dYdX (DYDX)

What is dYdX?

dYdX is a decentralised exchange (DEX) that specializes in perpetual contract trading, including margin trading. It originates from the mathematical concept of derivatives, indicating its focus on derivative and margin trading within the cryptocurrency market. The platform enables trading with leverage, using a technology called StarkEx for scalability and reduced gas fees, enhancing efficiency and security for its users​​.

What is dYdX (DYDX) used for?

The primary function of dYdX is to offer traders the ability to engage in leveraged trading of perpetual futures contracts. This allows for speculation on the future price movements of cryptocurrencies without an expiry date. Utilizing StarkEx, a layer 2 solution, dYdX processes transactions with high throughput and low fees. It also operates under a non-custodial model, ensuring that users maintain control over their funds. Furthermore, the platform has transitioned to the dYdX Chain, a Cosmos SDK-based proof-of-stake blockchain, which expanded the utility of the DYDX token beyond governance to include staking for network security and participation in governance​​​​.

Expanded Utility of DYDX on the dYdX Chain

The migration of dYdX to its own blockchain, known as the dYdX Chain, marked a significant evolution for the DYDX token. Initially, DYDX served primarily as a governance token on the Ethereum-based dYdX platform (dYdX v3). With the transition to the dYdX Chain, DYDX has become the native token of a standalone proof-of-stake blockchain network. This shift broadens its functionalities to include staking for network security and active participation in the governance of the dYdX Chain.

Key highlights of the migration and expanded utility include:

• dYdX Chain Adoption: The dYdX community voted to adopt DYDX as the Layer 1 token of the dYdX Chain, transitioning from ethDYDX, the governance token on dYdX v3, to a broader role in the new network.
• Fee Distribution: On the dYdX Chain, all collected fees (trading and gas fees) are distributed to Validators and Stakers, aligning incentives for network security and participation.
• Gas-less Trading: Trading on the dYdX Chain does not incur gas fees for transactions, with only maker and taker trading fees in USDC being applicable.
• Genesis Event: The first block of the dYdX Chain was created by Genesis Validators, marking the official launch of the network and the beginning of DYDX's new functionalities within this ecosystem.

This evolution from a governance token to a Layer 1 protocol token emphasizes the dYdX community's commitment to creating a decentralized and secure platform for advanced trading in the crypto market. The dYdX Chain, built using the Cosmos SDK and leveraging CometBFT for consensus, showcases a significant step towards a decentralized financial system where the community has a pivotal role in shaping the network's future.

Who created dYdX (DYDX)?

Antonio Juliano founded dYdX in 2017, leveraging his experience as a software engineer at Coinbase and Uber. The platform was designed to bridge traditional financial market tools, such as derivatives and margin trading, with the cryptocurrency market. dYdX has received significant backing from the crypto community and prominent investors, reflecting its pivotal role in the DeFi space​​.