dYdX is a leading decentralized exchange that supports spot, margin and perpetuals trading.
dYdX is a decentralized exchange (DEX) that provides users with perpetuals, margin and spot trading, as well as lending and borrowing. The platform uses off-chain order books with on-chain settlement and enables traders to short-sell tokens, increase exposure by longing with leverage, or earn interest on deposited tokens. Each asset on the exchange has a global lending pool with interest rates determined by supply and demand. Borrowers who wish to borrow must first overcollateralize the loan by depositing assets with a collateralization ratio of 125%. dYdX utilizes two types of margin trading on its platform: isolated margin and cross-margin. Isolated margin allows the user to leverage one asset, while cross-margin utilizes all the assets in the user's account to take a position. Trader can leverage up to 5x on dYdX.
The trading platform generates revenue from two types of orders: Maker and Taker orders. Maker orders are orders that don't immediately fill and stay on the order book; these orders add depth and liquidity to the order book. Taker orders are orders that immediately fill existing Maker orders and thus remove liquidity from the order book. The fees vary based on different volume tiers from ther user's last 30-day trading volume with low volume traders incurring higher fees. dYdX also takes 5% of all interest payments from borrower to fund a protocol insurance pool.
There are three main earning opportunities on dYdX. First is the Trading Rewards rebate program which pays 25% of the total token supply (250M) to active traders over time base on a combination of trading fees paid and open interest during each 28-day epoch. The second program is staking USDC in the liquidity staking pool to earn DYDX; this program rewards 2.5% of the total supply (25M) over time. Lastly, DYDX token holders also indirectly benefit from trading and volume-based discounts based on how much DYDX is held in their accounts.