DeFi’s mark on the Web3 landscape has grown steadily each year, finding new ways to innovate, to stretch beyond current limitations, and to ease the pain points of current users. The DeFi crowd is a tough crowd, willing to put up with a bit more latency, sometimes higher fees, and a more Wild West feel in general to trading. But at the end of the day, this attitude is held with the belief that DeFi holds a financial freedom that TradFi, and even a centralized exchange can’t offer. For DeFi, it also means that this group of traders are more likely seasoned professionals who know their business, focus on advanced trading techniques, and are always looking to improve. Those who want to test the Web3 waters do so on a CEX. Those who come to trade and use the heavy industrial equipment do so on a DEX.
There are a number of decentralized exchanges to choose from, and there are more than a few that offer high quality services. Reliability, security, and speed are first tier priority, and critical to the success of a trader. Deep liquidity, low fees, and rich features are the focus once the first tier is squared away. With liquidity, security, and scalability as key concerns for DEX users currently, various exchanges are working to expand their offerings in order to build a larger user base and reinforce the positive cycle of more users, more liquidity, higher performance, higher returns, repeat…
Does dYdX focus on key concerns?
One such platform is dYdX, a DeFi protocol developer that specializes in advanced trading tools and a wide range of markets (134 at the time of this writing). However, this number is about to explode as part of a unique launch of their dYdX Unlimited suite, which was designed to take on the key issues holding back DeFi’s growth, building them not for new entrants but rather for advanced professionals. By doing so, however, a successful launch will cause the entire DeFi industry to move forward as new markets are built up, advanced trading is supercharged, and the rest of the trading community benefits from the momentum. While the suite of features for the upcoming Unlimited is broad, let’s look at some of the key highlights to see how this release addresses top DeFi concerns, building up both dYdX and its traders.
All about the markets
The biggest features in this massive update are by far the additions to market services. In a first for any DEX or CEX (and certainly for TradFi), users will be able to list virtually any market on the dYdX Chain—without first obtaining governance approval. This is unheard of in Web3, and opens up significant opportunities for traders. It will be incredibly interesting to see just how wide this blows open various markets listed on dYdX, and whether there will be a large number of niche markets or several key markets that will see a great deal of activity. In order to list a market, the user who wishes to list will deposit an amount of USDC that is determined by the governance. At this point the market will go live, with liquidity provided from the start.
The liquidity, an absolutely massive issue for DEX users in general, cannot be set up and tagged for a particular market because it would quickly dilute the overall liquidity while unbalancing the supply and demand within the more popular markets. Instead, the Unlimited release introduces Megavault, which acts as an intelligent, automated master liquidity pool, monitoring every market and providing the necessary liquidity to act as market maker for the growing number of user-listed markets, as well as the pre-existing markets on the platform. The To ensure there will always be deep liquidity across markets, the Megavault will offer a number of incentives for depositors who wish to earn passive revenue, including both P&L and protocol revenue.
dYdX Unlimited, coming soon.
With a range of new groundbreaking features, this will be the biggest upgrade to dYdX Chain since launch.
🧵 Here’s what you can look forward to pic.twitter.com/f5savJAIwx
— dYdX (@dYdX) August 13, 2024
Incentives for bigger players
Another way to encourage strong activity from the launch date is to include several different incentive measures for those traders who want to operate at a larger volume, thus bringing in more positive churn into the system and if possible, new users. A simplified program enrolls traders with at least $10,000 and provides them with an affiliate link. Giving this link to invited friends will earn a share of their fees, and will give them discounted fees. The reward limits are generous too, with a full $1,500 possible—per month—per referral. With a heavy trader with active friends, this can add up quickly.
The other element to assist bigger players is the option of granting permissioned keys. This can build up the level of security that users exercise over their wallets, which is especially important for institutional traders that need to carefully manage control over who can and can’t access and act upon accounts. This is also critical for those accounts that are used by especially high-value traders.
Final touches
One other element that remains a challenge in DeFi, even with experienced, figure-anything-out traders, is the user interface and ability to onboard to a new DeFi platform. In the case of dYdX, although the main focus for Unlimited has been on the permissionless markets, the Megavault, affiliate incentives, and permissioned controls, it was still important to revise the UI and onboarding process to capture improvements that will ensure new users can be up and running faster, and be able to operate all features more intuitively. If all decentralized exchanges can show this level of continuous improvement for their features, the industry as a whole will likely see the DEX sector close the gap with centralized exchanges before long.
