dYdX is a decentralized derivatives trading protocol deployed on the Ethereum network, created by Antoni Juliano in August 2017. The core team comprises software engineers from prominent crypto companies like Coinbase.
Key Features of dYdX
Governance Token ($DYDX):
- Grants voting rights and transaction fee discounts based on holdings.
- Staking rewards available through the security pool.
Order Book Model:
- Mimics traditional centralized exchanges, offering diverse order types and liquidity.
- Supports perpetual contracts with up to 20x leverage and customizable slippage.
Institutional Liquidity:
- Designated market makers ensure robust liquidity, incentivized by allocated $DYDX tokens.
Why dYdX Stands Out
Layer-2 Integration:
- Utilizes a hybrid on-chain/off-chain order book for efficiency, lowering barriers for traders and market makers.
- Attracts institutional investors familiar with traditional trading mechanisms.
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Fee Structure
Maker-Taker Model:
- Maker fees: 0–2 bps | Taker fees: 2–5 bps (waived if 30-day volume < $100K).
Discounts:
- Up to 50% off fees for $DYDX/$stkDYDX holders.
- Fees retained by the dYdX Foundation (not distributed to token holders).
Future Roadmap: dYdX v4
Full Decentralization:
- Transitioning from Starkware to dYdX Chain, a Cosmos-based blockchain.
- Goals: Decentralized order book/matching engine and high throughput.
Note: Current AWS-hosted matching engine limits full decentralization.
FAQ Section
Q1: Is dYdX fully decentralized?
No—its order book and matching engine rely on AWS, but v4 aims to resolve this.
Q2: How does dYdX incentivize liquidity?
Through designated market makers and $DYDX token rewards.
Q3: What’s unique about dYdX’s fee model?
It offers volume-based waivers and holder discounts but doesn’t share fee revenue.
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