Crypto exchange dYdX is set to launch into the prediction markets sector, allowing users to place leveraged bets on binary event outcomes.
“DYdX will launch perpetual futures on prediction markets,” said dYdX Foundation CEO Charles d’Haussy. He stressed that DeFi must offer unique features to differentiate itself from centralized exchanges. “The prediction market could give DeFi a special chance to attract attention,” d’Haussy added.
The exchange is also looking into opportunities in foreign currency and index markets.
Prediction markets enable investors to bet on the outcome of various events, such as sports, asset prices, political events, and even the weather, using financial incentives. Perpetuals, a type of derivative contract without an expiry date, allow traders to maintain positions as long as desired.
While Augur, launched in 2018 on Ethereum, was the first to enter the crypto-based prediction market, it struggled due to liquidity issues and high fees. Today, PolyMarket leads the on-chain prediction markets, with a trading volume of over $450 million in August. In contrast, dYdX recorded a trading volume of $21.2 billion.
dYdX’s entry into prediction markets is part of the “dYdX Unlimited” upgrade, which is set to introduce new features like permissionless market listings and a master liquidity pool known as MegaVault.
Users will be able to propose new markets for listing on the dYdX chain, which will be actively managed for price and market parameters. The community is already experimenting with a foreign exchange (FX) trading pair tied to the Turkish lira.
To list new markets, users must deposit a governance-determined amount of stablecoin USDC into the MegaVault, which will provide instant liquidity by quoting orders. The vault will source liquidity from its users, who will receive a share of both the vault’s profits and the protocol’s revenue, as determined by governance.
“This model allows users to earn passive income by simply depositing USDC into the vault,” d’Haussy explained. “The vault will autonomously decide where to provide liquidity, making it an attractive option for users seeking a hands-off investment strategy.”
