Photo - What is dYdX? Platform review

What is dYdX? Platform review

dYdX is a decentralized exchange hosted on the Ethereum blockchain with an eponymous governance token.

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Author: Artem Khomenko

Date: 24 November 2022

Category: Education

dYdX is not a regular DEX. The platform offers its users to trade derivatives (features) with leverage on margin trading. The exchange does not require KYC, like other centralized crypto exchanges. To start trading on dYdX, users need to connect their wallets (for example, Metamask or Trust), sign up, and verify their email.

dYdX was launched in 2021. The project was backed by A16Z, Spartan, Polychain, and other well-known investment funds. A noteworthy detail is that the project rewarded its users with a big-budget retroactive drop before they got their token listed on crypto exchanges. Users who traded $200-300 in the past received $30-50K in dYdX tokens at the time of listing on September 8.

Investment funds that backed dYdX

Investment funds that backed dYdX

Once the wallet is connected, you need to create multiple digital signatures for the vault to sync with the exchange. After that, you will need to deposit funds to buy DYDX. It can be USDC, USDT, Ethereum, DAI, MATIC, and UNI.

The project’s architecture is like that of many crypto exchanges. It equips users with a live price chart, order book, details on trading positions, and transaction history. The platform supports different order types like Limit, Stop Limit, Trailing Stop, and Take Profit. 

The portfolio tab shows open orders and cryptocurrency available for trading. Below goes the rewards blocks, profile settings, competitions and leagues, DAO management tools, and additional information, including documentation, statistical charts, social media sites, privacy policy, and customer support.

dYdX Dashboard

dYdX Dashboard

Ethereum transaction fees are pretty high. dYdX employs StarkWare’s unique solution, which allows trading with zero gas fees (except for percent-based trading fees). 

Technically, dYdX operates on the Layer 2 Ethereum blockchain. StarkWare provides low, sometimes even zero, fees without sacrificing security or privacy. There is no need to pay miners for each transaction, transactions are executed instantly and confirmed on the blockchain "retroactively" within a few hours.

Features of dYdX's StarkWare integration

Features of dYdX's StarkWare integration

StarkWare will soon release its STARK token, a portion of which will be distributed to dYdX holders under a retroactive drop.

dYdX is set about developing its own dYdX V4 blockchain, based on the Tendermint PoS protocol with the ability to use the Cosmos SDK. This will create a decentralized autonomous order book and matching mechanism that can be scaled to increase bandwidth and the number of orders.

The dYdX native token is traded on Gate, WhiteBIT, FTX, Huobi and many other major exchanges. Token holders can trade with reduced fees, stake dYdX at 13% p.a., manage the protocol, and vote on changes. The most active traders regularly share a reward pool, which is distributed to token holders as an additional incentive.

The current dYdX price is $1.6. The project’s market cap of $220 million ranks the project 161st among cryptocurrency tokens, according to Coingecko.

dYdX price movement (Coinmarketcap)

dYdX price movement (Coinmarketcap)

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