What Is dYdX? Explaining the Popular Crypto Derivatives DEX

Dy dx exchange

Dy dx exchange

The dYdX Foundation does not directly participate in governance decisions to be made by the dYdX community, including, without limitation, by making and/or voting on governance proposals. The dYdX Foundation may change or complement its analysis or opinions expressed in this post in the future and assumes no obligation to publicly disclose any such change. In summary, GMX has advantages in asset exposure, no funding rate, and a simple trading interface.

Early iterations of the dYdX exchange platform allowed traders basic crypto margin trading capabilities with limited assets. Now, dYdX upped its game by rolling out margin and perpetuals for many cryptocurrencies. It also added lending and borrowing services to decentralize the entire trading experience altogether. DYdX is a decentralized exchange platform for cryptocurrency margin trading for assets like BTC, ETH, SOL, DOT, and more. Using the fast withdrawal process, users can get their funds on L1 much faster by essentially trading their L2 funds to an “LP” account operated by dYdX, in order to receive immediate liquidity on L1. Since the LP must then recycle these funds from L2 to L1 via the regular withdrawal process, dYdX is only able to process a certain volume of fast withdrawals within a given period of time.

dYdX (DYDX) Price

All private endpoints not listed above fall in this category, and must be authenticated via an API key. More info on the cryptography used on L2 is available in Starkware’s documentation. This optimization is only available for the Python client currently.The C++ wrapper methods in the client expect an absolute path to a Shared Object. The insurance fund is the first backstop to maintain the solvency of the system when an account has a negative balance. The account will be liquidated, and the insurance fund will take on the loss. For example, for a market with a 10% initial margin fraction, the impact notional value is 5,000 USDC.

DYdX is a leading decentralized exchange built by developers on a mission to build open, secure, and powerful financial products. DYdX runs on audited smart contracts on Ethereum, which eliminates the need to trust a central exchange while trading. We combine the security and transparency of a decentralized exchange, with the speed and usability of a centralized exchange. Users can earn interest or take loans for a nominal fee as well as trade on margin with custom leverage. GMX is a leading decentralized exchange that offers users both spot and perpetual listings and the ability to leverage, which means they can borrow funds to invest or trade.

Dy dx exchange

In practice, this means that when you deposit collateral to open a leveraged trading position, you’re borrowing from a decentralized liquidity pool funded entirely by other traders. However, exchanges like FTX and Bitfinex allow you to margin trade crypto with advanced derivatives products like leveraged tokens for more adventurous traders. There’s a massive market for crypto derivatives, as evidenced by the daily $50 billion derivatives trading volume on Binance.

In general though, only paying the network fees should be considered as below the global industry average when it comes to fee levels for crypto withdrawals. Prospective investors must not construe the contents of this website/application as legal, tax, investment, or other advice. The use and development of exit strategies/plans by users of the Shrimpy app are not the responsibility of Shrimpy, its affiliates, or partners. Shrimpy and its partners are not financial advisors and do not own or guarantee the success or failure of ANY exit strategy/plan displayed or developed on the Shrimpy app. After you deposit USDC to the protocol, you stake it in the pool to receive stkUSDC.

UNTRIGGERED reduce-only orders are either resized or canceled if the underlying position shrinks or no longer exists. When there are multiple UNTRIGGERED reduce-only orders and the total order size exceeds the existing position, they will be resized/canceled starting from the order that will be filled last. Within the L2 system, authentication is handled by a separate key pair, known as the account’s STARK key pair.

During periods of high volatility in the markets underlying the perpetual contracts, the value of some accounts may drop below zero before they can be liquidated. Since funding payments are exchanged every hour, the dYdX funding rate is usually represented as a 1-hour rate, which represents the return a position may expect to earn or pay every hour. Every time a transfer, deposit or withdrawal occurs for an account, the balance changes. Also, when a position is modified for an account, the quoteBalance changes. Also funding payments and liquidations will change an account’s quoteBalance.


The DYDX token is hugely responsible for the trading platform’s success because it’s primarily used for generous rewards. Earning rewards on dYdX isn’t as difficult as you might think — you just need to participate in the protocol. Until Ethereum gets its act together (i.e., Ethereum 2.0), Layer 2 scaling solutions are the next best home for high-volume DeFi apps like dYdX. That’s why dYdX on Layer 2 features the exchange’s flagship products.

Improving User Support in the dYdX Ecosystem

Also, because this version is built directly on Ethereum, transaction fees and speed are dependent on Ethereum network activity. A crypto perpetual contract is similar, except there is no fixed date specified for the exchange. In other words, you can hold a perpetual contract indefinitely (hence perpetual 😉). The main advantage of trading perpetuals over futures is you aren’t stuck with a loss if the trade goes against you. Instead, you can keep riding the position by funding it, allowing for a potential reversal of fortunes later.

Who is dYdX Built for?

Cross-margining is used by default, meaning an account can open multiple positions that share the same collateral. Isolated margin can be achieved by creating separate accounts (sub-accounts) under the same user. The Layer 1 version of dYdX is a highly liquid decentralized exchange for crypto margin and spot trading. Here, you can use leverage up to 5x on assets like BTC and ETH paired with stablecoins (USDC & DAI).

# Optional if eth_private_key or web3.eth.defaultAccount was provided. All of these steps are supported by the Python and TypeScript clients. See the Python integration tests for an example of onboarding and usage of various endpoints. Oracle prices are equal to the median of the reported prices of 15 independent Chainlink nodes. This formula is chosen such that the ratio V / W is unchanged as individual positions are liquidated. Accounts may only have up to 20 open orders for a given market/side pair at any one time.

Currently that amount is 100 USDC.An additional L1 transaction has to be sent to the Starkware contract to retrieve funds after a slow withdrawal. This cannot be done until the zero-knowledge proof for the block has been constructed and verified on-chain. For the L1 transaction, the Ethereum address that the starkKey is registered to must call either the withdraw or withdrawTo smart-contract functions. The contract ABI is not tied to a particular client but can be accessed via a client. In the event that the insurance fund is depleted, positions with the most profit and leverage may be used to offset negative-balance accounts, in order to maintain the stability of the system.

GMX has gained immense popularity among traders and investors because of its user-friendly platform and advanced features. The ability to trade spot and perpetual contracts with leverage has made it a top choice for those looking to maximize their returns. In this article, we will provide a detailed comparison of Orbits, dydx, and gmx, examining their pros and cons and evaluating their performance in horizontal and vertical dimensions. Whether you’re a seasoned trader or a newcomer to cryptocurrency, this article will provide valuable insights into decentralized exchanges and help you navigate the complex landscape of DEX trading.

For trading rewards, all formula terms will be summed and aggregated across linked addresses, including fees paid, open interest, and stkDYDX. For liquidity provider rewards, all formula terms will be summed and aggregated across linked addresses, including depth/score score, stkDYDX, and maker volume. For each market, the max uptime across linked addresses will be used. Crypto derivatives trading is usually reserved for experienced traders who have honed their craft over time and understand the risks, rewards, and strategies involved.

Fees for perpetuals also use the maker and taker model but are based on the user’s trading volume in the previous 30 days. Fees for other trading actions vary from 0% to 0.10% depending on volume. In any market, using financial products like derivatives lets you achieve superior risk management and open up previously unavailable avenues of potentially lucrative speculation. The benefits are no different in crypto, and the possibilities are blinding. DYdX swats away the heavy hand of a regulated central clearing house to give traders global and equal access while retaining full control of their funds. The staking mechanism offered by the dYdX exchange can become a major reason of interest for both small and large investors who are always on the lookout for making a profit all the time.

As you trade, the platform rewards you in DYDX tokens from a 250 million DYDX token stash. That’s a whopping 25% of the total token supply which shows serious dedication to dYdX users. Even though you can perform simple crypto spot trades on Layer 1 dYdX, that’s not its intended use. In fact, the spot trading function looks built-in just to generate an early revenue stream for the platform but will be phased out later.