These DeFi products are non-custodial, have permissionless margin calls, permissionless provision of margin call liquidity, and decentralized price feeds, but centrally determine interest rates and centrally control platform developments and updates.”

  • A BIG side note, is that the blog was written by Kyle J Kistner who is Chief Vision Officer at bZx. He gave his own project the highest ranking. What a surprise.
  • From the comprehensive blog post:

Custody: dYdX smart contracts are non-custodial from the point of loan origination.

Initiating Margin Calls: Margin calls can be initiated by anyone. There is a 5% discount on liquidated collateral to incentivize margin callers.


  • FromWeek in Ethereum (11-12-2021):

“dYdX deposit proxy post mortem, contract had user ERC20 approvals and could make arbitrary calls, $200k stolen, $500k bug bounty paid.”

  • From their Twitter (27-11-2021):

“The dYdX team was alerted of a security issue with a newly deployed smart contract. A white hat recovery of potentially vulnerable funds was executed in partnership with @samczsun and the dYdX team, and all potentially vulnerable funds were saved.”

Liquidations in 1-2020

  • FromDeFi Weekly (17-1-2020):

“During the drop to $120/ETH dYdX saw their total assets locked up drop from $30m all the way down to $15m! Why? Basically the volume of people trying to liquidate was so high that dYdX’s front-end servers collapsed under the pressure.

That pushed dYdX to the top of DEX volume.”

Oracle Method

  • From this list curated by Linda Xie on Github (8-4-2020):

“Oracle Method

Prices are fed to the dYdX smart contracts through price oracles that run on Ethereum. dYdX uses different price oracles for different assets.

For ETH, dYdX uses the MakerDAO ETH-USD V1 Oracle that is used by MakerDAO for their stablecoin SAI, and relies on a distributed network of reporters that report the price of ETH in USD.

For SAI, dYdX uses a price of $1. SAI can no longer be borrowed and is basically worth 0 as collateral. We only include this oracle method for completeness.

For DAI, dYdX uses our own price oracle which calculates the USD price of DAI using a combination of Oasis Trade’s on-chain orderbook, Uniswap, and the MakerDAO ETH-USD oracle.

Dydx 65m series 10m006

This safety pool will be used to create a safety net in case of a security failure. This pool will go live as DYDX becomes transferraible on September 8th.”

  • FromOur Network (14-8-2021):

“Over $108M USDC across 400+ stakers is now being staked in Liquidity Staking Pool. This pool functions as a zero-interest, uncollateralized loan to known market makers governed by the dYdX Community.
This capital will be used by market makers to continue to bolster liquidity on dYdX order books.”

Liquidity Mining


  • From their announcement (18-8-2020):

“dYdX is excited to announce a partnership with StarkWare. Our engineering teams are collaborating on a Layer 2 scaling solution for Perpetual Contracts, based on StarkWare’s StarkEx scalability engine and dYdX’s Perpetual smart contracts.

Dydx 65m series 10ma

Therefore, while dYdX operates a non-custodial exchange powered by its users, the revenues from trading fees directed towards the parent company actually brings dYdX closer to a CEX rather than a DeFi protocol.”

Admin Key OpSec Risk Assessment

  • The following information comes from a spreadsheet (4-2-2020) created by Chris Blec.

“Current Admin Key Config- Time Lock: 3 days

Current Admin Key Config- Multisig: 2-of-3

Claimed Admin Key OpSec: None

Verified Admin Key OpSec: Unferifiable

Is security of deposited funds dependent on opsec of admin key?: Yes

Admin Key Address: Link

Documentation on Admin Key Powers: Help Center Article

Additional Info (if any)? Bramah Audit (Highly Privileged Accounts)”


  • FromThe Block (15-6-2021):

“There are also plans to decentralize the protocol.

Dydx 65m series 10md

Our goal really is to get to a point where we’re only publishing open-source code and all of dYdX is run natively on the blockchain, and the blockchain is available to more people in more places in the world,” said Juliano.”




  • 4-8-2021:

“While the tokens can be claimed already, users will need to wait until September 8th for it to become transferrable.”

  • FromThe Defiant (10-9-2021):

“dYdX dropped 7.5% of its initial billion-strong token supply on Sept 8. At the current price of $11.12, those 75M tokens are worth more than $800M. At one point the airdropped tokens’ value eclipsed $1B.”

Token Allocation

  • FromCrypto Briefing (4-8-2021):

“More than 64,000 Ethereumaddresses can claim the token granted they make at least one trade in August.

Margin Call Liquidity: Anyone can provide margin call liquidity, making this feature decentralized.

Price Feeds: dYdX uses the MakerDAO price feed for ETH and DAI, but also uses the Uniswap and ETH2DAI price feed to bound the update price to mitigate attacks on the feed. The MakerDAO price feed is semi-centralized, but is also not controlled by dYdX. For this reason we believe the dYdX price feed should be considered decentralized, but not as decentralized as using Kyber.
It should be noted that the centralization of the dYdX approach increases the cost of an attack on the price feed.

Interest Rates: dYdX sets the interest rate model parameters, giving them central control over the interest rates.

Development: The dYdX smart contracts are centrally developed and closed source.

Automated market makers are great, but they’re very capital intensive. So you have to have, if you’re Uniswap, or Sushiswap, or whatever, billions of dollars locked on the exchange to approach a similar level of liquidity as other exchanges that operate on order books have. So that’s the way it works right now.

And then I think the other piece that’s really critical to dYdX and the main kind of differentiator for us over most other decentralized exchanges is that we’re focused on more advanced financial products.

So the current product that we’re really focused on is a synthetic, which is known as a perpetual contract. Probably a lot of people in crypto are already familiar with this.

The way most people got to Coinbase, especially back in 2015, is that they were really into Bitcoin, and especially back then in 2015, Bitcoin was really all there was in terms of the interesting stuff going on in crypto. But I didn’t really know that much about it.

And through the interview process met a lot of really awesome people, was really fortunate while I was there to be able to work with just a lot of the top people in blockchain at the time were at Coinbase, or if they weren’t they were probably coming to Coinbase and giving talks. Like Vitalik came really early on in the life cycle of Ethereum to talk to us, and Olaf Carlson-Wee, was there giving presentations on smart contracts and gas usage on Ethereum, and all this kind of stuff.

So that just got me really excited about what was possible to build based on that new technology.

Because I really think of finance as a stack, especially decentralized finance as a stack where first you have decentralized money like Bitcoin and Ethereum and stuff, then you have decentralized spot exchanges like at the time, it was Kyber and 0x, and then the next logical thing to build on top of that is derivatives. But you can’t build anything higher in the stack without things lower in the stack, and that’s kind of what I was getting at back with the timing point. So been working on dYdX since then, we’re founded in 2017, so I’ve been around for a while now.”

Audits & Exploits

  • Bug bounty program can be found here.

    Max payout is $50,000 (29-6-2020).

  • Blockchain Security DB (29-6-2020) shows 1audit.

It’s basically financially the same product that was really popularized by Bitmex and it is now super popular across the space on exchanges like Binance and FTX.

Introduction of fees

  • Trading fees are distributed to the parent company.
  • Initially, using dYdX was free, however, in early 2020 they introduced fees. From their blog (3-3-2020):

“There are separate taker and maker fees, based on each trading pair. dYdX has been paying transaction fees for all trades since September. When orders are matched, dYdX submits a transaction to execute the matched trades on-chain.
This has cost us over $40,000 in February alone.”



  • FromCrypto Briefing (4-8-2021):

“A safety staking pool will distrbute more of the governance token to users who stake the governance token.

Our Perpetual Contracts will be powered by StarkEx by the end of this year.”


Other Details

  • FromDeFi Weekly (11-3-2020). dYdX uses Typescript (which provides integration guarantees) instead of JSON ABI files (which need to be updated).
  • FromOur Network #22 (22-5-2020):

“dYdX recently launched their BTC perpetual contracts. These contracts operate on the Ethereum blockchain and this system is the first non-custodial way to get exposure to BTC price movements in the Ethereum DeFi ecosystem. It was in private beta prior to launching publicly on May 13th.
The protocol offers up to 10x leverage. Since launch, the protocol has seen good volumes, with daily volume exceeding $12M in a single day of trading.

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