I didn't know how to start for a moment. I felt shy like a middle school girl in love. Yes, I had another car accident today, in front of the traffic police. It was the same situation on the second day of last month. The only difference was that the car in front of me was a young lady instead of an uncle. What remained the same was that I was fully responsible. The reason was that I watched dydx from the beginning last night. From a nobody to the founding of a dynasty, it was quite like the style of Qin Shihuang unifying the six kingdoms. I was still thinking about it this morning.
Today I want to talk about dydx, and I also want to talk about the development of a project, including the ideas and changes of the founder, so that everyone can understand the project more thoroughly, and I can also provide everyone with a framework for analyzing the project.
Antonio Juliano, the founder of dudx, founded Weipoint after working at Coinbase for two years. This was his first startup, which was a search engine for decentralized applications, or dapps. After five months of development, the platform had a record-breaking number of 10 users. Yes, a record-breaking 10 users.
At the time, there were only a few dozen dApps. There was nothing to search for, so what was the point of a search engine? This brings us to our first lesson: timing.
Too early or too late is as good as a mistake. On July 27, 2017, dYdX was founded. At that time, the main way for our users to use cryptocurrency was for trading.
Antonio's intuition was that the next step would be derivatives trading, and in the same year he completed a $2 million seed round led by a16z and polychaincap, bringing dYdX's valuation to $10 million. I remember that they released their first product, Expo, when the valuation reached $50 million.
You can also see the pictographic dydx from the picture, but Expo’s function at that time was very simple. It was a simple trading app where users could buy leveraged tokens. But at that time, users preferred innovative science fiction products and did not agree with Expo’s simplicity. They all thought that the trading application was too simple, so that at its peak, Expo’s daily transaction volume was about 50k. At this point, Antonio has failed twice. Because the transaction fee has not been used yet, the income is still 0
As Antonio said, the team should build something to attract target users instead of building a general platform like CEX.
By September 2019, the second version of dYdx was called “Solo”, not the current sol. This is not a product of the same parent. This new version imitated the lending method called comp. Yes, that’s right, dydx imitated comp here. Before this, the dYdX we see today did not exist.
Because the solo platform relies on a third-party DEX to obtain buy and sell orders, which greatly damages the user experience, the dydx team decided to build its own order book trading system.
On March 12, 2020, dYdX enabled transaction fees for the first time. Three years later, the company achieved profitability for the first time! That’s right, dydx started making money, and the gears of fate began to turn.
In April of the same year, dYdX made the best decision ever: the team decided to launch a new perpetual contract protocol. This decision was actually a bit passive, mainly because the perpetual contract trading volume driven by Bitmex has exploded, and Bitmex's trading volume has quickly surpassed Bitfinex and CEX. dYdX is here to join if you can't beat it. I definitely can't just stand there and watch you eat meat.
But now it seems that this gamble has paid off hugely, as dYdX is currently the largest sustainable DEX.
The launch of COMP and the subsequent explosive growth of liquidity mining and DeFi tokens have greatly changed the DeFi field. Because dydx, as mentioned above, imitated comp when launching solo. Because dYdX could not provide new markets like Uni, its market share quickly dropped from about 50% to about 0.5%. This is when dydx's difficult time began, and the gears of fate got stuck. Because the rise of DeFi caused Ethereum's gas costs to increase by 100-1000 times. But dYdX initially paid gas fees for users, so a single transaction cost the platform more than $100 in gas fees.
Today, there are no misplaced photos. It was the same choice as dydx back then, letting users take a step back and not charge if you don’t look at it. They decided to increase the minimum transaction size to $10,000 and charge a transaction fee proportional to the gas fee. Problem solved. Some user interests were sacrificed, but the user experience was not changed. The previous gas had already emptied the company’s expenses, so dYdX decided to raise more funds to keep the company running, but all major venture capital firms such as a16z, Polychain, and Paradigm refused to lead this round of financing. Fortunately, Three Arrows Capital stepped in and led the Series B financing, raising $10 million at a valuation of $80 million.
With the greatest bull run of all time about to begin in 2021-21, dYdX needed to make major changes as the business was being hit by gas fees and was unable to compete with its competitors.
The team decided to abandon Ethereum. Some time later, dYdX landed on Starkware.
Soon after the launch, trading volume surged about 5x to around $30 million per day.
From the brink of collapse, dYdX quickly returned to the track of dominating the industry. In June 2021, the company raised $65 million in Series C funding at a valuation of $215 million, led by paradigm. This is the time to say that when your back is against the wall, that's when you show who you are. Grind and give it your all to rise from hell.
In the summer of 2021, the dYdX Foundation was established, and shortly thereafter, $dYdX was released in August 21. After the launch of the token, dYdX trading volume soared to over $2 billion per day.
At the start of the 2022 bear market, trading volumes on all cryptocurrency exchanges began to drop significantly, affecting dYdX as well. However, the company had over 6 years of runway at this point, so there was nothing to worry about. The only thing to focus on was construction. FTX Crash The second largest exchange in the cryptocurrency space crashed in a matter of days. This event was a confirmation of how much decentralized solutions were needed, and that dYdX must have been well prepared to welcome a new wave of users.
If I were to describe the feedback dydx has received so far, I would sum it up in one sentence—it seems arrogant, but it is actually smart. The world is ever-changing, but there is one thing that remains unchanged, just like no matter how aesthetics change, it is still the masters who pay for it to be considered true aesthetics. No matter how the decentralized platform develops, whoever the transaction ends up in, it must be passed down layer by layer to the masters to be useful. Friends, see you next time! ! Respect! ! I put the wrong picture because my hand was shaking at the end.
