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 Danny krypt👾 🔶️ [@DanielAgaba20](/creator/twitter/DanielAgaba20) on x 2138 followers
Created: 2025-07-19 09:28:38 UTC
A Guide to Decentralized Perpetuals Trading 📈
Ever wondered how you can trade with leverage in a decentralized, non custodial way? Enter dYdX, a leading decentralized exchange (DEX) designed for trading perpetual contracts,
It combines the speed of a centralized exchange with the security and self custody of DeFi
Let me break down how it all works,
The Core Engine:
Off Chain Order Book & On Chain Settlement
dYdX uses a powerful hybrid model to give you the best of both worlds,
Off Chain Order Book:
When you place, modify, or cancel an order, it's handled by a high performance, off chain matching engine This means your actions are instantaneous and you don't pay gas fees for these operations It feels just like using a traditional trading platform.
On Chain Settlement: While orders are matched off chain, the actual trades are settled on the dYdX Chain, a dedicated blockchain built with the Cosmos SDK This ensures that all transactions are transparent, verifiable, and, most importantly, you always maintain full custody of your funds Your assets are never held by a central party.
This combination provides a seamless, fast, and secure trading experience without compromising on decentralization
Trading Perpetuals on dYdX
Trading on dYdX is straightforward Here’s the typical flow:
Connect Your Wallet:
You connect a self-custody wallet like MetaMask or Keplr.
Deposit Collateral:
You deposit collateral, primarily in the form of USDC, into your dYdX account.
Place Your Trade:
You can open a long (betting the price will go up) or short (betting the price will go down) position on various assets like BTC, ETH, and SOL.
Use Leverage:
dYdX allows you to trade with leverage, enabling you to open a position that is larger than your collateral For example, with 10x leverage, a $XXXXX deposit can control a $XXXXXX position While this magnifies potential profits, it also significantly increases risk, so use it wisely,
The Funding Rate Mechanism
Because perpetual contracts don't have an expiry date, a mechanism is needed to keep the contract's price anchored to the underlying asset's real time spot price This is done through the funding rate.
If the perpetual price is higher than the spot price, long positions pay a small fee to short positions.
If the perpetual price is lower than the spot price, short positions pay long positions.
This payment, which occurs every hour, incentivizes traders to take the other side of the trade, naturally pushing the contract price back towards the spot price The rate is calculated as:
FundingRate 24TWAP(MarkPrice) TWAP(IndexPrice)
Where TWAP stands for Time Weighted Average Price
The dYdX Chain and the DYDX Token
The entire protocol is powered by its own sovereign blockchain, the dYdX Chain This chain is operated by a decentralized network of validators The native token, DYDX, has two primary functions
Staking:
You can stake your DYDX tokens with a validator to help secure the network In return, you earn a share of the protocol's trading fees, which are paid out in USDC
Governance:
DYDX holders can propose and vote on changes to the protocol, such as adding new markets, adjusting trading parameters, or upgrading the software This gives the community direct control over the platform's evolution.
In short, @dYdX offers a robust, high performance platform for perpetuals trading that puts security, speed, and user control at the forefront.
XXX engagements
**Related Topics**
[decentralized](/topic/decentralized)
[Post Link](https://x.com/DanielAgaba20/status/1946502430922780747)
[GUEST ACCESS MODE: Data is scrambled or limited to provide examples. Make requests using your API key to unlock full data. Check https://lunarcrush.ai/auth for authentication information.]
Danny krypt👾 🔶️ @DanielAgaba20 on x 2138 followers
Created: 2025-07-19 09:28:38 UTC
A Guide to Decentralized Perpetuals Trading 📈
Ever wondered how you can trade with leverage in a decentralized, non custodial way? Enter dYdX, a leading decentralized exchange (DEX) designed for trading perpetual contracts, It combines the speed of a centralized exchange with the security and self custody of DeFi
Let me break down how it all works,
The Core Engine: Off Chain Order Book & On Chain Settlement dYdX uses a powerful hybrid model to give you the best of both worlds,
Off Chain Order Book: When you place, modify, or cancel an order, it's handled by a high performance, off chain matching engine This means your actions are instantaneous and you don't pay gas fees for these operations It feels just like using a traditional trading platform.
On Chain Settlement: While orders are matched off chain, the actual trades are settled on the dYdX Chain, a dedicated blockchain built with the Cosmos SDK This ensures that all transactions are transparent, verifiable, and, most importantly, you always maintain full custody of your funds Your assets are never held by a central party.
This combination provides a seamless, fast, and secure trading experience without compromising on decentralization
Trading Perpetuals on dYdX Trading on dYdX is straightforward Here’s the typical flow:
Connect Your Wallet: You connect a self-custody wallet like MetaMask or Keplr.
Deposit Collateral: You deposit collateral, primarily in the form of USDC, into your dYdX account.
Place Your Trade: You can open a long (betting the price will go up) or short (betting the price will go down) position on various assets like BTC, ETH, and SOL.
Use Leverage: dYdX allows you to trade with leverage, enabling you to open a position that is larger than your collateral For example, with 10x leverage, a $XXXXX deposit can control a $XXXXXX position While this magnifies potential profits, it also significantly increases risk, so use it wisely,
The Funding Rate Mechanism Because perpetual contracts don't have an expiry date, a mechanism is needed to keep the contract's price anchored to the underlying asset's real time spot price This is done through the funding rate.
If the perpetual price is higher than the spot price, long positions pay a small fee to short positions.
If the perpetual price is lower than the spot price, short positions pay long positions.
This payment, which occurs every hour, incentivizes traders to take the other side of the trade, naturally pushing the contract price back towards the spot price The rate is calculated as:
FundingRate 24TWAP(MarkPrice) TWAP(IndexPrice) Where TWAP stands for Time Weighted Average Price The dYdX Chain and the DYDX Token The entire protocol is powered by its own sovereign blockchain, the dYdX Chain This chain is operated by a decentralized network of validators The native token, DYDX, has two primary functions
Staking: You can stake your DYDX tokens with a validator to help secure the network In return, you earn a share of the protocol's trading fees, which are paid out in USDC Governance: DYDX holders can propose and vote on changes to the protocol, such as adding new markets, adjusting trading parameters, or upgrading the software This gives the community direct control over the platform's evolution.
In short, @dYdX offers a robust, high performance platform for perpetuals trading that puts security, speed, and user control at the forefront.
XXX engagements
Related Topics decentralized