dYdX is a decentralized exchange platform that offers perpetual trading options. It has over 35 popular cryptocurrencies including Bitcoin (BTC), Ether (ETH), Dogecoin (DOGE), and Cardano (ADA). At the moment, it is more an app-based platform running on iOS than an online live trading site like Bitcoin or Ethereum.
The protocol was founded in July 2017 with the launch of the Layer 1 product (Solo) which supported lending, borrowing, and margin trading on Ethereum.
dYdX exchange is already a major player in the crypto industry. With 64,000 unique traders, 11 billion dollars in total volume across perpetual and margins, and 250 billion dollars in flash transactions, dYdX boasts the biggest liquidity pools.
What made dYdX popular?
Last September, 64,306 eligible users of the derivative exchange celebrated the distribution of the dYdX governance token. In the aftermath of the airdrop, the project experienced unprecedented momentum, which culminated in the exchange’s daily trading volume surpassing that of Coinbase ($3.7 billion to $4.3 billion) for the first time in its history.
dYdX also collaborated with Starkware, which implemented StarkEx for non-custodial trading on dYdX as a layer 2 scalability engine. Simply put, it will have the same impact as the upcoming ETH 2.0 upgrade.
Token Utility
The dYdX tokens enable users to invest in a leveraged trading position by depositing collateral and borrowing from a decentralized liquidity pool.
BTC, ETH, SOL, AVAX, etc. are all included, along with up to 20x leverage on some pairs. Moreover, transactions are fast, and wait times are close to none.
The main aim of this decentralized platform is to provide security in trading services with low gas costs. By moving to Layer 2, StarkWare enables the platform to increase its settlement capacity for trades.
Features of dYdX
Governance
In the governance process, token holders can vote for the changes regarding the new updates to the platform. Changes include payouts from the safety staking pool upon losses, as well as risk parameters for the updated platforms. Also, market makers can vote on whether to add them to the pool of liquidity stakeholders.
Safety Pool
As long as the safety pool continues to operate, dYdX users still receive rewards in proportion to their staked tokens. However, the users must wait 14 days before they can un-stake their tokens if they wish to do so, and submit a request before the current epoch ends.
Liquidity pool
The liquidity pool is targeted towards two major goals which are to provide liquidity network effects and encourage professional market makers to invest in the platform. The dYdX Layer 2 protocol allows market makers to create new markets and stakers to receive dYdX proportionately to the stake they hold. Tokens in the liquidity pool can be un-staked after 14 days and during the ongoing epoch period.
DYDX Token
DYDX (dYdX), the governance token for the eponymous non-custodial decentralized cryptocurrency exchange, is the governance token for the layer 2 protocol.
While their other social media followers are lacking, their Instagram followers are plentiful.
Competitors
Binance(BNB) and GMX are among dYdX’s greatest competitors The top investors of the dYdX include:
- In 2017, DeFiance Capital invested $15 million
- In 2021, ThreeArrows Capital and Paradigm invested $30 and $20 million respectively.
