What Is (DYDX)? dYdX Cryptocurrency Supporting Perpetual Trading - Altcoins of Interest
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Summary:
- How does dYdX work?
- A look into what a perpetual cryptocurrency trading exchange is.
- Advantages of investing in the dYdX crypto exchange.
- Past and future price performance.
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dYdD is a decentralised trading platform that is used for cryptocurrency margin trading.
Dydx is a decentralised trading platform that is used for cryptocurrency margin trading for assets such as ETH, BTC, SOL, DOT and more. The bulk of the trading happens on the Ethereum blockchain, however, with the recent launch of layer 2, the Dydx exchange can be used for inexpensive, instantly settled trades. Dydx has successfully filled a niche market in the world of cryptocurrencies.
Since the launch of this platform in September 2021, they have added many features, including lending and borrowing services to decentralise the trading experience. The exchange has a market cap of $258.2 million, a circulating supply of 65569295 with a max of 1 billion.
dYdX is a leading crypto exchange that supports perpetual trading.
Dydx is a leading crypto exchange that supports perpetual trading. It trades on the ethereum block chain using smart contracts and no intermediaries.
Perpetual trading on cryptocurrencies are financial derivatives that enable traders to bet on crypto asset price movements, using leverage without owning the underlying asset. Some advantages of using this method are:
- Increased flexibility of trades by allowing both long and short trades.
- Increased leverage.
Dydx is aiming at trading for everyone. They are building an open platform for crypto financial products, which is powered by the Ethereum blockchain.
dYdX works in the following way:
The creation of smart contracts has allowed for cryptocurrency exchanges to create decentralised liquidity pools, collateralisation and lending across popular protocols like Uniswap, Sushi and Compound.
dYdX took all of the best decentralised financial technologies and combined them to form a first-of-its-kind cryptocurrency derivatives exchange using crowd sourced liquidity only. To explain this concept more, it means that when you deposit collateral to open a leveraged trading position, you are borrowing from a decentralised liquidity pool that is funded entirely by other traders.
Dydx Layer 1 blockchain:
Layer 1 is a highly liquid, decentralised exchange for both crypto margin trading and for spot trading. On this layer it is possible to leverage up to 5x your position. As long as users collateralise correctly, it is fast and efficient to borrow funds for your positions.
dYdX claims to have built the fastest and most powerful decentralised exchange ever through their layer 2 blockchain.
Advantages of layer 2:
- No gas cost and lower fees: when users deposit to layer 2, the user will no longer be required to pay fees to miners.
- Fast withdrawals: layer 2 does not have a waiting period to withdraw funds.
- Security and privacy: increased security and privacy via zero-knowledge rollups*.
- Very fast: trades are instantly executed and confirmed on the blockchain within hours.
- Mobile friendly: can be used on any device thanks to upgrades.
- Cross-margining : users are able to access leverage across positions in multiple markets from a single account.
- USDC collateral: dYdX allows users to provide USDC as collateral in their trades.
*Zero-knowledge rollups is a Layer 2 scalability solution that allows blockchains to validate transactions faster whilst ensuring gas fees remain low.
How to trade perpetually with Dydx:
- Download the dYdX trading app and open it.
- Connect your crypto wallet to the app.
- Deposit funds into the wallet and then select the “trade” option.
- Open a trading position with selected leverage and limits.
- Use the app to track your position's performance.
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The dYdX token, the platform gives dYdX tokens to its users in the form of generous rewards.
Advantages of the dYdX token:
- dYdX liquidity staking pool: this feature is important for keeping the exchange alive and financially supported.
- Trading rewards: it is possible to earn dYdX tokens just by trading on the platform.
- Discounted trading fees: if users hold dYdX tokens in their wallet, they can receive a 3% discount on trading fees.
- Governance token: dydx is also used for governance of the protocol, which gives holders voting rights.
PAST, PRESENT AND FUTURE PRICE
When the token was first launched the price spiked and showed promise, since then the price has been on a consistent downward trend. In general the crypto market is volatile, this is shown in the price changes for this cryptocurrency.
Currently with the negative global investor sentiment, the price of cryptos have been falling in general over the past months, which could be a reason this tokens value is currently trading so low.
The coin price is forecasted to increase in the future. In 2022, the price is expected to increase by 78% and is expected to continue on this upward trend for the next 5 years.
dYdx cryptocurrency Price Chart
Sources: academy.shrimp.io. Dydx.exchange, cryptoadventure.com, trading-education.com
