The Rise of dYdX Chain: The New Dominator of Decentralization Perpetual Futures

The competition in the decentralized perpetual contract market is becoming increasingly fierce, and dYdX still firmly occupies the leading position in the industry. Recent data shows that its trading volume is far ahead of its competitors.

The data platform shows that as of January 24, 2024, even when only considering data from Layer 2 networks, the trading volume of dYdX far exceeds that of other derivatives protocols. It is worth noting that the trading volume of dYdX v4 is already comparable to that of v3, and with various incentive measures in place, its potential may be even greater.

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dYdX v4, also known as dYdX Chain, was officially launched on October 26, 2023. This release enables full decentralization, including the order book and matching engine, while beginning to distribute transaction fees to stakers of DYDX tokens.

dYdX Chain: A new chapter in full decentralization

dYdX is a leading decentralized Perpetual Futures exchange, founded by Antonio Juliano in 2017. From its initial margin trading protocol to the efficient order book-based trading system today, dYdX has continually innovated, surpassing a total trading volume of $1 trillion in July 2023.

As an independent blockchain network, dYdX Chain employs the Cosmos SDK and Tendermint PoS consensus protocol, supporting high performance with 2000 transactions per second. Compared to v3, v4 achieves true comprehensive Decentralization. The front end is operated by the community, the order book and matching engine are managed by globally distributed validators, and the launch of new tokens is also decided through on-chain governance.

Profit Distribution: A Blessing for Stakers and Validators

All fees generated on the dYdX Chain are currently distributed entirely to validators and stakers. These fees mainly include trading fees denominated in USDC, as well as a small amount of Gas fees denominated in DYDX or USDC.

Fees accumulate by block, with an average of one block generated every 1.08 seconds. Users need to manually claim their rewards, but since the main reward is USDC, there is no impact from market fluctuations even if they do not claim in a timely manner.

According to the data, a total of 2.51 million USDC and 126 DYDX rewards have been distributed in the past 30 days. Validators receive a commission of 5%-100%, and users can stake DYDX to active validators through the wallet to earn rewards. There are currently 60 active validators.

In the past 30 days, the daily average staking yield fluctuated between 6.2% and 29.06%, with an average of 14.97%. Currently, the value of staked DYDX is $212 million, remaining stable over the past month.

It is worth mentioning that the hardware wallet has been integrated with the relevant software, and users who use the hardware wallet can also easily perform operations such as staking. In addition, a liquid staking service provider has also launched a liquid staking service of DYDX, providing users with more choices.

A multifaceted approach: Incentivizing dYdX Chain trading volume growth

Official data shows that v4 has surpassed v3 in certain metrics. In the past 24 hours, v4's trading volume was $688 million, while v3's was $546 million; v4 had 635,791 trading orders, compared to v3's 161,337. However, in terms of open contracts, v4 still has some catching up to do.

To promote the development of v4, dYdX has launched a series of incentives. The community has authorized professional bodies to run a 6-month start-up incentive program to distribute $20 million worth of DYDX tokens to early adopters.

The program is divided into 4 phases, and the second phase is currently underway. Users can earn points for trading on dYdX, and DYDX rewards will be issued according to the points at the end of each stage. Each stage is optimized based on the feedback from the previous stage, such as the second stage where performance rewards are introduced to incentivize profitable trades.

In order to attract trading volume and liquidity, dYdX Chain also offers preferential trading fees. The overall fee rate is slightly lower than that of mainstream centralized exchanges, and there are corresponding preferential policies for market makers and takers.

Users can transact and deposit through various wallets and cross-chain bridges. As more infrastructure is improved, the deposit and trading experience on dYdX will be further optimized.

Summary

As a leader in the decentralized Perptual Futures market, dYdX has further consolidated its market position by launching the dYdX Chain. The fully decentralized architecture, reasonable profit distribution mechanism, and diversified incentive measures have collectively driven the rapid development of the dYdX Chain. With the implementation of various optimization measures, dYdX is expected to maintain its leading position in the decentralized derivatives trading field.