Digging into on-chain data: What’s behind DODO’s 2.6 billion monthly trading volume?

Exploring DODO's 2.6B monthly trading volume through on-chain data.

Crypto researcher CJ_Blockchain found that DODO’s trading volume over the past month was $2.6 billion, second only to UNI and Curve. After further analysis, CJ_Blockchain discovered that almost all of the top DODO trading addresses were MEV bots.

In the past 30 days, Uni has a trading volume of 23.9 billion USD, Curve has 5 billion USD, and DODO has 2.6 billion USD in DEX trading volume rankings. However, Uni’s market capitalization is 4.1 billion USD, and DODO’s market capitalization is only 42 million USD. This made me decide to investigate who is undervaluing the currency. From DODO’s trading volume composition, we can see that stablecoin trading contributed 99% of DODO’s trading volume on the Ethereum chain, even more than Curve. Then I found the trading pair address of DODO USDT-USDC and found that the addresses with high DODO trading volume are almost all MEV bots. It turns out that almost 99% of stablecoin trading comes from MEV arbitrageurs and 1inch routing.

Then I checked two trading pairs that contribute 99% of the trading volume on the DODO official website, and I found that the transaction fees for these two stablecoin pools are 0%. So using MEV in this pool can be considered costless. Of course, DODO also provides 4-5% DODO token incentives to these two stablecoin pools. Therefore, if we do not consider the stablecoin trading volume that does not earn money, DODO’s profitable trading volume on the Ethereum chain is actually less than 1% now, and it has not exceeded 3 million USD in the past 30 months. DODO is using its platform token to subsidize LPs to increase its trading volume in the 0% fee stablecoin pool.

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Reference: https://twitter.com/nanbeiblock/status/1675142469145759744

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