Our take
dYdX is a decentralised trading platform that offers spot trading, margin trading, lending and borrowing. It’s build on smart contracts with Ethereum in a completely decentralised way.
It's built by a team in San Francisco that's funded by some of Silicon Valley's top investors. They launched in 2017 and have managed to raise two rounds of funding to continue executing on their vision of DeFi.
They're significantly smaller in users compared with other DEX's, however, they seem to be gaining traction with some of their DeFi-based lending and borrowing products.
Borrowing with dYdX
Currently, dYdX supports ETH, DAI and USDC. It has a minimum collateralisation of 125% and has to be maintained above 115% to prevent liquidation.
The product connects directly to your Ethereum wallet, allowing you to borrow directly into it.
In order to use this product you’ll need an Ethereum wallet. We’d recommend using Metamask or Coinbase Wallet. In our case, we tested this with Metamask on the Chrome browser and Coinbase wallet on our iPhone.
Its borrowing interface is fairly straight forward on both mobile and desktop. You can simply select USDC, DAI or Ethereum to borrow. You then select the amount you want to borrow and the account you want to collateralise with.
The transaction takes less than a minute in most cases, which is pretty astonishing when you compare that with the traditional finance industry.
USD Margin Lending- Return rates optimized daily
- Secure, stable investment growth
- No minimum
- No lock-up period, withdraw anytime
Lending
dYdX have very competitive interest rates and are constantly rated amounts the top interest accounts for ETH, USDC and DAI.
Like most DeFi lending platforms, the rates fluctuate wildly. In our testing we were earning up to 27% on DAI at one point. At the time of this writing, it’s now 3.13%, which is still quite competitive.
In order to earn interest with dYdX, you’ll need an Ethereum wallet like Metamask or Coinbase Wallet. Once connected, you simply move your assets into dYdX and it’ll automatically start earning interest in real time.
One of the powerful things about DeFi is that you can take your assets at any time and receive all the interest up to that minute.
The dYdX team
dYdX was founded by Antonio Juliano who was previously a software engineer at Coinbase and Uber. He’s joined by a team of 8 others that are Silicon Valley based.
Advisors of dYdX are Silicon Valley veterans from companies like Google, Coinbase and Airbnb.
They’ve also got an all-star set of investors including Andreessen Horowitz, Polychain Capital, Bain Capital, Craft Ventures, Kindred Ventures and other top VC firms based in Silicon Valley.
dYdX’s history
The platform was launched in 2017 and received venture funding of $2m from A16z in December 2017. Since then dYdX has grown from being a decentralised exchange to offering a larger range of financial products such as lending and borrowing.
The service has grown, leading to a subsequent round of $12m in October 2018. They’ve hired a larger team, launched new products and are currently hiring more staff to help them scale further.
Why use dYdX
The only reason to use dYdX over another DeFi product is because it offers more competitive rates. Unfortunately, rates change almost by the second, so while they may be best right now, five minutes from now, someone else could be more competitive.
The product is decent, however, it’s not great. It’s rough around the edges, feels quite dated and is definitely geared towards someone who is very familiar with decentralised finance. It provides very little in regards to guides and help, so I definitely wouldn’t recommend this to someone who isn’t comfortable with Ethereum-based wallets and already using cryptocurrencies.
There are centralised options like BlockFi which generally offer better rates and more stability. It’s far easier to use as well.
If it’s DeFi only that you’re looking for, it’s an ok option, however, putting rates aside, we’d choose Dharma as a product over this. Dharma is far more polished and easy to use.
dYdX support
dYdX offer email support. While fairly responsive, it’s not exactly sophisticated. Should the service be hit with an attack or there be another crypto disaster of some sort, we can imagine this would not scale well. We couldn’t even find a FAQ section.
Their support services leaves us a little concerned to be honest. It seems more like an afterthought. Particularly for a company with this level of funding.
Ease of use
If you’re already a DeFi user, this should be pretty straight forward. Connect an existing wallet and you’re ready to go. As I mentioned earlier, it’s not the nicest interface, but it roughly makes sense.
If you’re not an experienced DeFi user, we don’t recommend this. If you want to simply earn interest, then go to BlockFi. They generally have better rates and don’t require strange Ethereum wallets that aren’t exactly easy to set up and use. If you don’t understand cyber security, they’re also too risky.
How to set up a dYdX interest account
Make sure you have an Ethereum wallet like Metamask or Coinbase Wallet
Go to dYdX website
Click on ’Start lending’
Connect your Ethereum wallet
Click ‘Deposit’
Select relevant currency
Select relevant wallet
Enter the amount
Click ‘Deposit’
How to set up a dYdX loan account
Make sure you have an Ethereum wallet like Metamask or Coinbase Wallet
Go to dYdX website
Click on ’Start borrowing’
Connect your Ethereum wallet
Click ‘Borrow’ in the top navigation
Select relevant currency
Select relevant wallet
Enter the amount
Click ‘Borrow’
dYdX summary
As an exchange
dYdX just isn't competitive as an exchange in our opinion. When testing, it was far from intuitive and they were severely lacking in features. There are far better options for exchanges whether they're decentralised or centralised
As a lending platform
dYdX offers competitive rates and is fairly easy to use for those who are used to DeFi and Ethereum-based wallets. If you're less comfortable with that, then we recommend using a centralised service like BlockFi who generally offer more competitive rates and are far easier to use
As a borrowing platform
dYdX offer fairly competitive rates for loans and the platform is easy to use if you're used to DeFi and Ethereum-based wallets. It's near instantaneous and because it's decentralised, it's secure, so long as you know what you're doing. Again, BlockFi generally offer better rates and an easier to use experience in most cases.