dYdX maintains a leading position in the Decentralization Perptual Futures field

The competition in the decentralized Perpetual Futures market is becoming increasingly intense, while dYdX still firmly holds the leading position in this field, with trading volume recently far ahead.

According to the data, as of January 24, 2024, even when only counting the data from Starkware's layer two (dYdX v3), the trading volume of dYdX far exceeds that of other derivatives protocols. It is worth noting that the trading volume of dYdX v4 has now matched that of v3, and driven by a series of incentive measures, its potential for future development may be even greater.

dYdX v4, also known as dYdX Chain, was officially launched on October 26, 2023. This version achieves complete Decentralization, including an order book and matching engine, while starting to distribute trading fees to DYDX token stakers.

comprehensive Decentralization of dYdX Chain

dYdX is a leading decentralized Perptual Futures exchange founded by Antonio Juliano in 2017. Before founding dYdX, Antonio Juliano worked at a well-known cryptocurrency exchange and had previously developed a decentralized search engine full-time.

The original product of dYdX was a margin trading protocol (v1 and v2), allowing users to conduct leveraged trading in cryptocurrencies by borrowing funds. However, this product was inefficient and was constrained by the high Gas fees of Ethereum.

Since v3, dYdX has established an order book-based trading system. After adopting Starkware to build Ethereum Layer 2 products and issuing DYDX tokens, dYdX's trading volume has seen explosive growth, surpassing $1 trillion in total trading volume by July 14, 2023.

Currently, the dYdX Chain officially promoted by dYdX is an independent blockchain that utilizes the Cosmos SDK and Tendermint PoS consensus protocol. It went live on October 26, 2023, supporting 2000 transactions per second.

Compared to v3, dYdX Chain has truly achieved complete Decentralization. In v3, a certain company operates the order book and collects fees, and the listed tokens are also determined by the development team. In v4, the front end of dYdX is operated by the dYdX Operations SubDAO, the order book and matching engine are managed by globally distributed active validators, and the listed tokens are also decided through on-chain governance.

Fee Distribution Mechanism

All fees generated on the dYdX Chain are currently allocated to validators and stakers. These fees consist of two parts: primarily transaction fees denominated in USDC, and Gas fees denominated in either DYDX or USDC.

Fees accumulate gradually per block, with an average of one block produced every 1.08 seconds, requiring users to claim manually. Since the rewards mainly come from USDC, they are not affected by market fluctuations, even if not claimed in a timely manner.

Data shows that a total of 2.51 million USDC and 126 DYDX rewards have been distributed over the past 30 days. Validators will charge a commission of 5%-100%, and users can earn rewards by staking DYDX to active validators, of which there are currently 60.

As of January 24, the average daily staking return over the past 30 days has ranged from 6.2% to 29.06%, with an average of 14.97%. Currently, the value of staked DYDX is $212 million, remaining stable over the past month.

A well-known hardware wallet has integrated with Keplr, allowing users of the hardware wallet to connect to Cosmos applications through Keplr for staking and other operations.

In addition, Stride, a leading liquid staking service provider in the Cosmos ecosystem, has also launched liquid staking services for DYDX. Users who stake DYDX through Stride will receive stDYDX, and staking rewards will be automatically reinvested, allowing them to obtain more DYDX upon redemption.

dYdX Chain trading volume growth incentives

According to official data from dYdX, v4 has surpassed v3 in certain metrics. In the past 24 hours, dYdX v4's trading volume was $688 million, while v3 was $546 million; the number of trading orders for v4 was 635,791, compared to 161,337 for v3. However, in terms of open contracts, v4 ($38.88 million) still lags behind v3 ($251 million).

dYdX has implemented a series of measures to promote the growth of trading volume for v4. Before the launch of dYdX Chain, an incentive plan was established, aimed at gradually transferring trading volume from v3 to v4, while gradually phasing out the existing incentives on v3.

The dYdX DAO has authorized Chaos Labs to run a 6-month launch incentive program, distributing $20 million worth of DYDX tokens to early users of the dYdX Chain. The program is divided into 4 phases (Trading Seasons), with Season 2 currently underway, lasting from February 14 to February 24. Users can earn points by trading on dYdX, and DYDX rewards will be distributed based on the points earned at the end of each Season.

To attract trading volume and liquidity, dYdX Chain also offers trading fee discounts. The overall fees are slightly lower than mainstream centralized exchanges. For Makers, the maximum fee after the first 120 days is 0.01%; for Takers, the maximum fee is 0.05%.

Users can still trade through various wallets and deposit through multiple networks. A well-known payment company has issued native USDC through Noble, making future deposits on dYdX more convenient. In the dYdX Chain environment, market order trading is smoother than before.

Summary

As a leader in the field of Decentralization Perptual Futures, dYdX Chain has shown stronger competitiveness than version v3 since its launch, with recent trading volume of v4 exceeding that of v3.

The dYdX Chain has achieved full Decentralization, including the front end and the matching engine. It is worth noting that all transaction fees are distributed to DYDX stakers and validators. Currently, there are still several measures in place to incentivize the growth of v4 trading volume, such as Maker rebates, trading rewards, and performance rewards, which may further increase the trading volume and open interest on the dYdX Chain.