DYdX to Debut Perpetual Futures on Prediction Markets as DEX Seeks to Raise Profile

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SINGAPORE — Perpetuals-focused decentralized cryptocurrency exchange dYdX will soon enter the prediction markets sector, allowing users to place leveraged bets on the outcome of binary events, as it looks to divert attention from centralized trading venues.
“DYdX will launch perpetual futures on prediction markets,” dYdX Foundation CEO Charles d’Haussy said in an interview, explaining that decentralized finance (DeFi) needs to offer something special to differentiate itself from centralized venues.
“The prediction market could offer DeFi a unique opportunity to regain attention,” d’Haussy said, adding that the DEX is also looking at foreign currency and indexes markets.
Prediction markets allow investors to place bets on the outcome of specific events, ranging from sports, financial asset prices, political events and even the weather, using financial incentives. Perpetuals are futures-like derivatives contracts without an expiry date, allowing market participants to hold positions as long as they see fit.
Augur, launched in 2018 on Ethereum, was perhaps the first to enter the crypto-based prediction market. However, it failed to gain traction due to a lack of liquidity and high fees on the Ethereum blockchain. Today, PolyMarket is the leader in on-chain prediction markets. August trading volume on the platform exceeded $450 million. DYdX’s trading volume was $21.2 billion, according to DefiLlama
DYdX’s impending foray into prediction markets is a part of the dYdX Unlimited upgrade, which is expected later this year. The program, touted as the dYdX blockhain’s most significant to date, will introduce features like a permissionless listing of markets and a master liquidity pool called MegaVault.
The platform’s users can propose to list any market on the dYdX chain. The protocol actively maintains price and market parameters,” Haussy said, explaining permissionless listing. The community is currently experimenting with an FX trading pair tied to the Turkish lira (TRY).
Users who debut new markets will need to deposit a governance-determined amount of stablecoin USDC into the MegaVault, which will then quote orders on that market, facilitating instant liquidity.
The vault will source liquidity from users, who will get a share of the vault’s profits plus a share of the protocol’s revenue determined by governance. More importantly, users only need to deposit USDC into the vault, and the vault will decide where to provide liquidity. In esssence, it’s a passive income strategy, d’Haussy explained.
Edited by Sheldon Reback.
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Omkar Godbole is a Co-Managing Editor on CoinDesk’s Markets team.