What is dYdX?
DYDX (dYdX) is a governance token for the layer 2 protocol of a decentralized, non-custodial cryptocurrency exchange. It enables traders, liquidity providers, and partners to contribute to the protocol's future by allowing them to propose changes and benefit from token staking and trading fee discounts.
Built on Starkwire's StarkEx scalability engine, the layer 2 protocol is used for trading cross-margined perpetuals on the platform. The scaling solution enables dYdX to increase transaction speed, eliminate gas costs, reduce trading fees, and lower minimum trade sizes.
An open-source platform with smart contract functionality, dYdX is designed for lending, borrowing, and trading crypto assets. The platform primarily focuses on derivatives and margin trading, but it also supports spot trading. The exchange was founded in 2017 with over $10 million in seed venture capitalist funding and went live in 2019. The DXDY token initial coin offering (ICO) was on September 9th, 2021.
dYdX was founded by Antonio Juliano, an experienced programmer with a background in blockchain technology. He first entered the crypto space in 2015 when he got a job as a software engineer at Coinbase. He is a Princeton University graduate with a degree in computer science. Zhuoxun Yin, who has a bachelor's degree in commerce from the University of Queensland, is the head of operations at dYdX. He previously worked at Nimble and Bain & Company.
The platform combines advanced financial tools with decentralization, supporting margin trading, which allows investors to increase their exposure to digital assets through leverage. dYdX's isolated margin allows users to assign specific funds in the account as part of a trade, while cross-margin utilizes all the assets a trader holds on the platform. The platform also offers perpetuals, a type of futures contract that does not have a predetermined selling date, and currently offers a maximum of 25x leverage on synthetic assets with no expiry date.
When users deposit funds into the account, they automatically begin to earn interest as their assets are entered into the global lending pool specific to each cryptocurrency. The platform guarantees security for lenders by ensuring that borrowers have enough collateral in their account at all times. Borrowing on dYdX enables users to instantly acquire any asset available on the platform using funds in their possession as collateral for the loan. The platform also features an order book architecture, as opposed to automated market makers like Uniswap.
dYdX's layer 2 increases scalability of the network through the use of a form of zero-knowledge rollup, zkSTARKS. This technology receives proofs and validates a batch of transactions off-chain, then sends the proofs back to the blockchain, where they are verified by a smart contract. zkSTARKS makes it possible to remove expensive computations from the mainnet without sacrificing decentralization.
In addition to trading and liquidity provider rewards, dYdX introduces retroactive mining benefits, allowing the platform to show appreciation to historical users and incentivize them to trade on the layer 2 protocol. Token holders can stake their tokens in dYdX's safety and liquidity pools. The safety pool provides the platform with a safety net in case of a shortfall event, while the liquidity pool serves to attract high-quality market makers.
The investment information, comments, and recommendations provided here do not fall under the scope of investment consulting. Therefore, making an investment decision based solely on the information and comments provided here may not yield results that meet your expectations.
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