The logic behind the surge in DYDX: token positioning upgrade, unlocking new income possibilities

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Azuma
3 months ago
This article is approximately 731 words,and reading the entire article takes about 1 minutes
From now on, the DYDX staking community will share 100% of the protocol revenue.

Original - Odaily

Author - Azuma

The logic behind the surge in DYDX: token positioning upgrade, unlocking new income possibilities

The OKX market shows that the decentralized derivatives protocol (perhaps it should be called a network now) dYdX (DYDX) has risen sharply today, reaching a peak of 4.1 USDT. As of the time of publication, it was temporarily trading at 3.94 USDT, a 24-hour increase of 15.66%.

The key events that drove DYDXs current surge are not hard to find.

On the evening of November 13th, dYdX Chain governance proposal #1 regarding the launch of all trading markets was successfully passed, which means that dYdX Chain has transitioned to the Beta stage and the trading function is officially activated on dYdX Chain. In other words, the v4 version that dYdX has been preheating for nearly a year has been successfully launched, and users can trade freely on the v4 market.

The logic behind the surge in DYDX: token positioning upgrade, unlocking new income possibilities

As a key node in the dYdX roadmap, the launch of v4 is undoubtedly a long-anticipated benefit for the market. However, the market still has a more intuitive analysis of how much new potential this upgrade can bring to the DYDX token.

In June this year, dYdX officially announced the most important announcement about the v4 version——It will be transferred from the Ethereum ecosystem to the Cosmos ecosystem, and dYdX Chain, the basis of the v4 version, will be developed based on the Cosmos SDK.

The greatest significance of this transformation is that DYDX has upgraded its positioning.

original,The ERC-20 version of DYDX on Ethereum (for distinction, hereafter called ethDYDX) only has the function of governing the v3 version of the protocol, but it cannot share the protocol revenue; with the launch of dYdX Chain, ethDYDX is bridged in1: 1 The mapped DYDX will become the native token of Layer 1 of the dYdX Chain, thus unlocking more new functions for DYDX beyond governance.

According to the dYdX Foundation,On the dYdX Chain, all fees charged by the protocol (including transaction fees denominated in USDC, gas fees for transactions denominated in DYDX or USDC) will be distributed to all objects participating in the DYDX pledge, including validators (Validators) and Stakers.

The logic behind the surge in DYDX: token positioning upgrade, unlocking new income possibilities

Note that 100% of the fee income will flow to the DYDX staking group, and the income composition includes not only DYDX, which has a certain degree of volatility, but also the stable currency USDC.

It is worth mentioning that, according to dYdX founder Antonio Juliano,In order to keep the dYdX Chain always controlled by the community, neither dYdX development parent company dYdX Trading nor its employees will participate in the staking of DYDX.

The logic behind the surge in DYDX: token positioning upgrade, unlocking new income possibilities

About two weeks ago, dYdX Chain completed the mainnet creation, and then activated the DYDX chain staking.

On-chain data shows that as of the time of publication, approximately 350 million ethDYDX have completed the migration to dYdX Chain, and the number of pledged DYDX has reached nearly 10 million.

The logic behind the surge in DYDX: token positioning upgrade, unlocking new income possibilities

but,Since the trading function on dYdX Chain has just been activated, the overall trading volume is still low for the time being., there were only 609 transactions in the past 24 hours, the open interest was only about US$10,000, and the total trading volume was only US$30,000. Based on this data calculation, the current actual shareable income from DYDX staking is temporarily negligible. Perhaps for this reason, the official staking interface of dYdX currently does not provide the expected staking return (APR) of DYDX.

The logic behind the surge in DYDX: token positioning upgrade, unlocking new income possibilities

So, if dYdX v4 gradually runs out of scale, what level of income is expected to be achieved by DYDX? Theoretically, this data will be directly linked to the overall pledge rate of DYDX and the actual trading volume of the v4 market.The Crypto hedge fund Ouroboros Capital has calculated an APR prediction of 20%, but this is only a statement from one company, and the specific situation still needs to be verified by subsequent facts.

The logic behind the surge in DYDX: token positioning upgrade, unlocking new income possibilities

All in all, the launch of the v4 version has upgraded the token positioning of DYDX, unlocked new revenue possibilities, and thus improved the market’s value expectations for the token.

Finally, I want to emphasize that the content of this article is only a logical analysis of the recent developments of dYdX and does not involve investment advice. From a risk perspective, firstly, DYDX is about to usher in a large amount of unlocking in December, and secondly, dYdX will also face certain liquidity expansion problems after switching to the Cosmos ecosystem (compared to the Ethereum ecosystem), which may directly affect v4 The market performance of the version, so please consider carefully before operating, DYOR.

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