DyDx is “cool” and Commands Billions, but is it Overvalued?
DyDx is actively demonstrating a future in which Ethereum won’t be under the choke-hold of scaling issues. The resulting unbridling would open unimagined possibilities, accommodating innovations from the hyper-growth within the Ethereum ecosystem. Trading is gradually being decentralized and migrating to able layer-2 containers for better execution and user experience. DyDx is a crypto derivatives platform presenting several incentives to participants. On the table, traders can margin trade besides accessing other exciting features as you would expect in any other ambitious DeFi protocol. In DyDx, the setup is as a typical DeFi pool. The main difference is the offloading of execution from the base layer to layer-2. This change results in negligibly low Gas fees and lightning-fast settlement. This is the kind of speed you would expect in Binance and experience in Arbitrum or Uniswap on Optimism. Settlement is quick—and this is precisely what the trading community wants to “feel.” However, unlike Binance, a trader won’t have to take a selfie as part of the verification. All that’s needed is a MetaMask wallet, and everything is good to go. Powering DyDx is StarkEx by Starkware using ZK-Rollups—(inaccessible to U.S. users). ZK-Rollups use rollups—just like Optimism—but is not optimistic, meaning that the protocol wouldn’t rely on or trust validators to “act right” and not include a fake transaction in a block. In place of trust is zero-knowledge-proof mathematics allowing for automatic transaction validation—an effective, privacy-enhancing data integrity measure. While a trader could mention BNB or FTT as a reason for sticking with Binance or FTX exchange, the rollout of the DYDX governance token is the game-changer. DyDx Exchange borrowed a leaf from Uniswap—the world's largest DEX. There will be 1 billion DYDX tokens as total supply. Out of which a big chunk will be allocated to the community comprising liquidity providers, active traders, stakers, and other stakeholders—it's DeFi, after all. The fuel depends on community participation. Five hundred million DYDX tokens will then be distributed to early investors, the foundation, the team, consultants, employees, name them all. Like Uniswap's UNI, DYDX will strictly be a governance token where token holders would help shape the project's trajectory. Holding DYDX and surpassing the threshold requirements would allow token holders to achieve utility functions. They can set risk parameters for the layer-2 protocol, vote for the inclusion of new token listing, govern underlying contracts, vote on market makers that can be added to the liquidity pool, or define safety staking pool payouts if there are losses. As they hold DYDX tokens, they will, in turn, receive retroactive mining rewards. However, only active traders qualify, and rewards depend on their activity levels--trading rewards—including trading discounts-- to encourage the use of the trading portal—also depending on trading activity and volumes--and receive liquidity provision rewards. This program will run for five years, during which participants can supply liquidity—provided they meet the protocol's set requirements. All rewards, it should be mentioned, would be distributed after 28 days. DyDx states that the goal is to build liquidity over the long haul steadily. DyDx is offering niceties while not disappointing on their product offerings, a reason why participation has been exploding in recent weeks. As of writing on September 29, DyDx has a TVL of $653 million, rising 26 percent week-to-date and only tracking Arbitrum with over $1.3 billion under management. The protocol's TVL has more than 20X from December 2020—thanks to Layer-2 integration and the introduction of the DYDX token. Besides the rapid expansion in TVL, there are over 40k cumulative traders. Most of them entered the system after August—during which over 8.5k joined. Despite all that DyDx Exchange is offering and demonstrating, DYDX token holders don't receive a share of trading fees—a big concern for one observer. What's more, there is no plan encoded for the DAO to allow fees distribution to token holders; neither is there any other use case nor buy backs of the token. Instead, all fees are distributed between DyDx Foundation and the Exchange. 1/22
I love DyDx as a product, it shows the huge value that onchain perps are going to have. But, I think its overvalued compare to the upside potential of others in the space.
China's push on CEXs was a huge gift to the space, that while up large, I think is just starting. Therefore, while he admits the benefits of DyDx—for instance, its ingeniously crafted liquidity programs--and its position as a leader in Layer-2, DYDX—at spot rates—is over-valued. Accordingly, it might just under-perform competitors, for example, the Perpetual Protocol or the Injective Protocol, which he argues have better rewarding schemes. If you liked this post from Cryptowriter, why not share it? |
Older messages
What Will the Ethereum Upgrade Mean for the Industry?
Saturday, October 2, 2021
The Ethereum Foundation made headlines earlier this year when it announced that the Ethereum Blockchain would transition from proof-of-work to proof-of-stake. Months later, the blockchain has completed
EOS is serving the Underserved Communities of the World
Saturday, October 2, 2021
Just another week in the world of cryptocurrency, and if you have been here for any length of time, you know it's in the pullbacks that we truly discover the projects that have real staying power,
6 Reasons Why the Success of Bitcoin Is Inevitable
Friday, October 1, 2021
No force on earth can stop an idea whose time has come.
DAPP Spotlight: EMANATE!
Thursday, September 30, 2021
DAPP Network's community project spotlight for this week is Emanate! The Emanate team just announced they'll be using DAD's bridge to launch an erc-20 version of EMT on Ethereum. DAD's
Bullshipples: An Uplifting Story
Thursday, September 30, 2021
The Uplift World team put into action a brilliant vision. They dream where few dare. EOSIO's Delegated Proof of Stake opens doors to so very much. Metaverse developers have been waiting for fast,
You Might Also Like
Your bi-weekly crypto insights 📊
Thursday, May 9, 2024
Top data-driven insights from across the crypto space, to keep you ahead of trends. This week's top insight: Use of Axelar's GMP and ITS grew 39000% Flipside Crypto Onchain Insider Your bi-
Biden administration to veto overturning of controversial SEC crypto rules
Thursday, May 9, 2024
The controversial SEC bulletin impacts banks' ability to work with crypto. ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏
What Knowledge Is Required to Become a Web3 Developer?
Thursday, May 9, 2024
Author: Dapplink Translation: Wublockchain Original: https://mp.weixin.qq.com/s/TOFzUSsxODyR73ayGXl_ig 1. Preface With the development of Web3 to this day and the rising market value of industry
Reminder: Chainalysis And Tether Team Up To Combat Illicit Activity
Thursday, May 9, 2024
We bring you the top stories in crypto every week! Stories like... Monday May 6, 2024 Sign Up Your Weekly Update On All Things Crypto TL;DR Chainalysis And Tether Team Up To Combat Illicit Activity
SEC calls Ripple’s proposed stablecoin an ‘unregistered crypto asset’
Wednesday, May 8, 2024
Ripple's CLO Stuary Alderoty said the SEC filing was baseless. ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏
Integrate BTC, cooperate with Pendle and MakerDAO Can Ethena become a new generation of stablecoin?
Wednesday, May 8, 2024
Author: defioasis By holding LST and an equivalent amount of perpetual contract short positions, Ethena has created a delta-neutral CDP, pioneering a new chapter in synthetic dollars . The yield on
DeFi & L1L2 Weekly - 🎉 Crypto.com Reaches 100M Users, BlackRock’s BUIDL Becomes Largest Tokenised Treasury Fund
Wednesday, May 8, 2024
Crypto.com hits new milestone with 100 million global users. BlackRock's BUIDL is now the largest tokenised treasury fund. Ethereum devs propose EIP-7702 to enhance externally owned accounts. ͏ ͏ ͏
DeFi & L1L2 Weekly - 🎉 Crypto.com Reaches 100M Users, BlackRock’s BUIDL Becomes Largest Tokenised Treasury Fund
Wednesday, May 8, 2024
Crypto.com hits new milestone with 100 million global users. BlackRock's BUIDL is now the largest tokenised treasury fund. Ethereum devs propose EIP-7702 to enhance externally owned accounts. ͏ ͏ ͏
Holy Grail! We’re live with a $100k prize pool 🏆
Tuesday, May 7, 2024
Swap, borrow, and stake to earn yield and get a chance to win a slice of the massive prize pool. Flipside Crypto Holy Grail! 🏆 Aptos Grail Tournament with $100k in prizes starts today! Keep doing what
US Bitcoin ETFs see record outflows as Hong Kong counterparts thrive
Tuesday, May 7, 2024
Hong Kong spot Bitcoin and Ethereum ETFs recorded significant inflows of more than $300 million last week. ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏ ͏