DYDX In Crypto: Everything You Need To Know

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DYDX offers perpetual trading options for over 35 popular cryptos, such as Bitcoin (BTC), Ether (ETH), Dogecoin (DOGE), and Cardano (ADA). In terms of trading activity and customer base, it is among the biggest decentralized exchanges.

DYDX was founded by Antonio Juliano in August 2017 as a California-based startup. The exchange initially offered margin trading, lending, and borrowing services based on Ethereum layer-1.

The key to understanding how DYDX works is to understand the various trading options available in the market and their major differences. It is necessary to have a self-custody wallet such as a Bitcoin Wallet in order to purchase DYDX.

Futures contracts that never expire, or perpetual contracts, allow investors and users a fixed price to buy or sell indefinitely. As opposed to spot trading, where cryptocurrencies are bought and sold instantly based on market prices. Traditional futures contracts, however, have a time limit on every order, which disappears once the time expires.

DYDX is primarily a decentralized exchange offering perpetual markets that eventually branched out to include spot and margin trading on Ethereum layer-1 and layer-2 cross-margined perpetuals.

How Does DYDX Work?

As opposed to making and accepting loan proposals from different lenders and borrowers, everyone takes part in one “global lending pool.” Since each commodity has its own lending pool governed by smart contracts, you can borrow, loan, and withdraw anytime without waiting for matches or enough funds. How much an asset’s interest rate fluctuates depends on how lenders and borrowers interact, or demand and supply.

Using perpetual futures contracts, also known simply as perpetual contracts, users and investors are able to place a purchase or sell order indefinitely at a predetermined price. The latter differs from spot trading, which involves purchasing or selling cryptocurrencies immediately based on the market rate. A cryptocurrency exchange is not only a digital marketplace, but also a trading platform.Traditionally, futures contracts have a deadline for each order, after which the order collapses automatically. In addition to layer-1 and layer-2 cross-margined perpetuals, DYDX, an exchange specialized in perpetual markets, also offers spot and margin trading on its layer-1 blockchain.

On The DYDX Exchange, You Can Trade Options

The DYDX exchange has four key products: perpetual trading, governance, steak and NFTs.

The DYDX exchange is open for perpetual trading

DYDX’s perpetual trading offers non-expiring contracts for trading open markets. Consequently, investors are able to hold their buy or sell positions indefinitely until the predetermined trade conditions are met. For instance, if a user places an order to sell 1 Bitcoin at $100,000, the order will remain active until Bitcoin reaches $100,000. If an investor wants to terminate the contract, they can pre-close their buy or sell orders.

DYDX Governance And Stakes

DYDX, the governance token for the DYDX protocol, was launched by the exchange about a year after it launched the DYDX platform. DYDX tokens can be earned through trading activities on the DEX – fees and open interest included.

DYDX Non-Fungible Tokens

A new NFT collection named Hedgies is coming out from DYDX, featuring animated hedgehogs designed by Anna and Arek Kajda. DYDX’s NFT collection launched in February 2022 and has since launched 4,200 NFTs.

DYDX Spot And Margin Trading

DYDX offers spot and margin trading on Ethereum layer-1. As of November 1, 2021, the exchange stopped offering layer-1 perpetual products and has since switched over to layer-2 perpetual products.