Things One Needs to Know About dYdX Before Starting to Use It

Decentralized exchanges (DEX) have been here for quite some time. Crypto owners use them to trade many types of digital assets anonymously. Moreover, these platforms offer various other features and benefits that centralized websites lack. However, there’s one particular thing that even DEX couldn’t offer. It is the option of perpetual trading options. This insufficiency was fulfilled by dYdX which made perpetual trading possible in a decentralized environment.

dYdX and Its Abilities That One Must Know

dYdX offers perpetual trading on over 35 cryptocurrencies. They involve the likes of Bitcoin, Ether, Dogecoin, and Cardano. In terms of trading volume and market share, it’s one of the largest decentralized exchanges. In August 2017, Antonio Juliano, a California-based entrepreneur established it. Initially, it offered lending and borrowing services along with margin trading on Ethereum Layer-1.

By 2021, the platform started offering cross-margin perpetual trading. In this particular trading system, users could bring in more liquidity by repurposing the available balance. Today, it has emerged as a popular method to avoid liquidity-related risk during high volatility in existing trades. Starkware, the Israeli software company known for cryptography, powered its essentials. It provided the Ethereum smart contracts and STARK (zero-knowledge) Rollups as well.

To understand the workings of dYdX, one needs to delve into the trading options first.

Tradeverse of dYdX Exchange

Perpetual futures contracts facilitate the buy or sell orders on a future date. It varies from spot trading which lets investors trade cryptos instantly on the current market price. The conventional futures come with a time limit, post which, the contract is nullified. dYdX hosts perpetual markets that extend spot and margin trading services too. It makes them viable on layer-1 ETH network and Layer-2 cross-margined perpetual.

Besides Layer-2 perpetual trading options, dYdX also offers other solutions. It delivers Ropsten Ethereum testnet for risk-free testing and NFT collections for community building. In the last few years, dYdX has inched closer to its goal of getting fully decentralized. The exchange takes a step-by-step approach to releasing its new products. Its four primary offerings are:

Perpetual Trading– It enables traders to deal with open markets using non-expirable contracts. In this environment, investors hold their positions for an uncertain time till the conditions are met.

Governance and Staking– The platform allows the staking of existing crypto holdings to yield in-house governance tokens. Users can earn based on their trading activities with open interest. In addition, it offers a liquidity pool and a safety pool.

Non-Fungible Tokens– dYdX’s NFT collection went live in February 2022. Since then, it has launched over 4,200 assets using the ETH network. Recently, it launched Hedgies, a collection of animated hedgehogs.

Spot and Margin Trading– Initially, dYdX employed Layer-1 Ethereum blockchain to deliver this distinct service. On 1st November 2021, the exchange migrated all the products to Layer 2. It was one step forward towards achieving a full-fledged decentralized mechanism.

dYdX is a preferred choice of many crypto users. It’s also inspiring other exchanges to extend their range of services and embrace decentralization.