dYdX Becomes Largest DEX by Trading Volume Thanks to BTC Derivatives
Also, DXdao raises more than $1M in fundraiser, Idle Finance upgrade, tBTC bug update.
Hello Defiers! Yesterday, centralized crypto has a horrible day with BlockFi leaking users’ information (something that just can’t happen in DeFi because users control their data), while BitMEX was down. But DeFi kept growing. Here’s what’s up:
- dYdX’s BTC perpetual swaps are surging
- DXdao’s Decentralized fundraiser crossed $1M mark
- Idle Finance upgrades platform
- Keep releases details of tBTC pause
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dYdX’s BTC Perpetual Swaps are Mooning
DeFi traders are snatching up dYdX’s BTC derivatives, pushing the non-custodial trading platform to surpass Uniswap and become the leading decentralized exchange by trading volume.
Volume for BTC perpetual futures contracts, which launched in April, surged by almost seven times to a record of $13M in daily volume yesterday, up from last week’s record of $1.9M. Total volume on dYdX reached $16M yesterday, or about $5M more than value trading hands on Uniswap.
dYdX is one of the first DEX’s to offer BTC contracts for Ethereum’s growing DeFi ecosystem. Perpetual contracts have been popularized by centralized exchanges, allowing users to gain synthetic exposure to Bitcoin and other major crypto assets without an expiration date. BitMEX traded over $2.2B in daily volume and roughly ~$82.5B in monthly volume according to their ecosystem report in January, making perpetuals one of the most popular assets in crypto markets. Judging by dYdX’s early success, they’re on track to become the most popular assets in decentralized markets too.
dYdX’s perpetual trading offers 10x leverage on BTC (long or short) with no expiry, and with settlement and margin in USDC.
Centralized exchanges dwarf dYdX and other DEXs in terms of volume ––ranked against centralized crypto exchanges, dYdX would come in 21st, right after Gemini. But the growth in dYdX’s perpetual contracts shows the increasing interest in DeFi protocols and products at large.
(Above) dYdX BTC Perpetual Swap Volumes. Data via Dune Analytics
dYdX and Uniswap are dominating the DEX sector. The next closest competitor is Kyber and IDEX with $2.7M and $2.1M, respectively.
(Above) Ethereum DEX volumes via DeBanked
While dYdX’s volumes have surged in the past few days, the platform has also seen significant, steady increases in trading over the course of the year. In January, dYdX’s average daily volume stood at roughly ~$834K. Fast forward to April and daily volume for the platform averaged nearly ~$4M, or an increase of almost 5x in less than four months.
Even though dYdX currently leads trading volumes, Uniswap is still outpacing the platform in terms of annualized earnings. According to Token Terminal, dYdX is on track to reach around $2.25M in annualized revenue (which is directed to the platform’s development company) while Uniswap is estimated to hit $4.7M in earnings for liquidity providers. This is followed by Kyber and 0x - the two other major liquidity protocols - as they’re projecting to reach $2.20M and $1.08M in annualized earnings, respectively.
For reference on how trading fees compare across major DEXs, Uniswap charges a fixed 0.3% trading fee, dYdX charges 0.15% - 0.50% for takers —with 50% off on trading fees for perpetual contracts until May 20, which could in part explain the high volume— while Kyber has reserve contributors paying a 0.25% fee and 0x fees are proportional to the gas price paid by the trader
(Above) dYdX Average Daily Volume and Projected Annualized Earnings. Data via Token Terminal
The perpetuals boom is just getting started. Following BTC’s successful launch, the exchange plans to add ETH and Dai contracts, according to dYdX’s website.
If you’re interested in trading dYdX’s BTC perpetual swaps, our fellow Defiant Contributor - DeFi Dad - released a great tutorial on how to get started.
Matteo Leibowitz @teo_leibowitztruly absurd numbers coming out of @dydxprotocol BTC perp swap market what does this mean for BTC itself? https://t.co/faGK0CYUls5:56 PM ∙ May 19, 2020
DXdao Fundraiser Just Surpassed $1 Million
DXdao, an organization which has no hierarchy and is communally owned by more than 600 Ethereum addresses, yesterday crossed the $1 million mark in a fundraiser.
The contract now holds 4.9k ETH, or over $1 million, according to Etherscan. While decentralized autonomous organizations have successfully raised money before, this is the first time a DAO is raising money for its own projects, and not to invest in other ventures.
Image source: Etherscan
The sale of DXD tokens, which started in April, is open to anyone with an Ethereum address and the organization doesn’t ask for any of the buyers’ information. The whole process is automated: the price is set according to a math function known as a linear bonding curve and tokens are issued in exchange for ETH sent to the contract.
Tokens come from a reserve of 100k DXD, which has been pre-minted and vest over the next three years. 10% of funds raised are held in a separate reserve to make sure there’s enough liquidity for buyers who want to sell their DXD, which means anyone who buys DXD can immediately cash out.
DXdao wants to remove the last centralized pieces in DeFi. The space is already pushing the boundaries of how organizations are run and is trending towards community governance, with token-based voting mechanisms so users can have a say on decisions and even propose major changes. But they usually have a Foundation or company behind it, which leads development and is responsible for the overall roadmap and vision. DXdao has no foundation, company, or team with fixed roles.
Image source: dxdao.eth.link
Its mission is to develop DeFi products. Members propose what those products should be, vote on proposals, and hire out developers to build them. It already has three such projects under its belt: a portfolio manager (Mix.eth), a prediction market (Omen.eth), and a decentralized exchange (Mesa.eth).
Token holders are entitled to a portion of the projects’ revenue, which will be paid out in something like a dividend. This would probably set off regulators’ alarm bells, but with an unknown jurisdiction and mostly anonymous members participating in decentralized governance —even its website is decentralized— it would be interesting to see how they’d go about cracking down. For now, it’s still thriving in the most decentralized edge of DeFi.
Idle Finance Upgrade Increases User Control Over Funds
Idle Finance, which automatically allocates user deposits across a number of lending protocols, has upgraded to give users more control over how their funds are invested.
Idle now consists of a smart contract architecture that allows users to separately store funds, submit new allocations, and granularly manage different lending protocols. The non-custodial protocol is also implementing a risk-adjusted strategy, which automatically changes the asset allocation according to risk scores and yield.
The yield aggregator also added dYdX and MakerDAO DSR to the protocol where funds can be directed, and included the USDT stablecoin.
Keep Releases Details on tBTC Deposit Pause
Keep Network released details of the bug which caused it to pause tBTC, an Ethereum token representing BTC deposits. The communication between the Ethereum and Bitcoin chains was broken, and because of that, users of the system weren’t able to redeem the collateral they had posted. “The issue itself was rooted in the process that proves a redemption transaction has in fact gone through on the Bitcoin chain,” the team wrote in a post today.
The Crypto Price-Innovation Cycle: a16z
“Even though crypto cycles look chaotic, over the long term they’ve generated steady growth of new ideas, code, projects, and startups — the fundamental drivers of software innovation. Technologists and entrepreneurs will continue to push crypto forward in the coming years. We are excited to see what they build,” Chris Dixon and Eddy Lazzarin wrote.
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The Defiant is a daily newsletter focusing on decentralized finance, a new financial system that’s being built on top of open blockchains. The space is evolving at breakneck speed and revolutionizing tech and money.
About the founder: I’m Camila Russo, a financial journalist writing a book on Ethereum with Harper Collins. (Pre-order The Infinite Machine here). I was previously at Bloomberg News in New York, Madrid and Buenos Aires covering markets. I’ve extensively covered crypto and finance, and now I’m diving into DeFi, the intersection of the two.
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