<p>Interview with <a target="_blank" rel="noopener noreferrer" href="https://twitter.com/Tristan0x15">Tristan Dickinson</a>, Head of Marketing and Communications, dYdX Foundation.&nbsp;</p><p>&nbsp;</p><h2>What is dYdX and what does it hope to accomplish for Web3?</h2><p><strong>A:</strong> dYdX is a decentralized perpetual trading platform. Recently the fourth iteration of dYdX was launched as ‘dYdX Chain’, a stand-alone Cosmos appchain. dYdX Chain is fully open sourced, fully decentralized, simple to use and easy to onboard. Core overarching vision for dYdX is to democratize access to financial opportunities.</p><p>&nbsp;</p><h2>What are the differentiating features of dYdX and how does it differ from other projects with a similar mission?</h2><p><strong>A: </strong>dYdX Chain (dYdX v4) recently launched and has brought a raft of unique features;</p><ul><li>Fully decentralized, the community is in control</li><li>Fully Open Source</li><li>Distributes 100% of protocol fees to stakers in USDC</li><li>Lighting fast speed - up to 2,000 transactions per second</li><li>User first approach</li><li>Easy to add New Markets</li></ul><p>&nbsp;</p><h2>For non-crypto natives, what does dYdX bring to the user experience of crypto, and what will be its main applications?</h2><p><strong>A:</strong> dYdX user experience is one of the core advantages, the engineering team have aimed to replicate the simplicity of CEXs for trading, onboarding, on/off ramping and continues to enhance user experience. Some examples are 1 click onboarding, regardless of what chain your assets are you can easily onboard, Coinbase integration, Ledger Live native staking etc. Additionally the recent integration with Kado money allows you to easily onramp and offramp crypto to fiat.</p><p>dYdX is a perpetual DEX, you can deposit USDC and use leverage up to 20x on trades.</p><p>&nbsp;</p><h2>What parts of the dYdX roadmap is the team most excited for?</h2><p><strong>A:</strong> <a target="_blank" rel="noopener noreferrer" href="https://dydx.exchange/blog/2024-product-roadmap">Roadmap</a> for dYdX Chain in 2024 is broken into three categories; Core Trading Improvements, UX/Onboarding Upgrades and Permissionless markets.</p><h3>Core Trading Improvements</h3><ul><li>Improving the reliability and infrastructure of the exchange software</li><li>Adding trading features to help traders execute trades quickly and accurately</li><li>Adding support for additional clients in languages such as C++, Rust, and Go</li></ul><h3>UX/Onboarding Upgrades</h3><ul><li>Making onboarding easier by increasing the number of onramp options and creating more ways to connect</li><li>Improving exchange usability through better presentation and alerting of important information</li><li>Integrating social elements into the exchange software</li></ul><h3>Permissionless Markets</h3><ul><li>Instant + permissionless market listings functionality to enable anyone to list any market</li><li>Instant liquidity via LP Vaults to provide sufficient liquidity on all markets</li><li>Expanded oracles to enable perpetuals on any asset</li><li>Cross-margin and isolated-margin at the protocol layer for enhanced risk controls</li></ul><p>Permissionless markets is garnering the most excitement from the community. Instant + permissionless market listings that enable anyone to list any market in a sustainable and safe way.</p><p>&nbsp;</p><h2>What are the biggest challenges that dYdX currently faces, and how is the team addressing them?</h2><p><strong>A:</strong> Similar to other DeFi applications, education and onboarding new users. For education we have the dYdX Academy which explains in layman's terms many different facets of the crypto industry, DeFi, and trading on the dYdX Chain. Go to the <a target="_blank" rel="noopener noreferrer" href="https://dydx.exchange/crypto-learning#">dYdX Academy</a> to learn more.</p><p>For Onboarding, this is a permanent optimisation for the dYdX Ecosystem and is constantly addressed. Improving onboarding involves education, simplicity, speed and safety, on all of these areas the dYdX Ecosystem is working hard to improve, some highlights;</p><ul><li>Increasing the ease of on and off ramp integrations</li><li>Improving exchange usability through better presentation and alerting of critical information</li><li>Integrating social elements into dYdX Chain</li><li>Expanding reach and availability of DYDX</li><li>Native integrations for staking DYDX</li></ul><p>&nbsp;</p><h2>In your opinion, where do you see dYdX in 5 years and how will it look when it becomes widely adopted?</h2><p><strong>A:</strong> dYdX is the #1 DEX in the world by trading volume and has approximately 60% market share in the DEX perpetual space however only approx 2% market share for perpetuals. The perp market makes up 75% of total crypto trading volume (approx 3.2T per month) so it’s by far in the largest category.</p><p>In 5 years we can speculate dYdX competing with market leaders (Binance, Bybit and the like) and increasing market share significantly in the crypto space. Expanding the amount and volume of markets available to trade, to thousands of markets, however done sustainably and smartly by the community. Additionally we could potentially see the dYdX Community leading the expansion of the Crypto perpetual market via Permissionless Markets inc options, futures, warrants, swaps and introduction of commodities ie Oil, Gas.</p><p>dYdX could start to gain market share of the total Derivatives market which is valued at close to 40 Trillion per year. Democratized access to financial opportunity becomes a reality so anyone with a small amount of USDC can deposit and trade on dYdX.</p><p>Multiple awards for User Experience and User centric approach. Multi functional DAO led by the community and run for the interest of the dYdX Ecosystem at large.</p><p>The dYdX Chain distributes 100% of protocol fees to stakers, not many platforms of dYdX’s size and scale shifts financial model so that revenue now 100% goes to the dYdX Community (DYDX Stakers). Simply meaning the better dYdX performs the greater the benefit to the community.</p><p>&nbsp;</p><h2>How does the dYdX staking mechanism work and what are the incentives to stake dYdX?</h2><p><strong>A:</strong> Stake native DYDX therefore securing the dYdX Chain and receive USDC per block (every 1.3 seconds). As a reward mechanism 100% of protocol fee’s go to stakers and is non inflationary. Currently according to Staking Rewards, the <a href="/asset/dydx" target="_blank" rel="noopener noreferrer">APR is over 20%</a>.</p><p>&nbsp;</p><h2>What is the primary purpose of staking dYdX?</h2><p><strong>A:</strong> Every PoS Consensus mechanism is the same. Staking secures the chain, builds resiliency and strengthens the network.</p><p>To reward Stakers for securing the network they receive all protocol fee’s (currently over 10M USDC has been distributed in 3 months) in USDC on a per block basis which is approx 1.23 seconds.</p><p>This is a highly unique staking model, the majority of other staking models earn you the native token, for dYdX you receive USDC which unlocks many use cases.&nbsp;</p><p>&nbsp;</p><h2>Apart from normal staking rewards, what other benefits can users expect from staking dYdX?</h2><p><strong>A:</strong> Staking on dYdX generates $USDC every 1.23 seconds a highly efficient and unique staking reward that has many tangible benefits for users.</p><p>Additional to staking benefits; Trading on the dYdX Chain earns you DYDX, up to 90% of trading fees are earnt back in dYdX. For 6 months there is a launch incentive program to kickstart liquidity distributed in DYDX. The program is 20M USD in DYDX. And if you stake and secure the chain you earn USDC from the protocol. The better the protocol does the more USDC you earn.</p><p>This is a user first flywheel- come to dYdX Chain, easily onboard, earn DYDX for trading, stake the DYDX and earn USDC that you can use to keep trading or for many other purposes.</p><p>Additionally and most importantly dYdX is a DEX meaning you have self custody and control of your assets. An FTX situation could not happen, your custody, your control.</p><p>&nbsp;</p><h2>How do you see the landscape evolving as more traders use on-chain trading platforms instead of CeFi?</h2><p><strong>A:</strong> On-chain trading by it’s nature is more transparent. As the industry continues to mature, onboarding is simplified and user experience is enhanced it’s increasingly likely we’ll see On-chain trading significantly growing. Trading on CeFi is a black box, your assets aren’t in your control and by it’s nature (central control) it’s not decentralized. With On-chain trading maturing users will catch onto the benefits and likely shift.</p><p>&nbsp;</p><h2>How does dYdX handle MEV?</h2><p><strong>A:</strong> dYdX has invested time and resources into understanding and mitigating MEV on the dYdX Chain. Through various ecosystem partners, ChorusOne, Skip Protocol and the dYdX Research team, multiple strategic approaches were considered.</p><p>dYdX recently published an updated approach for mitigating MEV. &nbsp;This approach uses Cosmos’s ABCI++ vote extensions for collaborative block building and introduces frequent batch auctions (FBA) to neutralize transaction sequence effects. In addition to this an MEV social committee has been formed that regularly updates the community and addresses Validators performance issues.</p><p>&nbsp;</p><h2>What alterations to the user experience are necessary for decentralized on-chain trading platforms to attract a larger user base than traditional CeFi platforms?</h2><p><strong>A:</strong> CeFi really pioneered adoption of crypto to the masses and focused heavily on simple onboarding and offboarding solutions, in some cases you can transfer fiat to crypto and back within minutes. DeFi is more difficult to onboard and offboard however over the past few years we’ve seen significant strides to enhance experience. With better integrations and continual improvements to offboarding/onboarding a larger user base will trade on-chain.</p><p>&nbsp;</p><h2>Are there any exciting updates, announcements, or partnerships coming up in the immediate future that you can disclose today?</h2><p><strong>A:</strong> Recently v4 of the dYdX Chain protocol software was announced by the dYdX Operations SubDAO team (there is multiple upgrades to the dYdX Chain), bringing increased trading features and functionality. The Ops SubDAO has also indicated support for Android, currently iOS is supported.</p><p>Additionally dYdX recently announced the integration with Coinbase. It feels like every week there are enhancements and exciting updates for the dYdX Chain.</p><p>&nbsp;</p><h2>Where is the best place for the community to interact with you?&nbsp;</h2><p><strong>A: </strong>The various dYdX Ecosystem Twitter pages <a target="_blank" rel="noopener noreferrer" href="https://twitter.com/dYdX">@dYdX</a>, <a target="_blank" rel="noopener noreferrer" href="https://twitter.com/dydxfoundation">@dydxfoundation</a>, <a target="_blank" rel="noopener noreferrer" href="https://twitter.com/dydx_ops_subdao">@dydx_ops_subdao</a> and <a target="_blank" rel="noopener noreferrer" href="https://twitter.com/dydx_grants">@dydx_grants</a> provide the most frequent and timely updates. The <a target="_blank" rel="noopener noreferrer" href="https://dydx.forum/">dydx.forum</a> is the central place for community members and contributors to discuss meaningful topics and suggest improvements for dYdX. These topics, suggestions, proposals or DRC’s can then turn into governance votes and improve the protocol.</p><p>&nbsp;</p><h2>Why is Staking Rewards the best integration for your project?</h2><p><strong>A:</strong> Staking Rewards is a key integration for dYdX. Similar to TradFi where you have interest calculators helping to contextualize the benefits of savings for users, Staking rewards provides the same user first simple information. Additionally the addition of Validators for calculations helps the community to decide what Validators would suit them best.&nbsp;<br>&nbsp;</p>

Interview with dYdX Foundation: The Future of On Chain Derivatives

TL;DR: