2020 can be said to be the first year of DEX (decentralized exchange) in the cryptocurrency world. Before that, the niche games in the geek circle suddenly entered the field of vision of ordinary cryptocurrency players. If it is said that Uniswap has opened up the ultimate gameplay of decentralized spot with only more than 500 lines of elegant code, then dYdX is the pioneer and benchmark of decentralized contract trading. Since entering 2020, dYdX’s transaction volume has increased by more than 10 times, and it is about $5 million to $10 million per day.

dYdX is currently the decentralized exchange on the market that can provide traders with the best experience in perpetual contracts, leveraged transactions, and spot transactions. The form of self-custody can completely hand over asset control to users themselves, while asset liquidity Good, low price difference, good depth, a good combination of the security and transparency of decentralized exchanges and the speed and experience of centralized exchanges. dYdX applies a hybrid model, which ensures the security of DEX through a centralized order book, and at the same time has the speed and liquidity of CEX, without worrying about asset loss.

Top founding team and overseas venture capital endorsement

dYdX has long been known and popular in overseas DeFi circles. Its founder, Antonio Juliano, is also a popular figure. Antonio graduated from the world's top university Princeton University with a major in computer science. He used to be a software engineer for Coinbase, the "base camp" of cryptocurrency talents, Uber, a well-known taxi software, and the database MongoDB. This also laid a strong technical gene for dYdX.

Many of the core members of the dYdX team come from well-known companies and universities inside and outside the circle, including Google, Uber, Ripple, Bloomberg, Consensys, Wharton School of Business, University of Pennsylvania, Sharespost, Nerdwallet, Techstars, and digital currency hedge fund BlockTower Capital, etc. .

dYdX was born with a golden spoon in its mouth. In December 2017 and October 2018, it received two rounds of seed financing of 2 million US dollars and 10 million US dollars respectively. The first-line overseas blockchain investment institutions A16Z and Polychain Capital led the round. A16Z has been paying attention to and investing in many excellent blockchain and digital currency companies, including Coinbase, Ripple and so on. In addition, A16Z's first blockchain fund also invested in Facebook's Libra project. Polychain is an investor in star public chain projects such as Nervos, Cosmos, Tezos, and Dfinity, and is also an investor in the famous digital currency exchange Coinbase. Additionally, Dragonfly Capital and Bain Capital also invested. With 19 offices around the world, Bain Capital focuses on alternative investments.

A16Z commented on dYdX in this way: "dYdX is committed to decentralized finance, and the goal is to introduce the security, transparency and inclusiveness of open source software into the financial world." At the same time, Polychain Capital also praised dYdX: "In a trustless way Lending and trading with leverage is a fundamental breakthrough in financial markets. dYdX provides the full suite of technologies to make this a reality."

In addition to the favor of top capital, such as Coinbase founder Brian Armstrong, former Coinbase co-founder Fred Ehrsam, former Twitter vice president Elad Gil, former Coinbase product manager, and now the founding partner of blockchain venture capital fund Scalar Capital Linda Xie , Naval Ravikant, the originator of the equity investment industry, etc. These industry leaders and KOLs also made follow-up investments in dYdX. It can be said that it is a sweet pastry in the primary market.

Build a trustless, open, transparent, and audited smart contract transaction environment

The product mission of dYdX is open, safe and powerful. As a decentralized exchange, it naturally has many advantages that centralized exchanges cannot match.

Recently, the private key management problem exposed by a mainstream centralized derivatives exchange has brought the asset security problem of traditional CEX to the forefront. More and more traders are looking for a better way to protect their assets. In comparison, trading through a decentralized exchange (DEX) is a good choice. The most important private key in the blockchain world is in the hands of the user, and the ownership and control are owned by the user.

dYdX runs on audited Ethereum smart contracts, allowing users to trade quickly and fully control their assets without trusting a centralized exchange. In dYdX, users link their own private key wallets through smart contracts to conduct transactions. The entire exchange will not touch user assets, as long as they keep their private keys. The risks of running away, closing down, hacking and other platforms are reduced to close to zero.

From the perspective of asset management, centralized exchanges require users to use the traditional account password mode to register and log in. Some transactions also require KYC real-name authentication, and the user's assets are completely hosted in the exchange's own chain address, which cannot To be completely open and transparent, asset security issues are prone to occur, and centralized exchanges can even restrict users from depositing and withdrawing assets at will.

Expansion of decentralized exchanges through Layer 2

From the perspective of transaction matching, centralized exchanges often adopt the order book model under the chain, which is fast, but still needs to face the question of not being open and transparent. dYdX's model utilizes a hybrid infrastructure model. The settlement is on the chain, and the audited Ethereum smart contract runs, avoiding the need to trust the centralized exchange. On the other hand, the matching of transaction entrustment books is carried out outside the chain through a low-latency matching engine. This is a nice combination of the security and transparency of a decentralized exchange with the speed and user experience of a centralized exchange.

In 2021, dYdX will cooperate with StarkWare to launch a ZK Rollup Layer 2 system for hybrid margin perpetual contracts to reduce the Gas required for each transaction. These savings will be returned to traders with lower handling fees, which means that transaction handling fees will be reduced accordingly. At the same time, this move will rapidly expand DEX trading volume and trading pairs, provide basically the same functions as centralized exchanges, and increase the security advantages of self-custody.

dYdX also plans to launch many new trading pairs sooner, making it easier for traders to trade the tokens they want to buy or sell when they want. With Hybrid Margin, traders will be able to trade multiple perpetual contracts using a single margin account, greatly improving capital efficiency when trading multiple trading pairs.

Decentralization enables contract transactions

dYdX firmly believes that decentralized perpetual contracts are a major step forward in promoting the entry of institutions and market makers, and are naturally suitable for DeFi. This round of Bitcoin broke through 19,000 US dollars, hitting a new high in the past three years, thanks to the entry of large institutions led by Grayscale Fund. In addition to spot buying and buying, market makers and institutions have already been actively trading perpetual contracts. Because perpetual contracts provide a unique way to hedge risks and price crypto assets, while dYdX offers attractive rebates, they are popular with institutions and market makers. For ordinary users, perpetual contracts provide an easy way to efficiently use existing funds, short or long assets for profit. In short, dYdX can empower traders to better manage risks and allocate funds more effectively. Through the derivatives market, assets on the market can also be priced more reasonably.

At present, the trading volume of cryptocurrency perpetual contracts is twice that of the spot market, and it is still growing rapidly. It is expected that this trend will also apply to the DeFi field, and the transaction volume of decentralized perpetual contracts will quickly exceed the transaction volume of all DeFi spot transactions.

Contract trading especially requires the user's trust in the trading platform, because the user's order and position is a clear sign for the exchange. Regardless of morality and regulations, the exchange can completely profit by manipulating the market, so it is often seen that the transaction Users have criticized problems such as pin insertion.

After combining the attributes of decentralization, the perpetual contract can eliminate some disadvantages of the current centralized contract, such as the user's trust in the centralized exchange - the user cannot understand the specific liquidation mechanism, insurance fund and loss. Through smart contracts, dYdX makes information publicly visible on the chain, which can effectively solve problems related to credibility and lack of transparency.

dYdX enters China and joins two major DeFi alliances, Huobi Global DeFi and Conflux Networks Open DeFi

At present, dYdX has a high degree of discussion in overseas blockchain circles, especially DEX and DeFi circles. dYdX is the first member of Conflux Network's Open DeFi Alliance. First-line media including Coindesk, Cointelegraph, and THE BLOCK have reported on it.

At the same time, dYdX is also actively exploring the Chinese market. Recently, dYdX announced a partnership with Huobi, becoming a member of Huobi Global DeFi Alliance, bridging the gap between East and West, and exploring new products and cooperation opportunities. And, dYdX is establishing partnerships with leading domestic wallets including imToken, Math Wallet and Tokenpocket.

For the convenience of Chinese users, dYdX has set up a Chinese website, and translated its front-end interface and frequently asked questions into Chinese. dYdX is currently actively recruiting the head of the China region to promote the growth of the Chinese market and the construction of the Chinese community.

The next DEX giant is on the rise

The blockchain world is changing rapidly. Over the past year, we have witnessed rapid growth in the cryptocurrency market. In the third quarter of 2020, the daily trading volume of derivatives on centralized exchanges reached 45 billion, which is more than three times that of the spot market. At present, the scale of DEX transactions has reached 500 million, most of which are spot transactions, and the scale of DEX's financial derivatives accounts for 20 million of them. According to the development path of centralized exchanges, the explosion of the DEX derivatives market is imminent. The trading volume of dYdX has already accounted for half of the 10 million, and it has secured the top spot in DEX derivatives trading. The market for decentralized cryptocurrency exchanges still has a lot of room for growth. It is still a blue ocean, and early entrants like dYdX will have the opportunity to become future giants.