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About DogeSwap
DogeSwap, bridging gaps.
The Concept
DeFi projects of any model or size typically contain niche markets ranging from nano to micro-economies.
Whether it’s a DAO token, a ‘metaverse’ world, or an NFT project with a token, small project economies and their assets are typically split across different DeFi marketplaces, DEX’s, etc. Liquidity becomes thinner. As a result, most projects find themselves with some form of inefficient pricing within their project market economy as a whole.
DogeSwap incorporates NFTs and their related Utility Token into the same DeFi liquidity pool aiming to collateralize assets within a project market. With an AMM algorithm tying the two assets together, the pool incentivizes steady price correlation while holders of both assets would be able to profit from arbitraging that markets.
With both project assets backing the pool, it now encourages Liquidity Providers (LP) to participate in holding both assets of a project, Doge NFTs & $DAWG token in the example of Doge Capital's economy.
LPs of the pool will still earn fee income proportional to their share of committed liquidity. 
DC = Doge Capital
LP = Liquidity Pool (and/or) Liquidity Provider
DeFi Project Markets 

Knowingly or not, each type of DeFi project inherently contains an economic market for their assets. NFT projects with DeFi tokens are an easy example to use considering Doge Capital’s project market includes our NFT’s and DAWG token.
Since the official release of both our assets, they’ve been split across different markets. Till this day, market(s) for DC NFT’s exist on multiple NFT marketplaces while our DAWG token market exists within a traditional DeFi LP pool on a standalone DEX trading against SOL.
Given a considerable amount of DeFi projects have similar economic structures, it’s natural for their assets to experience less than efficient pricing in markets with less than total liquidity. 
While it is unlikely to gather total liquidity and create a perfectly-efficient market, the DOGESWAP model helps consolidate for optimization.
Future implications
For starters, the DogeSwap pool model is filling a systemic hole in the Doge Capital project economy by directly linking our NFTs to DAWG token.
After the platform is released, it will only become more efficient as our holders utilize the arbitrage tab, new users enter our community, and usage increases. This will put Doge Capital in a unique position to share our platform with other projects, and solve similar pricing issues for other projects as a whole.
It’s easy to say the possibilities are endless, so here’s some future potential use cases:
Project Revenue
In the absence of royalties, projects have lost the ability to generate revenue while centralized platforms are still able to collect fees from their holders.
DOGESWAP will essentially allow project teams to create their own market and instead of other marketplaces taking their trading fees, project teams can earn the fees themselves by providing liquidity to their own pool. 
Holders still won’t have to pay royalties and their NFT pricing will become more efficient. A win-win for everyone involved.
​
Future Assets
Launching a token is already hard enough. DogeSwap makes it easier by incorporating underlying project tokens directly into their existing NFT market. 
Integrating other collections would multiply the number of opportunities for Doge holders to profit from the arbitrage while continuing to earn fees.
​
DAO Perks
By including a DAO-governance token in a DogeSwap pool, it can help encourage holder participation in the DAO (remember, you must hold both assets to use a DogeSwap pool).
DAOs will also be able to build upon our platform and create holder-only tabs (like arbitrage) or provide project analytics that make it easier for their holders to manage investments in the project.

Links
DogeSwap: https://dogeswap.app
Official Site: https://thedogecapital.com
Discord: https://discord.gg/thedogecapital
Twitter: https://twitter.com/thedogecapital

FAQ
DogeSwap released in a BETA version, meaning everything written here is subject to change depending on the return of the market and feedback of the community.
What is Dogeswap ? 
DogeSwap is inspired from Uniswap Liquidity Pool mechanisms, pairing 2 tokens together.
DogeSwap is the first NFT x Token pairing swap. Linking the value of an NFT collection and its corresponding ecosystem utility token.
When does DogeSwap start ?
Beta tests: Early Avril 2023.
Grand opening: Mid Avril 2023.
Will I need an NFT to access DogeSwap ? 
 
For the Swap feature, it is not gated, free to use, and open to anybody.
For the Arbitrage feature, you'll need at least 5 Doges and the corresponding DAWG amount pooled, to be able to send the arbitrage transactions. Conditions may evolve in the future depending on the success of the protocol.
What fees does DogeSwap charge? 💳
Find all the details here: 
​
What collections are supported ?
At launch, only DOGE/DAWG pair will be supported.
After some time and depending on the response from the market, any other compatible NFT/Token pair can be integrated.
Is Rarity taken in consideration in DogeSwap ?
No, Dogeswap considers the Doges pooled like fungible tokens. And when you swap from $DAWG to Doge, it gets randomly picked from the pool. Same case for 
.
There are some rare Doges hidden in the pool, so you never know what you gonna get...

Swap
The DogeSwap structure is similar to traditional DeFi LP pool structures in the way that users are able to provide liquidity of both assets to the pool in exchange for a percentage of fee income generated.
The DogeSwap pool will of course allow holders to efficiently transition between the same project assets, buy Doges with DAWG tokens, and vice versa.
Buy, Sell, Swap.
Users of DogeSwap will pay a 0.5% fee for using the liquidity pool. Those that provided the liquidity are rewarded the fee, each wallet receiving:
Percentage % of fees earn per swap = Percentage % of total liquidity provided
In the DogeSwap pool model, the value of a Doge Capital NFT is directly collateralized by DAWG tokens.
Not only does this encourage efficient pricing of both assets, but it also incentivizes buying pressure on both as well. If someone wants to purchase our NFT to access community perks, they'll probably must buy DAWG tokens in order to use the pool & get the best price.

Arbitrage
While DAWG efficiently acts as backing for NFTs in the pool, inefficiencies may still occur in outside marketplaces. We built DogeSwap to aggregate price data from all third-party markets which allows DAWG/DC holders the ability to leverage those inefficiencies that may occur elsewhere. 
We even took it a step further to highlight those arbitrage opportunities for our holders directly within the platform. 
Potential Arbitrage Scenarios:
The price of DAWG in the Raydium pool is higher/lower than in the DogeSwap pool:
If higher, holders can swap a Doge Capital NFT for DAWG in our pool, and sell the DAWG for USDC on Raydium; profiting the difference. 
If lower, holders can purchase DAWG on Raydium, and sell it at a higher value into the DOGESWAP pool, profiting the difference.
The price of Doge Capital NFT’s is higher/lower on NFT marketplaces than in the DogeSwap pool:
If higher, holders can purchase an NFT from the DogeSwap pool and sell it on public marketplaces; profiting the difference. 
If lower, holders can purchase an NFT on the public marketplace, and sell it into the DogeSwap pool, profiting the difference. 
By encouraging our holders to take advantage of arbitrage, not only are we creating opportunities of profit, but it also enforces greater price efficiency within DogeSwap itself.

Fees
Swap fees:
0.5% in $DAWG per swap.
Distributed to LP holders dispatched depending their % of LP owned.
Arbitrage fees:
10% off of profit realised through arbitrage transactions goes to Doge Capital Treasury.
A small percentage will be shared with the respective NFT project creators that support the platform by providing liquidity.

Deep Dive
Swap
We use a modified version of the uniswap V2 constant product AMM algo for market making:
xy = kv, where v is the virtual liquidity factor.
We modified the algo to include virtual liquidity so that the liquidity is spread across a dynamic range (depending on the actual liquidity added) rather than being spread across 0 to infinity.
​
A simple example:
Let the initial price of the DC/DAWG be set at 100 & let the virtual liquidity factor be 2.
The pool contains 10 DC NFTs & 1000 $DAWG tokens.
Virtual liquidity pool now contains 20 NFTs & 2000 $DAWG tokens
Swaps in both the directions collects 0.5% fee in $DAWG out of which 0.4% is distributed between the liquidity providers depending on their share in the pool , remaining 0.1% is collected by protocol as platform fee.
DogeSwap is designed in such a way that the fee collected & distributed to the LPs can be set for each NFT / token pair supported by DogeSwap.
Swap from DC NFT to $DAWG:
=> 21*(2000-y) = 20*2000
=> y = 2000 - (20*2000)/21 = 95.238 $DAWG
User pays , 1 DC NFT
User receives, 95.238 - (0.5% of 95.238) = 94.76 $DAWG
LP’s Receives = (0.5% of 95.238) = 0.476 $DAWG 
Protocol Receives = (0.1% of 95.238) = 0.095 $DAWG
​
Swap from $DAWG to DC NFT:
=> 19*(2000+y) = 20*2000
=> y = (20*2000)/19 - 2000 = 105.263 $DAWG
User pays, 105.263 + (0.5% of 105.263) = 105.789 $DAWG
User receives, 1 DC NFT
LP’s Receives = (0.5% of 105.263) = 0.476 $DAWG
Protocol Receives = (0.1% of 105.263) = 0.095 $DAWG
​
Liquidity
Swap efficiency
DogeSwap AMM leverages virtual liquidity to provide better capital efficiency & lower price impact per trades compared to traditional AMMs. Each pool has a virtual liquidity factor that is used to calculate the additional virtual liquidity that will be deployed by the AMM.
Let the initial price of the DC/DAWG be set at 100 & let the virtual liquidity factor be 2.
User “A” adds 10 NFTs & 1000 tokens to the pool. Since the virtual liquidity (v = 2) , virtual AMM pool will now contain a total of 20 NFTs & 2000 tokens out of this only 10 NFTs & 1000 tokens is the real liquidity.
Normal AMM:
If the user “A” adds 10 NFTs & 1000 tokens to the pool. Total number of NFTs and tokens in the pool will be 10 & 1000 respectively & liquidity is spread across [0,infinity] range.
If a user wants to sell 1 NFT , user would receive (y)
11*(1000-y)=10000
y = 90.909 $DAWG

If a user wants to buy 1 NFT , user would have to pay (y)
9*(1000+y)=20000
y = 111.11 $DAWG
DogeSwap AMM:
If user “A” adds 10 NFTs & 1000 tokens to the pool. Since the virtual liquidity (v = 2) , virtual AMM pool will now contain a total of 20 NFTs & 2000 tokens out of this only 10 NFTs & 1000 tokens is the real liquidity.
If a user wants to sell 1 NFT , user would receive (y)
21*(2000-y)=40000
y = 95.238 $DAWG

If a user wants to buy 1 NFT , user would have to pay (y)
19*(2000+y)=40000
y = 105.263 $DAWG

Unlike normal AMM DogeSwap AMM does not provide liquidity in the [0,infinity] range . Let’s calculate the range of DogeSwap AMM when liquidity provided is 10 NFTs , 1000 tokens & vliquidity factor is 2.
If a user wants to buy 9 NFTs , user would have to pay (y)
11*(2000+y)=40000
y = 1636.363 $DAWG

If a user wants to buy 10 NFTs , user would have to pay (y)
10*(2000+y)=40000
y = 2000 $DAWG

Since there are actually only 10 NFTs in the pool , price difference between 1st & 10th NFT buy would be the range of the AMM.
Price of 10th NFT = 2000 - 1636.363 = 363.637
Price increase in % vs 1st buy = (363.637)*100/105.263 = 345.45 %
So the range of the AMM in the conditions above would be [initial price/3.45, initial price*3.45].
So the price of an NFT can swing 3.45 times to both sides and DogeSwap AMM would still be operational. DogeSwap AMM also allows LPs to adjust the vliquidity factor thereby adjusting the range of the AMM.
​
Removing Liquidity
Removing liquidity is a bit tricky since we deal with both NFTs & tokens in our AMM rather than just the fungible tokens.
Example
Let there be 3 users, User A, User B & User C.
User A deposits 1 NFT & 100 token
User B deposits 2 NFT & 200 tokens
Pool state:

pooledNFTs = 3
pooledTokens = 300
virtualNFTs = 4
virtualTokens = 600
Now user A owns ⅓ of the pool & User B owns ⅔ of the pool.
User C swapped a Doge to DAWG
User C receives
5*(600-y) = 2400
y = 120 $DAWG
Pool state:

pooledNFTs = 5
pooledTokens = 180
virtualNFTs = 5
virtualTokens = 480
User A & B still owns ⅓ & ⅔ of the pool respectively.
User A
NFT Balance = ⅓ * 5 = 1.667
Token Balance = ⅓ * 180 = 60

User B
NFT Balance = ⅔ * 5 = 3.33
Token Balance = ⅔ * 180 = 120
​
Now suppose User A wants to withdraw his liquidity, the protocol owes him 1.667 NFTs and 60 tokens but since NFTs can only be whole numbers we use our DogeSwap AMM to swap 0.667 NFTs to token at the current swap price, since NFT is being sold it will decrease the price of NFT in the pool. Once the internal swap is complete the protocol then distributes 1 NFT , 60 tokens & the equivalent of 0.667 NFTs in tokens to the user.
If no swap happens after the two users add liquidity then removing liquidity won't affect the price of the NFT since the NFT share of both users would be whole numbers and therefore no internal swap is required.
​
Potential Arbitrage Scenarios
The DogeSwap arbitrage engine uses Raydium & Elixir to perform arbitrages, for now. 
Lets 1 NFT costs $100 , 1 token costs $1 , and the price of 1 NFT in the DogeSwap pool is 100 tokens.
Right now the three markets are in equilibrium with each other. The equilibrium gets disturbed when the price in any one of these markets change.
Suppose the price of NFT increased to $150, the arbitrage route would be
1. User buys 100 tokens from raydium (total cost : $100)
2. User swaps 100 tokens to NFT in dogeswap
3. User sells the NFT in the marketplace for $150
Profit = $150 - $100 = $50
Suppose the price of token increased to $1.5, the arbitrage route would be
1. User buys an NFT from the marketplace for $100
2. User swaps NFT to tokens in dogeswap (user receives 100 tokens)
3. User sells 100 tokens in raydium for $150
Profit = $150 - $100 = $50 
Suppose the price in the swap changes from 100 tokens for an NFT to 150 tokens for an NFT
1. User buys an NFT from the marketplace for $100
2. User swaps NFT to tokens in dogeswap (user receives 150 tokens)
3. User sells 150 tokens in raydium for $150
Profit = $150 - $100 = $50
​
Pool Parameters
vLiquidity Factor: Controls the virtual liquidity added & the price impact & trading range for the respective pair.
Swap Tax: % of fee collected by the protocol for each successful swap.
Arbitrage Tax: % of total arbitrage profits collected as protocol fee.
Arbitrage Revenue share: % of Arbitrage tax distributed to the NFT creators that support the platform by providing liquidity.

Why provide liquidity ?
Earn Fees
This system is more efficient than classic staking:
Does not emit new tokens reducing the emission of utility tokens over time.
Farms more depending on DogeSwap volumes and LP participation.
Find a thread explaining this here:
Enhance the Ecosystem
Support the Solana ecosystem
Encourage long term holding
Help to balance the Buy/Sell pressure

What are the risks ?
As DogeSwap is a hybrid liquidity pool system between Fungible Tokens and NFTs. The impermanent loss that you usually experience in classic token pools on Raydium and other protocols, is still present.
DogeSwap will balance the Doges & DAWG in the pool based off a Constant Product AMM Algorithm (slight modified version from Uniswap, mainly to adapt NFT constraints).
Example:
User deposits 5 doges & 50k DAWG - If an other user buy doges from the pool and there now are less doges and more DAWG in the whole pool, it is possible for user's pool to now display 4 doges and 60k DAWG.
The algorythm and the arbitrage are here to rebalance the pool so over time users LP will tend back to the 5 doges initially deposited.
In any case, even if a user removes its liquidity while being imbalanced, he can still swap the supplement of DAWG withdrawn back to a Doge.