#dYdX Advanced Player Guide: How to play the perpetual contract on Wall Street on the chain? Old Leek will help you avoid pitfalls

Anyone who plays contracts knows that centralized exchanges (CEX) are the mainstream battlefield, but the custody risks always make people feel uneasy. Have you ever thought about being able to play with perpetual contracts and margin trading in a completely decentralized, non-custodial environment? dYdX is such an "on-chain Wall Street" built for experts.

Today, let’s not talk nonsense, let’s talk about this DeFi derivatives giant-dYdX. What is its origin, how to get started, and how is it different from the Uniswap brothers? It's full of useful information that even novices can understand.

What exactly is dYdX?

To put it bluntly, dYdX is a decentralized exchange (DEX) focusing on high-end derivatives trading. Its core is not simple currency exchange, but "advanced gameplay" such as perpetual contracts and margin trading, which are designed to cater to all kinds of veterans who want to increase leverage.

This guy debuted in 2017 and initially worked on Ethereum. However, due to the handling fees and speed of Ethereum, high-frequency trading was simply torture. So in October 2023, dYdX made a cruel decision: move! Moved to its own dYdX Chain. At this time, the transaction speed soared, the handling fees dropped sharply, and it jumped directly from the "country road" to the "blockchain highway".

As of the end of 2023, its cumulative trading volume has exceeded 1 trillion U.S. dollars, and its users have increased rapidly, becoming the absolute leading player in decentralized derivatives trading.

How does dYdX work? How is it different from ordinary DEX?

Most DEXs, such as Uniswap, use the AMM (Automated Market Maker) model. The price at which you exchange coins is determined by a mathematical formula and a pool of funds. There is no way to accurately specify "I will buy a Bitcoin at $50,000."

But dYdX is different. It uses the Order Book model of the traditional financial market. You can place limit orders and market orders just like on Binance and OKX, and have complete control over the price. For veterans who are used to professional trading interfaces, this is a seamless switch.

Its technical core is dYdX Chain, a proprietary Layer-1 blockchain developed based on the Cosmos SDK. Using Tendermint consensus, the main thing is to be fast and cheap, specially optimized for complex operations such as high-frequency trading and derivatives.

**By the way, when it comes to centralized exchanges such as Binance and OKX, if you are their user, there is a secret to save money that you must tell you: **

When registering for these major firms, remember to use the invitation code so that you can permanently enjoy the discount on transaction fees. For example:

Binance: Use the invitation code LULALA Register to enjoy 20% commission rebate.
OKX: Use the invitation code LULALA Register to enjoy 20% commission rebate.
Bybit: Use the invitation code ODXBWMN Register to enjoy 20% commission rebate.

**Always remember that the first choice for currency trading is regular large exchanges. No matter how high the profit temptation of the pheasant platform is, the safety of the principal is always the first priority. **

What are the trading methods on dYdX?

This is a place where experts gather, and there are three main ways to play:

Perpetual Contract: This is the signature of dYdX. You can go long (bullish) or short (bearish) on a cryptocurrency, and the contract has no expiration date and can be held forever. The key is to increase leverage, and the returns and risks will be magnified simultaneously. If you play well, you will become rich overnight, but if you play poorly, you will go back to zero.
Margin trading: Simply put, it is "borrowing money trading". You mortgage part of your assets, and the platform lends you more money to open a position, thereby amplifying your purchasing power. Likewise, this is a double-edged sword. If you use it well, you will get better, but if you use it worse, it will make things worse.
Coin-to-Coin Trading: Of course, it also provides the most basic spot trading function, but this is not its main battlefield, and experts generally disdain to only play this.

High-end tools are also available:

Stop Loss Order: Automatically set the stop loss position, which will help you automatically close your position when the market fluctuates in the opposite direction and control losses - don't wait until the pin is inserted to regret not setting it.
Limit Order: Specify the price to complete the transaction, control the trading rhythm, and avoid market orders being pitted by slippage.
Thanks to the low latency of dYdX Chain, Short-term trading and High-frequency strategies are also useful here, suitable for veterans with fast hands and smart minds.

In terms of fees, the transaction fee depends on your transaction volume and type, generally between 0.01% and 0.05%, which is cheaper than many centralized exchanges, but you may also need to pay a network gas fee on the chain - the brick-and-mortar party must calculate this account clearly.

IMPORTANT NOTE: dYdX is definitely not a novice village! If you are new to cryptocurrency and haven’t even figured out spot trading, please stay away from leverage and contracts first. Be sure to learn enough and test the waters with a small amount of money first before considering these advanced options. Don't be all in as soon as you come up. The market specializes in all kinds of dissatisfaction.

How to start trading on dYdX?

Since it is positioned at a high level, the operation steps are a little more than those of ordinary DEXs, but if you follow the old leek, there will be no big problem:

Prepare a wallet: You need a Web3 wallet, such as MetaMask, Coinbase Wallet, Ledger Live, etc. This is the "key" to enter dYdX. Without it, no one can get in.
Connect Wallet: Visit the dYdX official website and connect your wallet. Usually you need to complete some basic identity verification (KYC), don’t be too troublesome, safety first.
Deposit Funds: Deposit dYdX supported assets (such as ETH, USDC, USDT) from your wallet to the dYdX trading account. Please note that on-chain transfers may be delayed, so don’t worry.
Select trading market: Select the contract pair you want to trade, such as ETH-USD. Keep an eye on the market and don't mess around.
Place an order: Select the order type (limit price/market price), set the leverage multiple (if necessary), and then confirm the order. Don't shake your hands and keep your mind steady.

Iron Law of Risk Management:

Start from a young age: Don’t be all in as soon as you get started, test the water with a small amount of money first, and figure out the routine first.
Make good use of stop loss: This is your lifeline. Once it is set, don’t change it randomly. Discipline is more important than luck.
Continuous Learning: The market is always the teacher. Look more at Lao Liek’s experience and avoid detours.

dYdX vs. Uniswap: Which one should you choose?

Although both of them are DEX, they are completely designed for different groups of people, so don’t confuse them.

Summary in one sentence: If you want to play with contracts and leverage, and pursue professional trading experience, choose dYdX. If you just want to simply exchange some coins or participate in DeFi liquidity mining, choose Uniswap. Don't be greedy, find your niche.

The future of dYdX: Can it reshape the trading landscape?

dYdX’s move from Ethereum to its own chain shows its strong ambitions. It not only wants to be an application, but also wants to create an independent derivatives trading ecosystem.

Its governance token DYDX has been extended to staking and network security in the v4 version, with stronger value capture capabilities. Its future development roadmap revolves around multiple sub-DAOs (Decentralized Autonomous Organizations), covering operations, product development, market, risk management, etc. The color of community governance is very strong - this wave of operations has all the old leeks watching.

Conclusion

dYdX shows us a possibility: in a decentralized world, complex and efficient financial derivatives transactions can also be carried out. It's fast, low-fee, and non-custodial, making it extremely attractive to advanced traders who value asset autonomy.

However, no matter how good a tool is, it depends on who uses it. Derivatives trading is extremely risky, do not blindly follow the trend. Whether you choose a professional DEX like dYdX or use a centralized exchange such as Binance or OKX, register with our exclusive invitation code and get a discount on your own handling fee. This is always the first step for a smart player - you can save a little, and the little will add up.

Final reminder: Investment is risky, so be cautious when entering the market. This article is for information sharing only and does not constitute any investment advice. Please be sure to make independent judgments based on your own circumstances and take responsibility for your own decisions. Old leeks, be patient!