DeFi Ethereum

DeFi Project dYdX: Unveils Perpetual Contract Markets with Bitcoin Swaps First

The swap, which will give traders up to 10x leverage on the BTC-USDC market, has started in a private Alpha before eventually being opened up to non-U.S. locales.
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Ethereum’s young decentralized finance sector has proven itself to be promising to date, and decentralized exchange dYdX has earned its place as one of DeFi’s early bright stars. The project is pushing the envelope anew, too, with its fresh Perpetual Contract Markets reveal.

Announced on Monday, April 20th, the dYdX project rolled out the first of these Perpetual Contract Markets as a bitcoin perpetual swap offering. The swap, which will give traders up to 10x leverage on the BTC-USDC market, has started in a private Alpha before eventually being opened up to non-U.S. locales.

Such perpetual swaps are a kind of derivatives trading and can be understood as futures contracts that don’t have expiry dates. The BTC perpetual swap will give traders access to “synthetic exposure to BTC” without a set expiration, the dYdX team said.

Toward New DeFi Horizons

dYdX’s launch of Perpetual Contract Markets and its flagship BTC-USDC market is significant for several reasons.

To start, this bitcoin perpetual swap offering is only the first of more to come via dYdX if things continue to proceed as planned for the project. The protocol’s new markets system will “enable trading of any non-Ethereum based asset,” so coming swaps won’t be limited to just cryptoeconomy assets. That’s a fertile dynamic for future upside in and of itself.

Beyond being open to all assets, the new Perpetual Contract Markets system also has big potential since the perpetual swaps are already a bustling arena within the cryptoeconomy, dYdX founder Antonio Juliano said:

“Perpetuals are the most widely traded product in all of crypto with daily trade volume in the billions of dollars, eclipsing spot trading volume in 2019 as the most popular way to gain crypto price exposure … This is a significant step for dYdX and a launch we’ve been building towards for many months. We believe decentralized perpetuals are a big step forward for the industry, and are a natural fit for DeFi.”

Moreover, Juliano highlighted more benefits on launch day, too. The dYdX founder added that the new decentralized perpetuals system could not only bring newfound transparency to the perpetuals sector, but also much more in the way of sheer margin possibilities:

“Perpetuals open up a world of trading possibilities that are currently not available in DeFi. Now any asset, not just those based on Ethereum, can be traded on DeFi … Perpetuals give users an easy and capital efficient way to get leveraged long or short exposure. We expect this trend to apply to DeFi as well, and for the trading volume of decentralized perpetuals to quickly surpass all spot DeFi trading volume.”

dYdX Continues to Advance

The dYdX team has had the hot hand in recent months.

Data from Ethereum data dashboard Dune Analytics shows that the the DEX — which notably offers margin trading, derivatives, and lending services — achieved between nearly a third and nearly a half of the entire market share of DEX activity on Ethereum in the early days of March 2020.

That advance would be impressive for any DEX platform, so it’s certainly impressive for dYdX since it’s currently only the 7th largest DeFi project according tracker site DeFi Pulse. The DEX seems to be punching above its weight lately, as it were.

Moreover, last fall U.S. crypto exchange giant Coinbase announced that its USDC Bootstrap Fund — an initiative aimed at investingt directly into DeFi platforms via USDC, a dollar-pegged stablecoin — had invested $1 million USD worth of liquidity into dYdX.

The liquidity injection was a major stamp of approval from Coinbase and was followed up with the Coinbase Wallet team directly integrating support for dYdX in the exchange’s flagship wallet app.

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William M. Peaster is a professional writer and editor who specializes in the Ethereum, Dai, and Bitcoin beats in the cryptoeconomy. He's appeared in Blockonomi, Binance Academy, Bitsonline, and more. He enjoys tracking smart contracts, DAOs, dApps, and the Lightning Network. He's learning Solidity, too! Contact him on Telegram at @wmpeaster

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