What is dYdX (DYDX)?

What is dYdX (DYDX)?

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DYDX is a governance token that enables the dYdX community to control the dYdX Layer 2 Protocol completely. By providing shared control over the protocol, DYDX enables traders, liquidity providers, and dYdX partners to collaborate on enhancing the protocol.

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dYdX offers a complex ecosystem centered on governance, incentives, and staking — all of which are geared toward dYdX's future development and decentralization, leading to a better user experience.

 

Component DYdX (DYDX)
Technologies StarkWare, Layer 2
Market Capitalization $463.4 Million+
Open-Source Yes
Consensus Mechanism
Smart Contracts Yes
Founders/Authors Antonio Juliano
Launch Date 2017
Circulating Supply of Coins 65,569,295 DYDX
Maximum Coin Supply 1,000,000,000 DYDX
Mining-based Coin? No
Is dYdX a Stablecoin? No
Does dYdX have a burn rate? No
Does dYdX have a Whitepaper? Yes, the white paper can be viewed here

 

Evolution and Development of dYdX

Founded in 2017 by Antonio Juliano, a former Coinbase programmer, dYdX attracted significant investor interest, raising a total of $87 million in investment within a year.

The project's developers were able to construct the trading platform to exacting standards because of the substantial cash runway they had available.

The dYdX protocol allows two parties to exchange financial items at any price. So, the contracts do not need to know the market price. Traders submit orders that are utilized to execute the transaction. Traders want to choose orders with the best pricing.

The market sets the best price, and no better orders will be accepted. It employs one Ethereum Smart Contract to enable decentralized margin trading of ERC20 tokens.

Lenders can issue margin loans by signing a message with the loan amount, tokens invested, and interest rate. Off-blockchain systems can transmit and advertise these loan offers.

 

What makes dYdX unique?

Platforms like MakerDAO and Compound already provide decentralized borrowing and lending, but dYdX aims to develop more complex trading capabilities on the Ethereum blockchain.

The dYdX protocol, like other DeFi technologies, is open source and free to use–with smart contracts managing users' assets instead of people. At the time of writing, dYdX has over 336,000 ETH (worth over $1.2 billion) locked up in its smart contracts.

dYdX is one of the most sophisticated open, trustless, and non-custodial finance protocols available today. Lesser-known aspects include interest-bearing loan assets and two forms of margin trading: isolated margin and gross margin. These are basic tools for experienced traders, but they are crucial for the young DeFi economy.

Unlike margin trading, dYdX lending is low risk and passive. Lenders receive interest every time a new block is mined. Withdrawals are free of charge and do not need a minimum deposit. Because all loans are secured, the lender will always be paid back.

 

What are the main uses for dYdX?

dYdX combines the greatest decentralized financial technology to create the world's first crowdsourced crypto derivatives exchange. When users deposit collateral to create a leveraged trading position, they are drawing from a decentralized liquidity pool that is supported by other traders.

Short sales are used to allow investors to benefit from the decline in the value of an asset. Short sales can be utilized for speculative or hedging purposes. When investors fear the market is about to crash, they can employ a short sale to speculate.

The value of an asset will decrease. By shorting a connected asset, short sales may be utilized to hedge existing holdings.

Leveraged long positions are used to magnify gains when an asset's price rises. Long positions that have been leveraged can be employed for speculation since they let traders get a higher return on a smaller investment.

Investors can take advantage of leveraging long positions for more efficient capital allocation, in which less money is necessary to attain the same benefits for each investment. When users provide liquidity to the platform, they can earn interest.

The DYDX token can be used for:

  • Staking Pools
  • Governance on the platform
  • Trading rewards
  • Discounted trading fees

 

What is the future potential for dYdX?

dYdX's strategy has always been to provide more sophisticated trading products, such as options and derivatives, in addition to their signature margin trading.

Recent additions to the project include “stop-loss” features that enable traders to minimize their potential losses.

Additionally, the team intends to grow beyond the platform's existing three fundamental crypto assets. By increasing the intricacy of their platform, dYdX contributes to the overall complexity of the DeFi ecosystem–a symptom of a maturing industry.

 

Price analysis on dYdX

dYdX was initially launched in 2018 but only has price information from 2022 until recently. The price analysis in the past few months is as follows:

 

  September October November December to date
dYdX Price High $18.05 $26.73 $18.44 $14.43
dYdX Price Low $9.83 $15.16 $12.26 $6.95
Market Cap $1.16B $1.49B $1.04B $934.84M

 

Price prediction on dYdX

According to analysts, the DYDX price is predicted to surpass the $10.54 average price level in 2022, while the expected minimum price level of dYdX by the end of the current year is $10.26. Additionally, DYDX could reach a maximum price of $11.94.

 

Where can you buy dYdX?

DYDX tokens can be bought, traded, sold, and exchanged on the following exchanges:

  1. Crypto.com
  2. FTX Exchange
  3. BitYard
  4. Gate.io
  5. Binance

 

1. Crypto.com: Crypto.com is an online crypto exchange trading platform that is widely regarded as one of the quickest and most secure in the world. The Exchange began operations in June 2016 and has already expanded to over 10 million customers.

They let users purchase and trade a variety of digital assets, including Bitcoin, Ethereum, Cardano, Polkadot, and Chainlink, through bank transfer and credit/debit cards.

 

PROS CONS
The exchange has a comprehensive proprietary trading platform There are no standalone trading tools offered
There is 24/7 customer support offered There is a limited choice between accounts
There are more than 100 crypto assets offered Unregulated
Traders have access to educational materials  

 

2. FTX Exchange: A cryptocurrency exchange designed by traders for traders, FTX is a platform for exchanging cryptocurrencies. Therefore, the Exchange seeks to become an easy platform for first-time customers while being robust enough for seasoned traders to operate on.

 

PROS CONS
FTX has an innovative and powerful native trading platform  The exchange does not accept US clients
The exchange offers a choice of educational resources There are limited non-crypto assets offered
There are several advanced trading tools offered The exchange is not regulated
There are several digital assets to choose from  

 

3. BitYard: BitYard is a cryptocurrency exchange that was founded in 2019 and is located out of Singapore. The primary products supplied by the exchange are leveraged trading instruments on a wide range of crypto assets, including Bitcoin, Bitcoin Cash, Ethereum, Dash, Litecoin, XRP, and others.

The exchange also offers a variety of other goods. Tether (USDT) is the sole base currency available on the exchange, and it is the only one available on the exchange.

 

PROS CONS
The exchange offers a wide range of digital assets Only offers crypto trading
There is an intuitive trading platform offered There is a lack of trading tools and educational materials
The exchange offers 24/7 customer support Telephonic Support is not offered

 

4. Gate.io: Located in the Cayman Islands, the Cayman Gate.io cryptocurrency exchange provides a broad range of digital currencies for trading online using an innovative trading platform that is accessible for desktops, web browsers, and mobile devices.

 

PROS CONS
Educational resources are offered on the platform Limited funding options
There are several crypto assets offered on the platform There are limited trading products offered
The exchange offers a wide range of useful trading tools The exchange is unregulated
The trading platforms offered are innovative  

 

5. Binance: Binance is one of the most popular and well-known cryptocurrency exchanges in the world. The exchange claims a daily average volume of 1.2 billion and a transaction rate of over 1.4 million per second.

There are translations for the website in 17 different languages. Since its inception in early 2017, Binance has billed itself as an ecosystem that offers a wide range of tools and resources to its users.

 

PROS CONS
Users have access to more than 150 digital assets Unregulated
There is the option to buy crypto using a credit card Telephonic support is lacking
The training academy is comprehensive There is no daily market analysis
There is 24/7 dedicated customer support offered  
The exchange is a leader in crypto trading with high 24-hour trading volumes  

You can buy dYdX safely from these cryptocurrency platforms.

What is dYdX’s largest Competitor?

Fulcrum is the largest competitor of dYdX.

Fulcrum pTokens have constant leverage, whereas dYdX margin tokens have dynamic leverage due to market changes. Traders create Fulcrum pTokens by partially filling existing base protocol orders.

It has a predetermined beginning margin, so a trader has exposure proportional to the token bought. For example, a trader's 2x Long ETH token always represents 2x long exposure. This allows traders to receive the exact exposure they want.

There are differences between Fulcrum pTokens and dYdX Tokens. Due to their differing designs, Fulcrum pTokens and dYdX Tokens work differently. When a trader buys a dYdX 2x Long ETH token, they are purchasing a token with significantly larger leverage and hence a closer liquidation price.

dYdX tokens expire every 28 days and need monthly maintenance to maintain exposure. Since most margin traders do not have exposure for months at a time, perpetual margin tokens are most useful for financial products that employ margin tokens.

Tokens have loans that expire after 28 days. However, pTokens roll over automatically and decentralized, whereas dYdX tokens must be manually redeployed by the dYdX team.

These two types of tokens have distinct margin calling procedures. Fulcrum pTokens can be sold in batches to avoid excessive Kyber slippage. 

 

What is the Staking Process involved with dYdX?

There are two methods for obtaining dYdX tokens. The first is by staking USDC in a pool and earning a daily pay-out. USDC is staked to help ensure dYdX's liquidity and security.

The second method would be to exchange incentives. Users may earn dYdX tokens as a rebate for trading on the dYdX platform.

 

What can dYdX smart contracts do?

For every loan that is offered, the trader must send a transaction to the dYdX margin smart contract, which is a purchase order for the borrowed token and the loan amount. The smart contract then utilizes a decentralized external exchange like 0x to sell the borrowed token using the stated purchase order.

The smart contract keeps the deposit and borrowed token for the duration of the position. The trader closes the position by sending a sell order to the smart contract, proposing to sell the token owing to the lender for less than or equal to the position's lock.

Upon receiving this order, the contract utilizes a decentralized external exchange to execute the deal. The contract then gives the lender the borrowed token's outstanding amount. The lender's charge is included in the debt. The trader receives the remaining token, which equals deposit + profit. Not that the profit may be lost if the position was wrong.

The lender can also call in a margin loan when the price moves against the position. Following a loan call, the trader has a set period to close the position. The trader can even let other contracts terminate their positions for them using procedures like “Dutch Auctions.”

 

Is dYdX a Good Investment?

Yes, dYdX is a good investment.

The cryptocurrency sector continues to grow in popularity with the public, and worldwide crypto usage has increased significantly over the previous year. The majority of the DeFi sector's stability has come through the creation of stablecoins on the Ethereum network. The value of dYdX seems to be promising, given its decentralized interaction paradigm.

Perpetual contracts are permitted on very few exchanges, and dYdX is one of them. Additionally, users may avoid potential hazards associated with centralized exchanges, such as the possibility of customer cash being misappropriated.

KYC is not required for transactions on the dYdX platform, and to carry out a transaction, users only need an Ethereum wallet, with no other authentication required.

Another plus for dYdX is its amazing data lending service. This platform's order book model is more complex than that of conventional centralized exchanges. Users can choose between spot trading, margin trading, and contract trading, as well as a variety of order types.

Margin trading, perpetual contracts, spot trading, leveraged trading, and financing are dYdX's five primary offerings. The new perpetual contract, for example, is constructed on the Layer 2 network.

In general, investment in DYDX coins provides a chance to get access to a market leader in decentralized exchange. Additionally, as more individuals participate in this industry, user adoption and trade volume are expanding.

 

What is the supply and distribution of dYdX?

A total of one billion DYDX tokens will be distributed over the next five years in the following stages:

  • The dYdX community, namely traders, stakeholders, liquidity providers, and consumers, will get 50% of the entire DYDX supply depending on their achieved milestones.
  • Users who were previously active will earn 27.72% of the DYDX tokens.
  • 15.27% of tokens will be distributed proportionately among dYdX's official members, founders, staff, and others.
  • The remaining 7% of DYDX tokens are saved for future workers.

 

Is dYdX a viable Alternative Coin?

Yes, dYdX is a good altcoin according to the following factors:

  • Technology – dYdX uses innovative and robust technology including StarkWare, Layer 2 solutions
  • Potential Investment – because of its useful and unique technology, dYdX is a good investment option.

Any cryptocurrency that isn't Bitcoin is referred to as an altcoin.

What are the differences between dYdX and Bitcoin?

Bitcoin is the first cryptocurrency that was ever created and the one that sees the most attention from small to large investors. Bitcoin features simplicity and acceptance, having been adopted as an alternative payment by thousands of merchants.

dYdX's mission is to offer secure trading services at a cheap cost of gas and fees. To do this, the platform is currently transitioning to Layer 2 with the assistance of StarkWare to expand its trade settlement capabilities.

 

  Bitcoin dYdX
Price change 20/21 +400% -30%
Market Cap $800 Billion+ $463.4 Million+
Past Hacks None Yes, 2022
Popularity Very High
Altcoin Rank #1 – Original Crypto #139

 

What are the differences between dYdX and Ethereum?

The largest difference is that Ethereum has a different goal than dYdX. Ethereum operates as a programmable and decentralized blockchain, allowing for the development of Decentralized Applications and crypto networks such as dYdX and others.

Although Ethereum's usefulness is limited only by the imagination of the world's programmers, the platform is a hub of activity.

dYdX is a non-custodial decentralized exchange trading platform that enables users to utilize Ethereum smart contracts to conduct transactions. This enables traders to rapidly deposit cash and trade without incurring gas expenses on each transaction.

 

  Ethereum dYdX
Price change 20/21 +880% -30%
Market Cap $460 Billion+ $463.4 Million+
Past Hacks None Yes, 2022
Popularity Very High
Altcoin Rank #2 #139

 

What are the differences between dYdX and Dogecoin?

Dogecoin is a cryptocurrency that was established as a parody of the cryptocurrency industry after the creation of hundreds of altcoins following Bitcoin. Dogecoin was built using code from Litecoin, a Bitcoin derivative.

dYdX (DYDX) is a decentralized exchange and blockchain platform for margin trading in cryptocurrencies such as BTC, ETH, SOL, and DOT. The majority of dYdX's crypto margin trading solutions are Ethereum-based. However, the exchange just launched Layer 2 trading for rapidly resolved, low-cost deals.

 

  Dogecoin dYdX
Price change 20/21 +7,300% -30%
Market Cap $22 Billion+ $463.4 Million+
Past Hacks None Yes, 2022
Popularity High
Altcoin Rank #12 #139

 

What are the differences between dYdX and NFTs?

Nonfungible tokens (NFTs) are digital assets that each have a unique value, with no two NFTs holding the same characteristics or value as another. dYdX, on the other hand, is fungible, which means that one DYDX has the same value and characteristics as another DYDX.

 

What are the differences between dYdX and Solana?

Decentralized, scalable apps can run on Solana's blockchain platform. Comparatively, Solana's transaction costs are cheaper, and it can handle far more transactions per second than competing blockchains like Ethereum.

DYDX offers a complex ecosystem centered on governance, incentives, and staking — all of which are geared toward dYdX's future development and decentralization, leading to a better user experience.

 

  Solana dYdX
Price change 20/21 +9,300% -30%
Market Cap $54 Billion+ $463.4 Million+
Past Hacks None Yes, 2022
Popularity Very High
Altcoin Rank #5 #139

 

What are the differences between dYdX and Cardano?

Cardano's blockchain design is much more versatile, scalable, and energy-efficient than its competitors. Along with the developer's openness, the system is data-driven and peer-reviewed.

As a result, such a methodical strategy will help to reduce its volatility. The excitement around dYdX has grown as the exchange now offers a viable decentralized alternative to the eternal exchanges BitMex, FTX, and Bitfinex.

 

  Cardano dYdX
Price change 20/21 +2,100% -30%
Market Cap $42 Billion+ $463.4 Million+
Past Hacks None Yes, 2022
Popularity Very High
Altcoin Rank #7 #139

 

What are Layer-2 solutions relating to dYdX?

Until Ethereum 2.0 is released, layer two scaling solutions are the best option for high-volume DeFi applications like dYdX. That is why the exchange's main items are featured on dYdX on Layer 2.

Layer 2 dYdX is quick, frictionless, and affordable to use, and the trading experience is identical to that of a centralized exchange like Binance.

Layer 2 dYdX facilitates the trade of perpetual crypto contracts for a diverse range of digital assets. Among the USD-pegged cryptocurrencies accessible for trade are BTC, ETH, SOL, DOT, AAVE, LINK, UNI, SUSHI, MATIC, and LTC.

In addition, users can apply up to 25x leverage, which is a significant increase over Layer 1 dYdX. Layer 2 dYdX has certain unique characteristics, including the following:

  • When this option is chosen, a particular withdrawal liquidity provider transfers money quickly. There is no waiting period for withdrawals, which equates to faster trading.
  • USDC collateral: dYdX only accepts USDC collateral, ensuring that all traders have access to a transparent, reliable, and widely accessible quotation asset.
  • Non-custodial: Layer 2 dYdX is based on StarkWare and utilizes StarkEx technology to provide entirely on-chain liquidity. Allows for real-time trading while maintaining a safe, decentralized environment.

 

The distinction between Layer 1 and Layer 2 dYdX is that the former represents the legacy version of the protocol, whilst the latter represents the future of dYdX.

 

Which wallets are supported by dYdX?

The following wallets are compatible with dYdX:

  • MetaMask is currently the most popular wallet compatible with dYdX. It is an extension for web browsers such as Firefox, Brave, and Chrome. 
  • Ledger/Trezor are compatible when they are used in combination with the MetaMask extension.
  • The mobile application for Coinbase Wallet is compatible with dYdX
  • WalletConnect can also be used, and it allows users to connect through various wallets to the dYdX system.
  • imToken can be used directly through the mobile app to connect to dYdX

Best Bitcoin Wallets are the same as dYdX wallets.