dYdX consolidates its leading position in the Decentralization Perptual Futures market, with impressive performance in the new version.

The competition in the decentralized Perptual Futures market is becoming increasingly fierce, and dYdX, as the leader in this field, has recently shown outstanding trading volume, firmly holding the top position.

Data shows that as of January 24, 2024, even when only considering the data from Starkware Layer 2 (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 is already comparable to that of v3, and with various incentives in place, the v4 version may have even greater growth potential.

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

dYdX Chain: Achieving complete Decentralization

dYdX is a leading decentralized Perpetual Futures exchange, founded by Antonio Juliano in 2017. After receiving funding support from well-known investment institutions, dYdX has undergone multiple iterations.

Initially, dYdX offered margin trading protocols (v1 and v2), allowing users to engage in leveraged trading of cryptocurrencies by borrowing funds. However, this product was inefficient and limited by the high Gas fees on Ethereum.

Starting from v3, dYdX established an order book-based trading system. With the help of Starkware to build an Ethereum Layer 2 solution and the issuance of the DYDX token, dYdX's trading volume experienced exponential growth, surpassing the total trading volume of 1 trillion USD on July 14, 2023.

The currently highly regarded dYdX Chain is an independent blockchain that uses the Cosmos SDK and Tendermint PoS consensus mechanism. It was launched on October 26, 2023, and supports a processing capacity of 2000 transactions per second.

Compared to v3, dYdX Chain (v4) truly achieves complete Decentralization. In v4, the front end of dYdX is operated by the dYdX Operations SubDAO, the order book and matching engine are managed by globally decentralized active validators, and the listed tokens are also decided through on-chain governance.

Profit Distribution Plan: All allocated to stakers and validators

All fees generated by the dYdX Chain are currently distributed entirely to validators and stakers. These fees consist of two parts: primarily transaction fees denominated in USDC, as well as a small amount of Gas fees denominated in either DYDX or USDC.

Fees accumulate gradually per block, with an average of one block generated every 1.08 seconds, and users need to manually claim their rewards. Since the rewards mainly come from USDC, they are not affected by market fluctuations even if not claimed immediately.

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

In the past 30 days, the daily staking yield has fluctuated between 6.2% and 29.06%, with an average staking yield of 14.97%. As of January 24, the value of staked DYDX reached $212 million, remaining stable over the past month.

It is worth mentioning that 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 the staking rewards will be automatically reinvested, allowing them to obtain more DYDX upon redemption.

Multiple measures to promote dYdX Chain trading volume growth

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

The rapid growth of dYdX v4 is attributed to a series of incentive measures. Before the launch of dYdX Chain, the team established an incentive plan to encourage the migration of trading volume from v3 to v4, while gradually phasing out the existing incentives on v3.

Through governance, the dYdX DAO has authorized Chaos Labs to run a 6-month launch incentive program, allocating $20 million worth of DYDX tokens to early users to encourage them to migrate to v4. The program is divided into 4 phases (Trading Season), and the second phase is currently underway and will last until mid to late February.

After each stage ends, DYDX rewards will be distributed based on users' trading points on dYdX. Chaos Labs also provides a dashboard for users to view points and rankings for each stage. Each stage will optimize the incentives based on feedback from the previous stage. For example, the second stage introduced performance rewards on top of trading and market-making rewards, allocating 20% of the trading rewards ($800,000) to high-performing traders to incentivize profitable trading.

To attract trading volume and liquidity, dYdX Chain also offers trading fee discounts. 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 trade through various wallets and can also deposit via networks such as Arbitrum, Optimistic, and Avalanche. With Circle issuing native USDC through Noble, the deposit process on dYdX will become more convenient. In the dYdX Chain environment, the market order trading experience is smoother.

Conclusion

As a leader in the decentralized Perpetual Futures market, dYdX continues to solidify its market position. Since its launch, dYdX Chain has demonstrated stronger competitiveness than the v3 version, with recent trading volume surpassing that of v3.

The dYdX Chain has achieved full Decentralization, including the front end and matching engine. In particular, the highly anticipated trading fees have been fully allocated to DYDX stakers and validators. Currently, a series of incentives are driving the growth of v4 trading volume, such as Maker rebates, trading rewards, and performance bonuses, which are expected to further enhance the trading volume and open interest of the dYdX Chain.