In recent years, Decentralized Finance, or DeFi for connoisseurs, has undoubtedly been one of the most decisive innovations related to blockchain technology. Secure access to traditional financial services in a decentralized and uncensored way is indeed a true revolution for crypto investing. Key players in this ecosystem, so-called “decentralized” exchange platforms allow users to make trades anonymously directly from a private wallet. This is the case of dYdX, reference DEX which we will cover in this article.
Le Journal du Coin offers you this promotional article in collaboration with dYdX.
The concept
Operating on the StarkEx network, a layer 2 from Ethereum, dYdX is therefore a decentralized exchange platform (DEX in abbreviated English). Specialized in derivative products, it offers margin trading as well as perpetual contracts, and also offers the opportunity to obtain passive income through staking. Moreover, it allowst its users to compete against others through competitions.
Its interface is very easy to learn, very similar to those of large centralized exchanges. The fundamental difference lies in the fact that users can keep their anonymity there (within the limit of what the blockchain allows) and own the private keys of the wallet where their funds are stored.
dYdX is built around two entities:
- A decentralized entity, the dYdX Foundation, Decentralized Autonomous Organization (DAO in English). It is the community that proposes and votes on all changes to the platform.
- A centralized entity in the United States with a team and employees. She takes care of the technical maintenance and the implementation of the evolutions voted by the dYdX Foundation.
History of the platform and team
Team, investors and users
The protocol was born in July 2017, on the initiative of Antonio Julianno, a developer who previously worked for Coinbase and Uber. Starting from a blank slate, he was able to quickly put together a competent team and attract the attention of investors. Today supported “by the best”, the protocol has already raised several million dollars (65 million in June 2021) to expand.
dYdX has won over 25,000 traders with daily trading volumes regularly exceeding $1 billion. This makes it the first DEX in terms of volume according to CoinMarketCap.
The total blocked value (Total Value Locked= TVL) on the exchange is around $400 million. Based on this criterion, Defillama places dYdX in the top 15 of DeFi on Ethereum.
Evolution of the protocol
Basically, dYdX was implemented directly on the blockchain Ethereum. The platform then offered more products than currently with spot trading, loans and borrowings. These services have been suspended to allow platform migration to StarkEx. Constantly evolving, dYdX should offer them again at the launch of V4, before the end of the year.
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StarkEx is a second-tier Ethereum scaling solution known as “Layer 2”. It allows dYdX to benefit from the security and composability of Ethereum, while offering near-zero transaction fees. Schematically, orders are gathered before being sent anonymously and securely on the Ethereum network using technology Zero-Knowledge Rollup (ZK Rollup). Transactions are thus executed instantly and traders no longer have to pay gas fees. to validate them!
However the team remains in constant quest for maximum decentralization. Anticipating a performance and centralization problem announced for layers 2 of the Ethereum blockchain, dYdX decided to create its own blockchain based on the Cosmos network and the Proof Of Stake Tendermint consensus mechanism. The migration of dYdX to the Cosmos ecosystem will mark the entry of the protocol into its fourth version (V4) and should be effective at the end of 2022.
dYdX products
perpetual contracts
These are the flagship products of the platform. dYdX offers perpetual contracts on 36 different crypto pairs. The trades are carried out via an order book. There are different types that users can choose according to their strategies:
- limit order
- market order
- Stop Limit
- Stop Market
- trailing stop
- Take Profit Limit
- Take Profit Market
It is possible to put a leverage of up to x20 to increase profits … or losses. 3 assets can serve as collateral: ETH, DAI and USDC. Transactions can be carried out in isolation to commit only part of your funds, or combined to put your entire account as collateral.
Expenses
The platform fees are simple and minimal. For the traders whose volume does not exceed $100,000 over the last 30 days, dYdX does not take anything. Beyond that, the fees decrease from a million dollars of trading volume.
The platform does not tax deposits or withdrawals. You will, however, have to pay the gas fees of the Ethereum blockchain. If you deposit more than 500 USDC on your first deposit and more than 1000 USDC for subsequent ones, dYdX will cover these fees.
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The DYDX token
The DYDX token is used to vote for protocol evolution proposals. It also provides discounts on platform fees andincrease hit rewards by staking them.
Users who exceed $100,000 in volume trade receive rewards in DYDX that allow you to cover between 80 and 120% of their costs on average.
Staking
dYdX allows you to stake two tokens:
- USDC to participate in the liquidity of exchanges on the protocol.
- DYDXs to participate in security.
In both cases, the rewards are paid in DYDX.
Competitions and NFTs
For the most competitive, dYdX offers the possibility of competing against other users. The best get NFTs (them Hedgies) which allow you to move to the next third regarding the fee reductions offered by the platform. For example, a user who holds 5000 dYdX tokens and a Hedgie ends up at Tier 4 (15% off) instead of Tier 3 (10% off).
In addition to being entitled to privileges on the platform and rewards in dollars, these little digital creatures represent an advantage that can prove decisive in winning the bet.
Conclusion
dYdX is a protocol with great potential, available in French and on mobile. In full expansion, it has not finished being talked about. Many features have already been announced, as is the return of spot trading for V4 which is approaching. At a time when regulation is vindictive, many investors want to remain free. In this sense, there is no doubt that the protocol will attract more and more users. Why not you ?
Take advantage of current market conditions to quietly accumulate Bitcoin. Register now on dYdX and enjoy incredible returns with the decentralized leader in derivatives (trading link).