Guides to Cryptocurrency Exchanges
dYdX is a cryptocurrency exchange platform that provides margin trading, borrowing and lending of supported assets to its traders. It is powered by smart contracts that run on the Ethereum Blockchain and is reported by its team to be focused on being transparent, open-source, decentralized and accessible to anyone at anywhere.
With dYdX, users can trade without the need to go through a middleman or a centralized exchange and they can earn interest from their cryptocurrencies or margin trading with custom leverage. It is developed by its founder, Antonio Juliano and team to be a non-custodial exchange, meaning users’ funds are either in their wallet or in an Ethereum based smart contract.
Margin Trading: Isolated margin dYdX exchange trading of up to 3x short, 4x long and cross margin trading. Users can trade from their Ethereum wallets with available trading pairs, for example, ETH-USDC, ETH-DAI and UAI-USDC.
Borrowing: ETH, USDC and DAI are currently supported for borrowing directly to user’s wallet on dYdX with minimum 1.25x of starting account collateralization and must be maintained above 1.15x.
Lending: ETH, USDC and DAI are currently supported with minimum loan period and waiting period for matching. Interest accumulates immediately and continuously with every block. Rates are dynamically based on utilization.
There is no dYdX account needed for registration, user connects to dYdX and send transactions to the blockchain by using their Ethereum wallets.
Where to get an Ethereum Wallet?
The dYdX team recommends using MetaMask browser extension for PC use. Users can refer to the following official MetaMask link on how to install it.
For mobile device, users can use Coinbase wallet app.
Officially supported wallets are listed as MetaMask, Coinbase, Ledger and Trezor.
Transactions to the Ethereum Blockchain are powered by Ethereum gas developed as an interface on top of Ether cryptocurrency token, with a certain amount of Ether equivalent to a unit of gas. If users feel transactions are slow when they trade, they can set a higher price-per-gas fee to pay and incentivize miners to confirm their transactions faster. Traders usually pay only a small fraction of a unit of Ether for transactions.
Are Funds Safe?
The dYdX team assured users that there are no central intermediaries to hold their private keys and they (the users) are in full control of their own funds that are secured by smart contracts at all times. The team added that security audits and contracts are open-source and can be verified by anyone.
Why is dYdX Required?
Current markets with margin and derivatives are opaque, limited by location, and require heavy trust in intermediaries and counterparties. With scams and hacks rampant nowadays, it is very important to have both transparency and security in the cryptocurrency space. The dYdX team aims to solve the above problems by providing users with excellent financial tools to access directly from their blockchain based wallets.