The team of dYdX — an open trading platform for crypto assets, has announced the launch of a new and improved version. Central to this announcement is that the brand new product has now entered Alpha on mainnet, with the public launch soon to come.
The new dYdX supports:
- Trading on margin with up to 4x leverage through custom, non-tokenized, positions
- Borrowing and lending, with no minimums or lock up periods
- Management of user’s portfolio of assets and positions
Background
Last year, the dYdX team made an important decision to build user-facing products in addition to the base protocol layer. In their view, this was the best way to generate usage of dYdX and better onboard users into open finance.
Their first product, expo, allowed users to go short or get leverage by buying into tokenized margin positions. Since expo’s launch in October, $10 million+ of volume has flowed through expo/dYdX.
Over this time, the dYdX team continuously gathered feedback from users and others in the open finance community.
These are some of the most important the team learned:
- Crypto margin traders are sophisticated and want more advanced features
- Users want to borrow and lend assets directly
- Users often value using many different assets to collateralize positions
- Liquidity is critical
“With this new version of dYdX, we are excited to launch a product that meets these needs and is a one-stop shop for lending, borrowing, and margin trading crypto assets.”
The Product
- Margin Trading – On dYdX, users can enter into custom short and long positions with leverage up to 4x. While margin trading on dYdX, funds are automatically borrowed from lenders on the platform. dYdX integrates with the most liquid decentralized exchanges so users can trade without ever having to leave the platform. Collateral used to secure margin trades continuously earns interest, making sure you get the maximum yield on your capital.
- Lending – With dYdX users can easily earn passive income on their crypto holdings. Any funds deposited to dYdX will continuously earn interest. Funds can be deposited and withdrawn at any time. Interest rates are automatic and dynamic, so users will always earn market rate without ever having to worry about setting specific interest rates.
- Borrowing – Users can use dYdX to borrow funds directly to their Ethereum wallet. Any supported asset can be borrowed so long as they maintain a 1.25x initial / 1.15x minimum collateral ratio. Borrowed funds can be used for anything, including as working capital, or trading on third-party exchanges.
- Performance Tracking – dYdX makes it easy for users to track portfolio performance over time. The entire value and history of users positions, borrow, balances, and trades is displayed on the site so users will always have an up to date view of their holdings and performance.
What assets will be supported?
dYdX will initially support the ETH-DAI market. In the near future, it will add additional markets with reasonable liquidity.
The Protocol
To power the new product, the DyDX team built entirely new smart contracts that are both simpler and more powerful than the V1 contracts that powered expo. The new smart contracts have been audited by both Zeppelin Solutions and Bramah Systems, and no significant security issues were found.
The protocol is completely open to anyone to build on. The product that has been built is just one of many that can be built on top of the underlying protocol. The team also built a fully featured Typescript library, which makes it easy to interact with the new dYdX protocol contracts.
dYDX says it will be open sourcing the new smart contracts and Typescript library, as well as releasing the security audit reports alongside the public release of the product.
What does this mean for expo and Margin Tokens?
Expo and Margin Tokens will continue to exist for the foreseeable future. dYdX continues to believe that one of the major benefits of Margin Tokens is interoperability across exchanges. Exchange adoption is a long term play however, and most users of margin tokens were traders coming to expo directly.
For these users, dYdX saw several limitations with Margin Tokens:
- Inability to enter at a specific custom leverage
- Margin calls / liquidations occur for the entire position which limited the maximum size of the tokens
- Limited by the predetermined start and expiration dates
As such, while expo will continue to operate, the team says that it expects volume to move from expo and toward dYdX over time.