DYdX to Debut Perpetual Futures on Prediction Markets as DEX Seeks to Raise Profile

As a seasoned analyst with over two decades of experience in the financial markets, I find the recent move by dYdX to list perpetual futures on prediction markets quite intriguing. Having closely followed the evolution of decentralized finance (DeFi) and its attempts to disrupt traditional centralized trading venues, I believe this could be a strategic move that offers DeFi a unique opportunity to regain attention.

dYdX, a decentralized cryptocurrency exchange focused on perpetuals, is planning to step into the prediction market arena. This move will enable users to make leveraged wagers on the results of binary events, as they aim to shift focus away from traditional, centralized trading platforms.

According to dYdX Foundation CEO Charles d’Haussy, the platform will introduce perpetual futures on prediction markets as a unique offering within the realm of Decentralized Finance (DeFi), aiming to set itself apart from traditional centralized platforms.

As a researcher exploring decentralized finance (DeFi), I find the prediction market presents an intriguing possibility for revitalizing our focus. These markets offer a unique prospect that could potentially rekindle interest in DeFi, as I’ve come to understand during my studies. Furthermore, our decentralized exchange (DEX) is actively considering delving into foreign currency and index markets, expanding the scope of our operations.

As a researcher, I delve into the fascinating world of prediction markets where individuals can wager on various occurrences, such as sports games, financial asset prices, political events, and even weather patterns. The allure lies in the financial rewards that incentivize these bets. Moreover, I also explore Perpetuals – derivative contracts akin to futures, yet without a set expiration date, providing market participants with the flexibility to maintain their positions for as long as they deem appropriate.

Launched back in 2018, Augur made its debut as one of the pioneers in crypto-based prediction markets on Ethereum. Unfortunately, it struggled to pick up momentum due to insufficient liquidity and exorbitant fees associated with transactions on the Ethereum blockchain. As of today, PolyMarket stands out as the foremost platform for on-chain prediction markets, with over $450 million in trading volume last month alone. DYdX’s trading volume, on the other hand, reached an impressive $21.2 billion, according to DefiLlama.

DYdX is planning to enter prediction markets as part of their upcoming upgrade, dYdX Unlimited, expected this year. This major program for the dYdX blockchain includes new features such as the ability for anyone to create markets (permissionless listing) and a large liquidity pool known as MegaVault.

As a researcher delving into the intricacies of this platform, I can express that users have the freedom to suggest any market for listing on the dYdX chain. This process, known as permissionless listing, is maintained by the protocol to ensure accurate price and market parameters. At present, our community is engaged in a trial run with an FX trading pair linked to the Turkish Lira (TRY).

Users launching fresh markets are required to place a predefined quantity of the stablecoin USDC into the MegaVault. Once deposited, this will enable the quoting of trades on that specific market, thereby providing immediate liquidity.

The vault allows users to contribute USDC, earning them a portion of the vault’s earnings as well as a share from the protocol’s overall revenue based on governance decisions. Crucially, once deposited, the vault manages where to distribute liquidity, making it an easy way for users to earn passive income, according to d’Haussy.