In the eight months since the release of the v4 software, the dYdX Chain has come a long way. The team has put in incredible effort towards fixing issues up and down the stack and the dYdX Chain is more reliable and easier to use than ever. The results are tens of thousands of new users and more than $150B in volume. However, reliable UX and feature parity alone are not a recipe for ultimate victory. This begs the question: What is the vision for the dYdX Chain and how does dYdX prevail in an era where perp DEXs are a dime a dozen?
The answer is in doubling down on dYdX Chain’s inherent advantages as the only perp DEX running on a sovereign decentralized app chain.
True decentralization is a trade-off. Developing a decentralized exchange with a trading experience at parity with venues operating centralized infrastructure is a daunting technical task. On the other hand, decentralization unlocks an entirely new theory of victory for dYdX, the major components of which are detailed below.
Trade Anything
dYdX Chain software will support derivatives on any asset you can imagine. Users will permissionlessly launch perps, options, and prediction markets on any underlying asset that has a price on the internet. Meme coins, trading cards, sports games, commodities, and more are all on the horizon . A full-featured smart contracting environment for defining AMM strategies that quote directly on the orderbook will enable liquidity in even the most fringe of assets. The first steps in this direction are visible in the upcoming 5.0 release, which contains the unveiling of a totally new sovereign oracle architecture with unparalleled flexibility, powered by our friends at Skip Protocol.
Sovereign Tokenomics
dYdX Chain is owned by and operated by its community. The software enables powerful flywheels characterized by good friction as the user interacts. Every trade atomically generates trading rewards in the same block. These trading rewards can be tracked and staked directly in the exchange interface which in turn generates staking rewards. When their stake has generated some USDC rewards, users can claim them directly into their trading capital. Any protocol’s stickiest users are those who are directly invested in the protocol’s success.
Social through Transparency
dYdX Chain is transparent by default. dYdX will double down by developing features that lean into the chain’s transparency to enable new and unique experiences. The trading UI will seamlessly integrate discovery of traders with real edge with features that enable following, copying, and studying these traders. The dYdX trade page will become the densest in the industry with analytics on trader positioning, previous trading behavior, and standing order data. Each of these analytics is infinitely explorable as users drill down all the way to individual trader profiles, which form the kernel of a social experience.
These 3 theses collectively form the current theory of victory for dYdX, presented roughly in order of conviction. I’m incredibly excited to execute against the bold vision we’ve laid out.