Decentralized Platform dYdX to Launch Bitcoin Perpetual Contracts

dYdX, a decentralized finance (DeFi) lending platform, is in the process of launching a market for trading Bitcoin perpetual contracts.

First reported by The Block on Monday, the DeFi platform has already launched the alpha version of the upcoming derivatives market.

Perpetual contracts have become very popular crypto derivatives. Though they are similar to traditional futures contracts, perpetual contracts do not have any expiry date, meaning traders can hold on to them as long as they want.

Derivatives giant BitMEX was the first to introduce Bitcoin perpetuals in 2014, but soon other major exchanges also listed such contracts due to high market demand.

According to the company, this is the first perpetual exchange on a decentralized platform and also dYdX’s first offering of a non-Ethereum asset.

dYdX’s Bitcoin perpetual contracts will offer Leverage Leverage In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders Read this Term up to 10x and will be cash-settled in USDC, a USD-pegged Stablecoin Stablecoin Unlike other cryptocurrencies like Bitcoin and Ethereum, stablecoins are cryptocurrencies that have been designed to keep a stable value. Placing a greater emphasis on stability over volatility can be a huge draw for some investors. Many individuals can be turned off from large swings and uncertainty presented by cryptos relative to other traditional assets.Stablecoins control for this volatility by being pegged to another cryptocurrency, fiat money, or to exchange-traded commodities, including Unlike other cryptocurrencies like Bitcoin and Ethereum, stablecoins are cryptocurrencies that have been designed to keep a stable value. Placing a greater emphasis on stability over volatility can be a huge draw for some investors. Many individuals can be turned off from large swings and uncertainty presented by cryptos relative to other traditional assets.Stablecoins control for this volatility by being pegged to another cryptocurrency, fiat money, or to exchange-traded commodities, including Read this Term. The decentralized platform will also run a separate order book from all its existing Ethereum markets.

Rising demand for DeFi platforms

dYdX is one of the top DeFi platforms with a locked-in value of $22.8 million, according to DeFi Pulse, as of press time. The platform also wrote $1 billion in loans since its launch.

The platform is backed by well-known names like a16z, Polychain, and 1confirmation, raising $12 million.

DeFi platforms have created a lot of buzz lately and are seen as the real disrupter of the traditional financial market. However, these platforms still have massive vulnerabilities - both in design and security.

Recently, $25.9 million were siphoned from dForce, a Chinese DeFi platform, in 24 hours leaving only $6 worth locked in assets. Another DeFi platform - bZx - was attacked multiple times, raining major questions on such platforms security.