dYdX, the decentralized derivatives exchange, secured $ 65 million in a Series C survey led by Paradigm.
The San Francisco-based protocol development firm, which focuses on decentralized perpetual swaps, just announced a $ 10 million Series B fundraiser in January this year. Three Arrows Capital and DeFiance Capital led this round, in which Wintermute, Hashed, GSR, SCP, Scalar Capital, Spartan Group and RockTree Capital participated.
“It’s a raise that comes pretty soon after the previous one. The reason for this is that we simply see a great opportunity in crypto derivatives and especially in the way that decentralized derivatives can play in the market, ”Antonio Juliano, founder of dYdX, told The Block. “Our goal for dYdX is really to make it one of the largest crypto exchange periods, but on a time horizon of three to five years.”
Previous supporters of the protocol include a16z, Bain Capital Ventures, and Coinbase CEO Brian Armstrong.
In addition to Paradigm, a number of new strategic investors participated in the Series C increase, including the liquidity providers QCP Capital, CMS Holdings, CMT Digital, Finlink Capital, Sixtant, Menai Financial Group, MGNR, Kronos Research; Venture capital firms HashKey, Electric Capital, Delphi Digital; and StarkWare, a partner focused on scaling solutions for blockchains.
The money will be used to add new assets and features to the exchange’s perpetual contracts, launch a new mobile app, continue investing in international expansion, and double the team of 16 over the next year. A decentralization of the protocol is also planned.
“Our goal is really to get to a point where we only publish open source code and dYdX runs natively on the blockchain and the blockchain is available to more people in more places around the world,” said Juliano.
The cumulative trading volume in perpetual, margin and spot trading on dYdX, introduced in October 2018, reached 2.5 billion US dollars in 2020 compared to 63 million US dollars in 2019. By January 27 of this year, the protocol had has already exceeded a total trade volume of 3.5 billion US dollars.
But in February, dYdX launched a new Layer 2 protocol for perpetual contracts with coverage that uses StarkWare’s StarkEx scalability engine. The idea behind the integration was to make the exchange function more efficient, and dYdX said in a press release that customers can now trade without gas fees, lower trading fees and reduced minimum trade sizes.
“The main purpose of the introduction was scalability. One huge problem that plagued decentralized exchanges overall, including dYdX, has been gas fees and transaction fees on top of Ethereum, ”said Juliano.
According to Juliano, at one point in March this year, dYdX users were paying an average of over $ 100 in gas fees to make a single trade. Under the new Layer 2 system, dYdX charges these fees, but they’re about 100 times less than what its users paid before.
“We are now able to offer very competitive fees in relation to what users are used to on centralized exchanges,” said Juliano.
In the past five months, Layer 2 protocol has supported over $ 2.2 billion from over 11,000 merchants.
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