Most DeFi protocols choose to focus on one thing, such as Aave doing lending, Uniswap doing trading, and Curve doing stablecoin exchanges. But Dolomite has not taken this single-path approach; it has chosen a dual-engine fusion model of 'lending + DEX'. This model makes me feel a bit like a 'decentralized version of CEX'—on one platform, users can both lend and trade directly, with funds circulating internally.
Today I will talk about why Dolomite does this, and what the advantages and challenges of this model are.
1️⃣ Why integrate lending and DEX?
In traditional DeFi, users often have to go back and forth between different protocols:
Want to lend out assets, you need to deposit in Aave first;
Want to sell collateral, you still need to go to Uniswap;
Want to cash out or cycle borrow, you need to operate across protocols multiple times.
This experience is very fragmented, and fees are also high. Dolomite aims to solve this by integrating lending and trading, allowing funds to complete a closed loop within a single protocol.
2️⃣ The basic logic of the dual-engine model $DOLO
Dolomite's design logic is very straightforward:
Lending module: Users can deposit to earn interest, or use collateral to borrow assets;
DEX module: Supports instant exchange of assets, internal matching to reduce slippage;
Integrated interaction: Collateral generated from lending can be directly traded on DEX without cross-protocol transfer.
This model allows for higher efficiency of user funds.
3️⃣ Direct benefits for users
For ordinary users, the dual-engine brings several tangible benefits:
Avoid detours: No need to switch back and forth between Aave and Uniswap;
Save on fees: Internal matching reduces multiple Gas expenses;
Safer: Funds do not need to jump across protocols, reducing risks.
In simple terms, it's smoother and more worry-free.
4️⃣ Attractiveness to high-level players
One of the high-level users' favorite plays is cycling lending:
Deposit ETH → Borrow stablecoins → Buy more ETH → Deposit again → Borrow again.
Traditional methods require frequent switching between lending protocols and DEX. Dolomite's integrated model can wrap this process into a 'one-click strategy', making it more efficient and faster in returns.
5️⃣ Advantages at the protocol level
For Dolomite itself, the dual-engine model has two obvious advantages:
Capital retention: Funds do not need to flow out, all remain within the ecosystem for circulation;
Strong business scalability: More plays can be added, such as leveraged trading, strategy pools, asset combinations.
This makes it somewhat like a 'decentralized Binance': within one protocol, users can complete most financial operations.
6️⃣ Potential challenges
Of course, the integration model is not without risks:
Increased complexity: The protocol must maintain both lending and DEX, and both sides need to be secure and stable;
Risk transmission: Problems in lending may affect the trading module, and vice versa;
Intensified competition: Targeting both Aave and Uniswap simultaneously means facing strong opponents in two fields at once.
What Dolomite aims to do is to maintain stability while innovating.
7️⃣ Comparison with other protocols
Aave: Focus on lending, not trading;
Uniswap: Focus on trading, not lending;
Radiant: Cross-chain lending, but without built-in trading;
Dolomite: Lending + DEX dual-engine, taking the 'all-rounder' route.
This positioning is both an opportunity and a challenge.
8️⃣ My understanding of the dual-engine model
In my view, Dolomite's greatest ambition is to keep users within its ecosystem.
Novice users: One-click deposits, lending, trading, simple and clear;
Veteran players: Efficient cycles, compound strategies, maximizing returns;
The protocol itself: funds do not leak, and the business is expandable.
This logic is very similar to CEX's 'full-featured' approach, only Dolomite uses a completely decentralized method.
9️⃣ Summary
Dolomite has chosen the 'lending + DEX' dual-engine model, which fundamentally distinguishes it from single-function protocols like Aave and Uniswap.
For users, this is a 'smoother' experience;
For funds, this is a 'more efficient' cycle;
For protocols, this is a 'more ambitious' attempt.
If this path works, Dolomite will not just be a lending platform, but will become a comprehensive DeFi hub.#Dolomite
