dYdX has announced that it has raised $65 million through a Series C funding round led by Paradigm. In addition, dYdX is also welcoming new strategic investors such as QCP Capital, CMS Holdings, CMT Digital, Finlink Capital, Sixtant, Menai Financial Group, MGNR, Kronos Research, HashKey, Electric Capital, Delphi Digital, and StarkWare.
This is in addition to already existing investors such as Polychain Capital, a16z, Three Arrows Capital, Wintermute, and others.
An Important Milestone
The additional capital allows the team behind dYdX to maintain focus on the long-term goals while also significantly improving the liquidity of the dYdX exchange. The capital infusion brings dYdX a step closer to its vision of becoming one of the largest cryptocurrency exchanges in the world, offering trustless, decentralized financial infrastructure for crypto-financial products.
Currently, the dYdX exchange combines non-custodial, on-chain settlement with an off-chain, low latency matching engine through order books. This allows dYdX to deliver liquid, low-slippage, and institutional-grade trading experience for the DeFi world. The platform’s products enable traders to manage risk better, allocate capital efficiently, and express opinions about volatility and price.
A New Layer 2 Protocol
dYdX, in partnership with StarkWare, launched a Layer-2 cross-margined perpetual in February 2021. Based on dYdX’s perpetual smart contracts and StarkWare’s StarkEx scalability engine, the protocol enables significant improvement to non-custodial trading at scale. This means traders don’t have to pay Gas costs, lowering trading fees.
dYdX’s Layer-2 perpetual protocol has achieved the following
- The protocol has successfully supported over 11,000 unique traders and $2.2 million in volume.
- 13,000 unique addresses have given the protocol over $40 million in total value locked.
- The protocol has already launched 15 markets successfully, with more launches in the pipeline.
A Natural Fit For DeFi
According to dYdX, decentralized perpetuals are a natural fit for DeFi. Smart contracts solve issues relating to the lack of transparency and trustworthiness. The issues also exist with centralized perpetuals. However, users in centralized perpetuals do not have insight into safety funds, liquidation mechanisms, and socialized losses.
Perpetuals also gives access to a host of trading possibilities that are currently not available to DeFi users. Perpetuals allow any asset to be traded on DeFi, not just those based on Ethereum.
Fred Ehrsam, Co-Founder and Managing Partner at Paradigm, stated,
“dYdX has built a simple, crypto native, and global exchange that users love. We’ve known Antonio since he left Coinbase years ago. He’s built a great team around him to support the company’s growth and future potential.”
Founder and CEO of Wintermute, Evgeny Gaevoy, added,
“dYdX is pioneering layer-2 DEX trading with their new platform based on StarkWare’s StarkEx scalability engine. It offers decentralization and non-custodial trading of perpetual futures without any of the drawbacks that similar solutions built on layer-1 Ethereum face. We expected nothing less from a brilliant team that brought us the first-of-its-kind fully decentralized spot margin trading just a few years ago!”
Utilizing The Additional Funds
dYdX plans to utilize the additional capital in the following ways
- Work on the decentralization of the protocol
- Adding new assets and features to perpetual contracts
- Create and launch a mobile application
- Build partnerships with infrastructure players to bridge the gap between decentralized and centralized finance.
- Make strategic investments in growth markets such as the Asian markets.
- Focus on hiring world-class talent
dYdX is building one of the leading decentralized exchanges to create secure and powerful financial products. The exchange runs on audited smart contracts based on the Ethereum blockchain, eliminating the need to trust central exchanges during trades. dYdX combines the transparency and security of a decentralized exchange with the usability and speed of centralized exchanges.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.