The derivative market is always the largest market in the world, it’s bigger than the traditional stock market. Every project tried to apply blockchain technology to that market, but some have failed due to limited technologies. However, dYdX founded in 2017 is emerging to be a promising derivative platform surprising the crypto market with the blasting token airdrops.
The total retroactive airdrop is 75,000,000 DYDX tokens distributed to ~64,000 valid users. This means on average each user receives an airdrop of over $20,000 at the writing time.
The article below will provide all detailed information about dYdX, including:
- What is dYdX? How does it work?
- What is dYdX Token (DYDX)? All detailed information about its Tokenomics.
- How to get and buy DYDX tokens?
- Roadmap and updates.
- Details about the team, investors, and partners.
- Is dYdX a good investment?
Let's explore the potential of dYdX and why it was able to give such a big airdrop!
What is dYdX?
dYdX is a layer-2 decentralized trading platform built on Ethereum that supports multiple financial products such as perpetual, margin trading, leveraged trading, and spot trading. In simple terms, it combines off-chain order books with an on-chain settlement layer to enable bidirectional trading.
How does dYdX work?
The dYdX platform now is divided into two main layers offering DeFi products with different features.
- Margin: Spot and Margin Trading on Layer 1 of Ethereum.
- Perpetual: Trading on Layer 2 powered by Starkware (recently released).
Spot and Margin Trading on Layer 1 of Ethereum is a trading platform running on Smart Contracts of the Ethereum blockchain allowing to trade without any intermediary. It has the following products and features:
- Spot and Margin trading with up to 5x leverage supports three pairs: ETH-DAI, ETH-USDC, and DAI-USDC.
- Perpetual trading (migrated to Layer 2) with up to 10x leverage supports three pairs: BTC-USD, ETH-USD, LINK-USD.
- Lending with no minimum loan and waiting period, supporting ETH, DAI, and USDC tokens.
- Borrowing with the minimum collateral of 125%, supporting ETH, DAI, and USDC tokens and the collateral must be above 115% to avoid being liquidated.
Perpetual non-custodial trading is running on a layer-2 blockchain system. The system operates separately from the previous dYdX protocol on Ethereum.
Trades are processed off-chain and submitted validity proofs to the Ethereum chain, this is called ZK-Rollups ( Zero-Knowledge rollups) - Layer 2 solution of Ethereum powered by Starkware. Basically, ZK-rollups has the following features:
- Validating speed is higher since the state is updated after off-chain validation.
- Secure and decentralized features remain since the data is stored on the Ethereum blockchain.
- Lower gas fees and trading fees are preferred.
- Starkware doesn’t publish all transaction details on-chain; therefore, the privacy of traders is granted.
Perpetual powered by Starkware offers a trading product having features, including:
- Leverage up to 25x.
- Cross-margin and off-chain order-book.
- Only accept USDC as collateral.
- Front-running prevention.
dYdX supports Portfolio management for traders to monitor their trades, claim Trading Rewards, and get Fee Discounts based on their trading volume.
For every trading platform, price data feed or price oracle is the crucial part as it directly affects the benefits and experiences of users. dXdX uses Chainlink and MakerDAO oracle to feed the price data through its Smart Contract running on the Ethereum blockchain.
What is DYDX Token?
DYDX is the ERC20 governance token of the dYdX derivative platform that can be used in the governance process and for Fee Discounts.
DYDX holders can participate in the governance process of the platform. They decide whether a proposal is adopted by the community, affecting the future of the platform.
Detailed information about DYDX Token
DYDX Key Metrics
- Token Name: dYdX Token.
- Ticker: DYDX.
- Blockchain: Ethereum.
- Token Standard: ERC20.
- Contract: 0x92d6c1e31e14520e676a687f0a93788b716beff5.
- Token Type: Governance.
- Max Supply: 1,000,000,000 DYDX.
- Circulating Supply: Updating...
DYDX Token Allocation
The DYDX Token has the total max supply of 1,000,000,000 tokens distributed as follows:
- Community: 50% - 500,000,000 DYDX:
- User Trading Rewards: 25% - 250,000,000 DYDX.
- Retroactive Rewards: 7.5% - 75,000,000 DYDX.
- Liquidity Provider Rewards: 7.5% - 75,000,000 DYDX.
- Community Treasury: 5% - 50,000,000 DYDX.
- Liquidity Staking Pool: 2.5% - 25,000,000 DYDX.
- Liquidity Provider Rewards: 2.5% - 25,000,000 DYDX.
- Investors: 27.73% - 277,295,070 DYDX.
- Employees & Consultants of dYdX Trading or Foundation: 15.27% - 152,704,930 DYDX.
- Futures Employees & Consultants of dYdX Trading or Foundation: 7% - 70,000,000 DYDX.
Starting five years after launch, an inflation rate of 2% per year of DYDX tokens ensures sufficient resources for the development of the protocol.
- Community: 54.7%:
- User Trading Rewards: 22.7%.
- Retroactive Rewards: 6.8%.
- Liquidity Provider Rewards: 6.8%.
- Community Treasury: 4.5%.
- Liquidity Staking Pool: 2.3%.
- Liquidity Provider Rewards: 2.3%.
- Investors: 25.1%.
- Employees & Consultants of dYdX Trading or Foundation: 13.8%.
- Futures Employees & Consultants of dYdX Trading or Foundation: 6.3%.
DYDX Token Sale
DYDX Token Release Schedule
DYDX Token Use Case
DYDX is the utility token of the dYdX platform and it has functions, including:
- Governance: DYDX holders can participate in the governance mechanism to vote on protocol proposals.
- Incentives: 25% of the token supply (250,000,000 DYDX) will be distributed to traders contributing trading volume on the platform.
- Fee Discounts: Similar to BNB on Binance Exchange, users will receive discounts when trading on the dYdX platform, depend on the number of DYDX token holdings.
- Staking: DYDX token holders can stake their tokens in the Safety Module pool to earn additional rewards.
Disclaimer: While staking in the Safety pool, Shortfall Events can be caused by Exchange Solvency, Smart Contract attacks, and other governance events.
How to get DYDX Token
You can get DYDX tokens by participating in various products and services.
Retroactive Mining Rewards (75,000,00 DYDX) is the incentive program of DYDX that is distributed to its early active users who used layer-1/layer-2 dYdX products according to the snapshot ended at 0:00 UTC, July 26th, 2021. There are 5 tiers that have claiming requirements described in the following table.
Another way to earn DYDX tokens is to stake USDC (ongoing) or DYDX (coming soon) into pools on the platform.
Users can earn Trading Rewards based on the trading volume on the dYdX exchange. This means the dYdX project aims to incentivize the active usage of layer-2 protocol and accelerate the platform liquidity.
However, you can directly buy DYDX tokens on major exchanges such as Binance, OKEx, Uniswap, Sushiswap, etc.
How to buy DYDX tokens
You can buy DYDX token on Coin98 Exchange by clicking the swap button at the bottom of this article and following these steps below:
Step 1: Connect to the Coin98 Extension Wallet.
Step 2: Select SushiSwap.
Step 3: Choose coins/tokens for trading:
- Search DYDX.
- If the result does not come up, you can paste the contract of DYDX into the search box: 0x92d6c1e31e14520e676a687f0a93788b716beff5;
Step 4: Adjust the amount you want to swap.
Step 5: Adjust the gas fee, then click Approve.
How to store DYDX Token
You can store, send, receive DYDX Tokens on Coin98 Wallet with a few single steps. The guides on how to make transactions with DYDX on Coin98 Wallet are as follows.
Step 1: Open Coin98 Wallet & click Receive on the home screen.
Step 2: Search DYDX Token.
Step 3: Click on the correct result, copy the wallet address and send DYDX to this address.
Roadmap & Updates
dYdX promises to migrate other layer-1 Ethereum-based products to layer-2 powered by Starkware as soon as possible.
Team, Investors, and Partners
The Team at dYdX is public on LinkedIn, however, some of them have no profile picture:
- Antonio Juliano – Founder.
- David Gogel – Growth Lead.
- Paul Erlanger – Business Operations and Growth.
- Lucas W – Software Engineer.
- Corey Miller – Growth and Investments.
- Marc Boiron – General Counsel.
dYdX is undoubtedly one of the most favorable projects since it is backed by huge VCs and KOL individuals in the crypto space. In June 2021, the dYdX project raised $65M in the Series C round of funding led by Paradigm along with other big market makers. This shows the potential of dYdX to dominate the derivatives market in the crypto space.
Is dYdX (DYDX) a good investment?
FinTech has been developing fast over the past few years. dYdX is trying to facilitate and simplify the trading process with the advantages of blockchain technologies. There are some key highlights from Coin98 for investment decisions.
dYdX has outperformed other similar DeFi protocols, shown by some statistics as follows:
More and more traders are coming and staying to trade on the platform.
Since the launch of layer-2 perpetual with better technologies, the layer-1 trading volume is shifting to layer-2 trading.
dYdX is a highly profitable business since the revenue of the platform is nearly $500M on the leaderboard. It generated more profits than any other DeFi protocols, illustrated in the following chart.
dYdX was successful at attracting new users to the platform with a huge incentive program, then the platform was able to keep them staying by offering a quality DeFi product. From about 1,000 active users to nearly 10,000 ones, and stable at 6,000 users, they are contributing to billions of trading volume on the platform.
The layer-2 perpetual platform now supports over 25 coins/tokens for leveraged trading and other DeFi services such as lending, staking, and trading constantly to increase volume. Therefore, the platform is suitable for risky derivative trading and lenders who prefer non-risky positions.
The dYdX team designed fully functioning APIs for developers to interact with the derivative platform. This means dYdX targets both users and developers since they are the majority of the community.
In my opinion, dYdX is totally dominating the derivatives market in the crypto world. However, the traditional derivatives market is worth trillions of dollars, dYdX is still too small to handle that big market value.
Currently, platform trading fees are transferred to the dYdX team since traders are rewarded by the Trading Rewards. Whether the DYDX token can capture the value with this fee mechanism in long term?
The DYDX FDV (Fully Diluted Value) is 20 times bigger than the current market cap. As time goes on, more DYDX tokens are released, which might cause inflation. Therefore, investors should carefully consider it before investing in DYDX.
Furthermore, since it’s technically built on the Ethereum blockchain, it has to compete with other competitive derivative platforms on other blockchains in terms of technology such as Solana, Cardano, or BSC, etc. Therefore, dYdX should be followed for further updates and plans.
And as usual, whether it is worth investing or not, Do Your Own Research before buying and be responsible for your investment.
dYdX is the biggest derivative platform in the crypto space. However, there are other prominent projects waiting to take the position of dYdX such as bZx protocol, Kine Protocol, and other derivative platforms on other 3.0 blockchains.