What Is dYdX?
We hope you’ll enjoy the infographic below about the dYdX platform, which aims to be the “first ever” decentralized derivatives exchange.
In the financial markets, a derivative is when two or more parties make a contract between themselves, where the contract derives its value from a certain underlying financial asset (similar to a security).
Its value can even be derived from a set of assets rather than just one (similar to an index). Common types of assets include currencies, bonds, interest rates, commodities, stocks, market indexes, etc.
Advanced Crypto Trading Options
The open source dYdX platform enables for any ERC20 token:
- Decentralized P2P derivatives
- Short sells
- Options trading
- Margin trading
- And other trading options
This really helps open up the market for those in the crypto community.
P2P derivatives means there’s no middlemen in the process. A short sell is when someone attempts to capitalize (make a profit) on the anticipated decline of a security – that would have been useful during the 2018 crypto bear market!
On a basic level, options trading is buying the right (but not the obligation) to buy or sell a stock at a certain price point at or before a certain date in the future. Or in the case of dYdX, the right to buy or sell an ERC20 token at a certain price point in the future – the infographic will give further information.
Margin trading is where an asset is borrowed and immediately traded for another asset. This will really help to diversify cryptocurrency traders’ options in the market.
Crypto P2P Lending
The dYdX platform also allows crypto traders to make fully collateralized loans, which are used to fund short sellers. This could be potentially dangerous for those not familiar with the cryptocurrency market, the nature of handling loans responsibly, etc.
Especially with the volatile nature of cryptocurrencies and their recent year-long bear market, which we appear to still be in. Some people made some very bad crypto borrowing decisions over the last year. That said however, it is an option which could prove useful if used properly and responsibly.
Decentralized Protocol Security Audits
The founder of dYdX, Antonio Juliano, wants to make sure that the platform is as secure as possible, and plans to use received funds to conduct extensive third-party security audits on the new decentralized protocol.
This is extremely important, as flaws in it could bring it down. Cryptocurrency security audits will help make sure that the platform is running smoothly for future crypto traders, so they can rest assured that everything will run smoothly.
Any company or technology should undergo third party audits, which help them know where they stand, so the future planned dYdX security audits is good news.
Crypto Trading With Smart Contracts
The dYdX protocol is decentralized and runs on Smart Contracts. This means the process is automated, with no middlemen.
We’re excited about the possibilities of dYdX, which will make complex cryptocurrency trading options a possibility for crypto traders using the protocol. You can learn more this exciting project in the infographic below.
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