dYdX is launching Perpetual Contract Markets that enable trading of any non-Ethereum based asset. The first market to go live is entering private Alpha today: BTC-USDC with up to 10x leverage. Sign up to apply for early access.
Note: Perpetual Contracts on dYdX are not available in the US.
Perpetual Contract Markets
Perpetuals have been popularized by a number of centralized exchanges over the last few years — allowing users to get synthetic exposure to BTC and other crypto assets without an expiration date. Perpetuals are the most widely traded product in all of crypto with daily trade volume in the billions of dollars, eclipsing spot trading volume in 2019 as the most popular way to gain crypto price exposure.
Today, we are thrilled to launch the first ever decentralized Perpetual Contract Market. This is a significant step for dYdX and a launch we’ve been building towards for many months. We believe decentralized perpetuals are a big step forward for the industry, and are a natural fit for DeFi:
- Decentralized Perpetuals augment the value proposition of existing perpetual products. Smart contracts exist to solve problems around trustworthiness and lack of transparency. These are two of the biggest problems with current implementations of perpetual contracts where users have no visibility into liquidation mechanisms, insurance funds and socialized losses.
- Perpetuals open up a world of trading possibilities that are currently not available in DeFi. Now any asset, not just those based on Ethereum, can be traded on DeFi. For the first time DeFi users will have access to liquid trading of BTC, by far the most widely traded crypto asset.
- Perpetuals are the most popular trading product in crypto. Trading volume of crypto perpetuals is double the volume of the spot market, and still growing fast. Perpetuals give users an easy and capital efficient way to get leveraged long or short exposure. We expect this trend to apply to DeFi as well, and for the trading volume of decentralized perpetuals to quickly surpass all spot DeFi trading volume.
The First Perpetual Market on dYdX: BTC-USDC
For dYdX to be a meaningful cryptocurrency exchange, users must be able to trade the most popular crypto asset: BTC. BTC is where it all began, has the highest market cap, highest daily trade volume and is the entry point for many entering crypto. BTC also where the vast majority of professional & institutional volume is. For these reasons, and because of countless user requests for BTC on dYdX, we’ve been seriously considering enabling BTC trading in some form for the last 6+ months.
The market has shown that perpetuals are the best and most liquid way to trade BTC with leverage. Usage and volume of perpetuals far surpasses that of margin trading. For these reasons we chose to build a novel protocol for perpetuals rather than add any ERC20 BTC to our margin trading product.
The BTC-USDC Perpetual
The BTC-USDC Perpetual will offer 10x leverage on BTC (long or short) with no expiry, and settlement and margining in USDC. A periodic funding rate paid between longs and shorts keeps the contract price tethered to the underlying. Some key things to note:
- This is a separate market, with a separate native order book to the existing spot markets on dYdX
- Perpetual trading occurs in a separate account from margin trading. BTC-USDC perpetual accounts are margined and collateralized separately to existing dYdX margin accounts.
- Trading will be possible via our existing app or programmatically through our APIs / trading clients.
A summary of the main specs is below:
- Underlying market: BTC/USD
- Margin/settlement asset: USDC
- Expiry: Perpetual (no expiration)
- Maximum leverage: 10x
- Initial margin requirement: 10%
- Maintenance margin requirement: 7.5%
- Fees: -0.025% Maker, 0.075% Taker
- Funding: Funding payments are made every second according to a rate which is updated hourly. The funding premium is scaled so as to have a realization period of 8 hours
- Liquidations are on chain. The mark price used is the on-chain index price, given by the MakerDAO BTCUSD Oracle V2 which reports a median of the following seven spot exchanges: Binance, Bitfinex, Bitstamp, Coinbase Pro, Gemini, Kraken, Bittrex
- Contract loss mechanism: Insurance fund (seeded by dYdX, funded by percent of liquidation fees) followed by deleveraging if the fund is insufficient. All of these activities are verifiable and auditable on chain
We built an entirely new protocol to support Perpetual Contract Markets. The smart contracts for the perpetual are open source and deployed to the Ethereum mainnet.
Security: The protocol smart contracts have been audited by OpenZeppelin — the leading smart contract auditors. No critical or high severity issues were found. The link to the audit report is here.
Protocol Specification: To learn more about the perpetual protocol, see the technical protocol specification.
Source Code: To dive into the source code for the perpetual smart contracts, check out our open source GitHub repo.
BTC-USDC Market Specification: For a trading focused market specification, see the market specification document.
API docs: Our API docs have been updated and reflect the new perpetual market — refer to either the Python Client, TypeScript Client, or HTTP API documentation as a starting point for integration.
The BTC-USDC Perpetual Market enters private alpha today. The goal of the private alpha is to iron out any kinks and gather early product feedback. Over the next few weeks, we will be releasing the product gradually to additional users.
We invite the community to apply for early access and participate in the alpha period. We have a public launch date planned in the near future.
We’re incredibly excited for you all to try it out! Now let’s stack those sats.