As a Layer-2 decentralized exchange, dYdX leverages Ethereum smart contracts to create various types of crypto-asset financial products. DYDX is the name and ticker symbol of the governance token of the dYdX exchange.
This open trading platform supports perpetual swaps and margin trading as well as borrowing and lending with advanced trading features to ensure fast execution, security and transparency. The exchange also offers programmatic trading and helps traders build their trading bots on dYdX.
In 2020, the fully noncustodial protocol also implemented a Layer-2 scaling solution (ZK-Rollups) by partnering with blockchain-technology developer StarkWare. With this partnership, the perpetual contracts on the exchange are powered by StarkWare's scalability engine, StarkEx. As a result, with 25 times more buying power, traders no longer have to pay fees to miners for each transaction.
The StarkWare and dYdX integration helped bring more trading pairs onto the exchange, allowing traders to increase capital efficiency and trade with lower margin requirements.
The liquidity of the dYdX exchange is mainly due to staking pools. dYdX has two types of staking pools, namely safety and liquidity pools. Both provide liquidity and allow the creation of new markets on the Layer-2 protocol.
Users continue to receive staking rewards in proportion to their share in the pools. The platform also incentivizes long-term holders of DYDX tokens by providing them with trading rewards and discounts.
DYDX price and tokenomics
DYDX has a total supply of 1 billion, which will be distributed over five years. The perpetual inflation rate is fixed at a maximum of 2% per year, enforced via a governance proposal.
All holders of DYDX tokens can participate in the governance process to make necessary changes to the Layer-2 protocol. For example, holders can define staking pool payouts and set risk parameters, adding more utility value to the DYDX token.
50% of the total supply of DYDX tokens will go towards the dYdX community, which includes traders, liquidity providers and stakers. The remaining supply is distributed among past investors and employees of the dYdX Foundation.
The staking mechanism and governance utility of the token has facilitated the growth of DYDX's price.
About the founders
Antonio Juliano is the founder and CEO of dYdX. He started his journey in the world of crypto after graduating from Princeton University with a computer science degree, which landed him an internship at Coinbase.
He started the dYdX decentralized exchange to bring more transparency, improved user safety, and faster trading transactions. Juliano felt a lot of demand for margin trading and pushed it as a use case for dYdX.
dYdX has raised a total of $87 million over four funding rounds. On June 15, 2021, dYdX raised $65 million during a Series C round led by Paradigm. The previous funding round in January 2021 helped raise $10 million, the lead investors being Three Arrows Capital and Defiance Capital.
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