Dydx’s daily volume jumped from about $30 million in July to $450 million in August, then to $2 billion over the past month. The effects of these changes have been staggering. “Tokens can really throw fuel on the fire for growth with a product that already has product-market fit,” says Juliano. Dydx can offer the self-minted currency as the reward, creating a low-cost way to fund incentives. The second big change was that Dydx partnered with a Switzerland-based foundation to launch a Dydx cryptocurrency token, and then aggressively pursued a marketing tactic called “liquidity mining.” That’s a fancy term for offering monetary rewards for people to trade on an exchange. “That's pretty different from what most people are used to in decentralized finance.” “Now you make a trade, and it instantly updates like a normal website would,” Juliano says. With StarkWare, the gas fees are much lower, and Dydx pays them. Before this change, people trading on Ethereum-based, decentralized exchanges often had to wait 60 seconds for trades to finalize, and they had to pay Ethereum “gas” transaction fees of $50 to $100. In April, Dydx implemented a blockchain technology called StarkWare, which dramatically speeds up cryptocurrency transactions made through Ethereum. Two big changes brought on Dydx’s volume spike this year, according to Juliano. After launching them in 2020, Dydx soon grew to trade between $10 million and $30 million a day. Unlike futures, the financial derivatives that have been widely used for over a century, perpetuals don’t have an expiration date. Perpetuals track the price of bitcoin, but they don’t require you to own actual bitcoin.
The next year, it pivoted to focus on “perpetual swaps,” a derivative popularized by Hong Kong crypto exchange Bitmex. Dydx launched in 2018 and let users buy ether “on margin,” meaning they could borrow money through the Dydx platform to buy crypto, a strategy traders use to get additional leverage and maximize their profits (potential losses are magnified, too).īy 2019, Dydx was processing about $1 million a day in transactions. In late 2017, at the peak of the initial coin offering boom in crypto, he landed $2 million in seed funding from Andreessen Horowitz, Polychain Capital and Coinbase cofounders Brian Armstrong and Fred Ehrsam, among other backers. So it seemed like a pretty logical next thing to build,” he says. And then, eventually, people make derivative products on top of an asset that people want to trade. “Then assets are traded on margin exchanges.
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