What Is dYdX (DYDX)?
DYDX is the native token of the decentralized crypto derivatives exchange (DEX) that goes by the same name – dYdX. Check out the dYdX price chart above if you're interested in the current DYDX price.
dYdX takes a two-layered approach. On Layer-1 (based on Ethereum), dYdX is a liquid DEX that provides users with the options of crypto margin and spot trading with up to 5x leverage. However, on Layer-2 (based on StarkWare), dYdX offers perpetual contract trading with up to 25x leverage.
Simply put, margin trading enables traders to borrow more crypto assets using their funds as collateral for purchasing or selling than they could do solely with their funds.
Perpetual contracts, on the other hand, are essentially futures contracts that allow investors to place a buy or sell order at a predetermined price without an expiration date. Cross-margin perpetual trading offered by dYdX enables users to repurpose their funds and add liquidity to open trades.
The main difference between dYdX's isolated margin and cross-margin trading is that cross-margin makes use of all the assets a trader holds on the platform. In contrast, isolated margins allow users to assign specific funds in the account as part of a trade.
Besides, dYdX provides users with lending and borrowing services. By depositing their assets into specific lending pools, lenders are able to generate passive income. Borrowers can use their funds as collateral to borrow any asset that is offered in these pools. dYdX ensures that borrowers always have enough collateral in their accounts to provide security for lenders.
To increase the scalability of the second layer, dYdX utilizes Starkware's StarkEx zero-knowledge rollups. StarkEx is a STARK-powered scalability engine for crypto exchanges. It leverages cryptographic proofs to verify the legitimacy of batched transactions. StarkEx enables dYdX to reduce minimum trade sizes on the protocol, speed up transactions, get rid of gas expenses, and minimize trading costs.
How does it work? Simply put, while validating a group of transactions off-chain, the technology receives proof. The blockchain's smart contract uses these proofs to validate them before sending them back.
The Founder of dYdX
Antonio Juliano founded dYdX in 2017. However, the platform was released to the public only in 2019. Juliano is a programmer and an entrepreneur who has a degree in computer science. Prior to founding dYdX, he worked at Coinbase, Uber, and MongoDB as a software engineer.
The Purpose of DYDX Tokens
DYDX is the utility token of the dYdX exchange. The main use case of the token is governance. DYDX crypto asset holders are able to participate in the decision-making processes considering the further development of the protocol.
Furthermore, DYDX also acts as a reward token. This includes trading rewards, retroactive rewards, and liquidity provider rewards.
Besides that, whenever users trade on the dYdX exchange, they are able to receive discounts on trading fees based on the amount of DYDX coins they hold.
Lastly, DYDX tokens can be staked in the Safety Module pool, which provides safety for the platform. Stakers earn additional rewards for their contribution.
The DYDX price is subject to change, so keep that in mind if you're thinking about purchasing DYDX tokens. This occurs because the volatility of the entire cryptocurrency market has an impact on DYDX, just like it does on the pricing of other digital assets.
Tokenomics of DYDX
DYDX is a deflationary token because it has a max supply of 1 billion tokens. This means that over time, the dYdX price is expected to increase. All of the tokens are already minted. The tokens will gradually enter the circulating supply over the course of five years, starting on August 3rd, 2021.
Half of the DYDX token supply is dedicated to the community, which includes various rewards, a liquidity staking pool, and a community treasury. The remaining tokens are distributed between investors, founders, employees, advisors, and consultants.
The Initial Coin Offering (ICO) for dYdX was held in September 2021. During this time, the DYDX price was highly volatile, ranging between $12-$26. In general, dYdX tends to follow the bearish and bullish market trends set by major cryptocurrencies. It was one of the many crypto assets that were negatively impacted by the market crash in May-June 2022.
If you're interested in the current DYDX price, you can take a look at the dYdX price chart above.