Dolomite

Dolomite operates as a decentralized finance (DeFi) protocol that integrates a money market with a decentralized exchange (DEX), positioning itself as a hub for capital efficiency. The company was co-founded by CEO Corey Caplan and COO Adam Knuckey, both alumni of Lehigh University. Their journey into the crypto space began as traders in 2017, where they experienced the shortcomings of centralized exchanges, such as security risks and trade delays. This firsthand experience led them to explore the potential of decentralized technology.

Their initial work involved building an Android DEX application on the Loopring protocol, an experience that deepened their understanding of the technology and led to an investment from the Loopring foundation to create Dolomite. The first iteration of Dolomite launched in September 2019 as a hybrid DEX on Loopring, featuring off-chain order matching and on-chain settlement to enhance speed and liquidity while allowing users to maintain custody of their funds. Recognizing the evolution of the DeFi space towards automated market maker (AMM) pools, the co-founders pivoted, redesigning the platform. The new version of Dolomite launched in October 2022 on Arbitrum, an Ethereum Layer 2 solution, focusing on being a next-generation lending protocol. In May 2023, the company, under the developer Leavitt Innovations, closed a $2.5 million funding round led by Draper Goren Holm and NGC, with participation from Coinbase Ventures and others.

Dolomite's business model targets a spectrum of DeFi participants, including traders, yield aggregators, DAOs, and hedge funds, by providing a platform for managing assets and executing on-chain strategies. Revenue was initially generated from trading fees, with a model that included negative maker fees to incentivize liquidity. The platform enables users to perform over-collateralized lending, spot trading, and margin trading with up to 5x leverage. A key differentiator is its architecture, which supports thousands of assets, including complex, non-standard tokens like staked derivatives and yield-bearing assets, which would otherwise be illiquid. Users can lend these assets while retaining their native rights, such as staking rewards or governance votes. The protocol's virtual liquidity system enhances capital efficiency by allowing users to earn lending yields and swap fees simultaneously. The platform is deployed on multiple networks, including Arbitrum, Mantle, and Polygon zkEVM, to ensure low transaction fees. The DOLO token, an ERC-20 token, powers the ecosystem, providing governance rights and incentives for liquidity providers.

Keywords: decentralized finance, DeFi, crypto lending, decentralized exchange, DEX, capital efficiency, Arbitrum, money market, margin trading, yield farming