In this cycle, I still quite like the concept of “old project with new narrative,” as can be seen from my previous work on $MKR. The future split, rebranding, and SubDAO of $MKR, as well as the founder’s continuous purchase of $MKR, are enough to make me hold on to $MKR. A simple idea is that during a bull market, the subjective initiative of a project often determines the price trend of its token. It is evident that many project teams are converging towards popular concepts.
In the old DeFi, Uniswap is committed to promoting the development of intentional narrative, Compound’s founder is working on RWA, and dYdX has launched v4 and left the Ethereum ecosystem, using Cosmos SDK as its blockchain framework to build dYdX Chain.
Next, let me briefly discuss the updates of dYdX during this period.
Btw, feel free to use my referral link for trading, thank you:
https://dydx.zone/sleepintherain1
1/ Updates on $DYDX token economics
In v3, the main utility of $DYDX was to get fee discounts. However, in v4, $DYDX has become a real revenue token. Both stakers and validators can receive dividends paid in USDC (100% of fee revenue), and the team also incentivizes trading through $DYDX (trading mining).
As a result, the flywheel of $DYDX has taken shape, as shown in the figure below (P1).
The engine of this flywheel is the price of $DYDX. Only when the price of $DYDX rises, will there be enough users trading on dYdX to generate more fee revenue.
So, does $DYDX still have opportunities after this big drop?
We can see some clues from the tweets of dYdX Founder.
On April 7, the Founder mentioned that a portion of the treasury’s $DYDX would be staked, and the income would be used to repurchase $DYDX.
In simple terms, the project hopes to boost the token price through buyback actions.
2/ Customized high-performance decentralized exchange
As shown in the comparison chart by @TechFlowPost, the performance comparison between dYdX v3 and v4 is as follows:
The improvements in protocol performance and user costs in v4 are clearly visible.
3/ Interoperability and composability brought by building with Cosmos SDK
First, the benefits of joining the Cosmos ecosystem are not only customized application chains and improvements in token economics but also the interoperability and composability of the Cosmos ecosystem inherited by dYdX Chain. After the launch of v4, most of the LSD protocols in the Cosmos ecosystem have supported liquidity staking for $DYDX. The popularization of liquidity staking has substantial benefits for the growth of $DYDX staking data and price performance (LSD protocol will use $DYDX staking income in USDC to repurchase $DYDX).
Second, Noble has achieved native USDC extension on dYdX Chain through CCTP, which is the foundation for dYdX Chain to settle with USDC.
4/ Conclusion
In the dYdX 2024 roadmap, the team mentioned that they will focus on three main areas: Permissionless Markets, Core Trading Improvements, and UX/Onboarding Upgrades.
As I mentioned in my Vertex article, the mission of decentralized derivatives trading platforms given by the market is to compete with centralized derivatives exchanges. To compete, they need better token economics and better products, as well as something that the centralized derivatives exchanges do not have but the market demands:
Token economics: dYdX has adjusted its token economics by distributing 100% of fee revenue to validators and stakers, creating a potential flywheel.
Better products and user experience: In terms of user experience, dYdX aims to provide users with better trading feedback by improving the reliability, accuracy, and immediacy of trading functions. Additionally, dYdX is also committed to reducing user entry barriers (usability).
Competitive advantage of decentralized derivatives trading platforms – Permissionless Markets: I personally believe that support for long-tail assets is the main competitive advantage of decentralized derivatives trading platforms. dYdX hopes to build a Permissionless Markets that allows instant listing without governance processes and provides liquidity through LP Vaults.
In addition to token economics, Permissionless Markets and UX/Onboarding Upgrades are still in progress.
$DYDX still early
Tags:
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COMP
DeFi
dYdX
LSK
MKR
SNT
USDC
Ethereum
Source link:
https://sleepintherain.substack.com/p/dydx
Note: The opinions expressed in the article do not constitute investment advice.
