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What makes the cross-chain AMM of the new Dove Protocol different?

Leo

Read this article in 4 Minutes

Provide liquidity on L1, trade on L2.

Original author: Dove Protocol

Translated by: Leo, BlockBeats

Dove is a cross-chain AMM protocol, derived from our understanding of the "dAMM" concept proposed by Louis Guthmann and Brett Davos.

Dove is based on the existing design of constant function market maker (CFMM) such as Uniswap v2 and Solidity. Its main advantage is the use of cross-chain message passing, which allows transactions to be conducted on multiple chains (such as Polygon, Optimism, Arbitrum, etc.), thus ensuring unified and secure liquidity on Ethereum.

Simply put; provide liquidity on L1, trade on L2.

Dove's Vision

One of the highest risks in all DeFi is the risk incurred by liquidity providers when bridging their LP tokens outside of the Ethereum mainnet. Additionally, the current state of DeFi operates on disjointed AMMs across different chains, leading to liquidity dispersion in the entire L2 ecosystem and a decrease in available liquidity for trading, which is not very favorable for overall prices.

Dove has introduced a protocol to address this issue, which not only provides the same benefits as CFMM, such as lazy LP token management and user-friendly interface, but also meets the liquidity needs across multiple layer exchanges, rather than being limited to a single layer.

Unlike typical AMMs that combine liquidity and pricing, Dove separates the two. Therefore, Dove can operate multiple AMMs for specific trading pairs across different L2s, and all AMMs utilize the same liquidity from L1.

The improvement of capital efficiency is beneficial for both LPs (facing higher costs) and traders (better prices).

Dove's Future

The asynchronous and cross-chain nature of the Dove protocol brings new challenges, which are negligible in traditional AMM environments. We are still working hard to create the most stable tests possible to ensure safe usage.

For its first iteration, we have decided to provide limited support for tokens, restricting it to similar assets (stablecoins, ETH, stETH...).

As part of our plan, we intend to have our codebase audited, including through the FV team and public audit platforms.