dYdX – the permissionless margin trading platform – just announced it’s first set of decentralized perpetual contracts, starting with the BTC–USDC pair with up to 10x leverage.
1/ Today we're excited to announce that the most popular trading product in all of crypto is coming to dYdX.
Introducing Perpetual Contract Markets on dYdX…
??BTC/USDC with up to 10x leverage!??
Sign up for early access to our alpha + learn more:https://t.co/yme27bsRCw
— dYdX (@dydxprotocol) April 20, 2020
For those unfamiliar with futures contracts or the perpetual nature in which there is no settlement date, here’s a great overview from the BINANCE Academy.
This comes as major news to the sector leading DEX, lending and margin product as access to perpetual Bitcoin margin in an entirely decentralized fashion is something the market has yet to see to date. While there are other centralized exchanges offering similar services, they all require KYC and rely on a counterparty for trades to be processed and collateral to be custodied.
With dYdX, this whole process happens using smart contracts – largely providing users with transparency that centralized providers lack.
“Decentralized Perpetuals augment the value proposition of existing perpetual products. Smart contracts exist to solve problems around trustworthiness and lack of transparency. These are two of the biggest problems with current implementations of perpetual contracts where users have no visibility into liquidation mechanisms, insurance funds and socialized losses.”
What’s To Know?
Here are some of the major elements of dYdX’s perpetual markets to keep in mind.
- They trade on a separate market, with a separate native order book to the existing spot markets on dYdX
- Perpetual trading occurs in a separate account from margin trading. BTC-USDC perpetual accounts are margined and collateralized separately to existing dYdX margin accounts.
- Trading will be possible via the existing dYdX app or programmatically through their APIs / trading clients.
As for the parameters of the trading pair itself:
- Maximum leverage: 10x
- Initial margin requirement: 10%
- Maintenance margin requirement: 7.5%
- Fees: -0.025% Maker, 0.075% Taker
- Funding: Funding payments are made every second according to a rate that is updated hourly.
- On-Chain Liquidtions using the Maker BTCUSD Oracle V2
- Contract loss seeded by dYdX and funded by a percentage of liquidation fees
The Bigger Picture
Outside of the BTC-USDC trading pair, dYdX will slowly be rolling out a suite of other perpetual contracts including ETH-USDC and DAI– USDC in the coming year. Beyond these support pairs, this primitive enables DeFi to access to margin trading on any non-Ethereum based asset in a decentralized fashion.
The launch of these contracts comes at a perfect time for the SF based company as they’re currently experiencing the highest amount of volume and activity since launch. All of the contracts have been audited by OpenZeppelin here and more details on the technical design of the contracts can be found here.
7/ We recently crossed one billion dollars in loan originations on dYdX and over half a billion in total volume traded since we launched native markets in Oct 2019.
With the launch of our BTC Perpetual, we’re incredibly excited for our next milestone.
— dYdX (@dydxprotocol) April 20, 2020
What’s important to note here is that with tools like dYdX, DeFi is quickly consuming the most valuable aspects of the wider cryptocurrency ecosystem and offering them in a decentralized (and most often permissionless) fashion. While dYdX perpetual contracts are currently unavailable to US users, the broader implications of 10x leverage on Bitcoin in a non-custoidal fashion is one worth talking about.
More so, in tandem with the recent launch of products like Atomic Loans, it’s quite obvious that Bitcoin’s potential is slowly becoming more and more accessible to the vast nature of DeFi comparability.
In the coming months, we’ll be keeping a close eye on dYdX and are excited to share any meaningful updates with you right here at DeFi Rate.
If you’re interested in using dYdX’s newly launched BTC-USDC contracts, sign up for early access here.
That said – let’s dive into how interest rates have changed in the past week!
Cooper is the Editor of DeFi Rate. He is an ambassador of Set Protocol and an active contributor to MetaCartel where he seeks to find emerging consumer-facing applications that propel the Ethereum ecosystem. He often works with projects as the Director of Fitzner Blockchain Consulting where he coauthors the weekly publication Token Tuesdays.
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