In this cycle, I still like to do the concept of “old project new narrative”, which can be seen from my previous $MKR. $MKR future split + renaming + SubDAO, and the fact that the founders have been buying $MKR before, these points are enough for me to hold on to $MKR.
A relatively simple idea is that in a bull market, the subjective initiative of the project itself often determines the trend of the price of the project’s tokens – it can be seen with the naked eye that many project parties are moving closer to popular concepts.
In the old DeFi, Uniswap is committed to promoting the development of intent narratives, the founder of Compound is engaged in RWA, and dYdX has launched v4, leaving the Ethereum ecosystem and using the Cosmos SDK as its blockchain framework to build the dYdX Chain.
Next, I would like to briefly talk to you about the update of dYdX during this time:
1. Updates to the tokenomics of DYDX
In v3, the main utility of $DYDX is to get fee discounts, and after v4, $DYDX becomes a real income token – both stakers and validators can receive dividends paid in USDC (100% fee income, the team also needs to stake $DYDX if they want to earn fee income). At the same time, the team is also encouraging users to trade (transaction mining) through $DYDX incentives.
From this, the flywheel of the $DYDX has been formed, as shown in the following figure:
The engine of this flywheel is the price of $DYDX, and only when the price of $DYDX rises will there be enough users to trade on dYdX for profit and generate more fee income.
So, after this big fall, does $DYDX still have a chance?
We can see some clues from the dYdX Founder’s tweet:
As recently as April 7, the Founder mentioned that he would stake a portion of the $DYDX of the treasury and use its revenue to buy back $DYDX (P2).
To put it simply, the project team hopes to benefit the token price through repurchase.
2. Customized high-performance decentralized exchange
As shown in the comparison chart, the performance comparison between dYdX v3 and v4 is as follows:
The improvements in protocol performance and user costs from the v4 upgrade are visible to the naked eye.
3. Interoperability and composability that comes with building with the Cosmos SDK
First, the benefits of joining the Cosmos ecosystem are not only customized appchains and tokenomics improvements, but also the interoperability and composability of the Cosmos ecosystem are also inherited by dYdX Chain.
After the launch of v4, the LSD protocol in the Cosmos ecosystem has basically supported $DYDX liquid staking. The popularity of liquid staking has substantial benefits for the growth and price performance of $DYDX staking data (the LSD protocol will use $DYDX staking revenue USDC to buy back $DYDX).
Second, Noble has implemented the expansion of native USDC in dYdX Chain through CCTP, which is also the basis for dYdX Chain to be able to settle in USDC.
4. Conclusion
In the dYdX 2024 roadmap, the team mentioned that they will focus on three main areas: Permissionless Markets, Core Trading Improvements, and UX/Onboarding Upgrades.
As I mentioned in my Vertex article, decentralized derivatives trading platforms are given the mission of the market to compete with centralized derivatives exchanges, and if they want to compete, they need better tokenomics and better products, as well as what centralized derivatives exchanges do not have but the market wants:
1. Tokenomics: dYdX adjusts the tokenomics and distributes 100% of the fee income to validators and stakers, building a potential flywheel.
2. Better product and user experience: In terms of user experience, dYdX hopes to give users better transaction feedback by improving the reliability, accuracy and immediacy of the transaction function, and dYdX is also committed to lowering the entry threshold (ease of use) for users.
3. Competitive Advantages of Decentralized Derivatives Trading Platforms Permissionless Markets: I personally believe that the support for long-tail assets is the main competitive advantage of decentralized derivatives trading platforms. dYdX wanted to build a Permissionless Markets that would require no governance process, go live instantly, and provide liquidity through LP Vaults.