DeFi Platform, dYdX, Launches The First Ever Decentralized Perpetual Contract Market, Start off With BTC-USDC

  • Decentralized exchange, dYdX, launches perpetual contracts on the platform. The DEX new derivatives product will settle non-Ethereum based cryptocurrency assets.
  • Bitcoin (BTC) pair with Circle’s USDC is the first pairing on the exchange.

In an official announcement on Medium, Antonio Juliano, dYdX Founder, unveiled the decentralized exchange will launch the first-ever perpetual contracts on the platform. The contracts will allow users to trade any pair of non-Ethereum tokens with an alpha testnet set up for private users on the BTC/USDC pair.

Bitcoin perpetual contracts have taken over the crypto market scene since launch by centralized crypto exchange, BitMEX in 2014. Since, the field has grown exponentially with other centralized exchanges such as Binance taking up a larger market share in volume traded in the past few months. Can the launch of the derivatives spark a new rush in trading on decentralized platforms?

dYdX launches first-ever perpetual contracts on its DEX

Perpetual contracts offer the trader exposure to Bitcoin with no fixed expiration date on the contract. The dYdX perpetual contracts will allow traders up to 10X leverage on their position on the contracts. The contracts are cash-settled with the first stablecoin pair on the platform BTC/USDC being settled in Circle’s USDC stablecoin. The post reads,

“The BTC-USDC Perpetual will offer 10x leverage on BTC (long or short) with no expiry, and settlement and margining in USDC. A periodic funding rate paid between longs and shorts keeps the contract price tethered to the underlying.”

The contract will have an initial margin maintenance requirement of 10% with the maintenance margin set at 7.5%. The perpetual contract market will chop off 0.025% of the maker’s fees and 0.075% of the takers.

The open finance platform raised its series A funding round in 2018 raising $12 million led by Andreessen Horowitz ‘a16z’, 1 confirmation and a16z’s child, Polychain Capital. The latest addition is expected to be a big boost in the adoption of DEX trading in comparison to margin or spot trading. On the funding rate, the post reads,

“Funding payments are made every second according to a rate which is updated hourly. The funding premium is scaled so as to have a realization period of 8 hours.”

DEXes perpetual contract differences with centralized exchanges

You may have noticed the low fees charged for trades above compared to centralized exchanges. However, this is not the only difference that dYdX is aiming to bring about in perpetual contract trading. The platform will have a publicly auditable insurance fund and deleveraging that occurs will be public and auditable on-chain. dYdX head of strategy and business operations, Zhuoxun Yin, explained,

“On centralized exchanges, the exchange does the liquidation. On dYdX, any account may liquidate any other account that is liquidatable. The fact that anyone is able to perform the liquidation, and it is verifiable on-chain, means that it is quite different from centralized exchanges.”

dYdX recently reached a total of $1 billion in loans originated from the platform showing growth in the Defi space. The total volume locked (TVL) on dYdX has soared almost 40% in the past 90 days to slightly above $22.8 million.

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