As decentralized finance continues to thrive in the current market cycle, users increasingly seek out less obtrusive means of trading cryptocurrency. While centralized exchanges must adhere to AML and KYC regulations, decentralized exchanges can exist with more lax rules – by operating only as a facilitator and holding no tokens of their own. To this end, the dYdX exchange and their proprietary token DYDX found success in the space by offering options usually restricted to centralized exchanges.
In the wake of their token launch and the recent re-banning of cryptocurrency in China, dYdX catapulted higher, now trading at over $20 per token. Exchange governance tokens often represent a safer bet than other projects – particularly those that belong to a high-volume exchange. Even beyond that, dYdX appears to be performing above expectations. Surpassing Uniswap in the DEX niche is impressive – and accomplished through providing options that centralized exchange users have come to expect.
What does dYdX Offer?
Built on top of the Ethereum platform, dYdX uses the StarkWare second layer solution to drastically increase their transaction speed, while reducing overall fees. Leveraging the smart contracts available through Ethereum, dYdX allows users to trade at up to twenty-five times leverage despite being non-custodial. This attracts higher octane users than traditional DEX offerings like Uniswap, providing the means for greater profit.
Part of dYdX’s recent success can be directly attributed to the failure of native Chinese exchanges. As China’s crackdown intensifies, centralized exchanges that previously catered to Chinese citizens have banned mainland users – including Huobi and OKEx. As dYdX does not require know-your-customer verifications, Chinese users can ostensibly still access the decentralized exchange.
As part of their governance token launch, dYdX airdropped the new token to platform users. The number of tokens received depended on prior trading volume – with some users receiving over 9,000 tokens. Given the current market value, these power users gained almost $200k each as a result. Such high-value airdrops often signify a road to future success.
Uniswap, the highest-profile decentralized exchange and another Ethereum based system, dropped 400 UNI to prior users in late 2020. At UNI’s all-time high of $44.92, the airdrop represented nearly $18,000 for each user that received it.