DYdX To Complete v5 Upgrade Next Week

DYdX, a decentralized perpetuals exchange, is set to complete the rollout of its highly anticipated v5 upgrade next week.

Announced on June 7, dYdX’s v5 iteration introduces a suite of new features including isolated markets, batch orders, liquidity vaults, and new price oracles. The dYdX community voted to implement the v5 upgrade with 98.4% on June 3.

DYdX commands a total value locked (TVL) just shy of $500 million, placing it among the top 20 DeFi projects by TVL​, data from DefilLama shows. The protocol ranks second among perpetual DEXes, sitting behind GMX with $544 million.

DYdX is followed by Jupiter and Hyperliquid with $412 million and $392 million, respectively.

The protocol’s multiple iterations have generated more than $120 billion in cumulative trading volume​, the dYdX Foundation shared in an April blog post.

New features

The introduction of Isolated Markets is among the biggest changes introduced by v5. Previously, all markets on dYdX shared the same collateral pool, limiting the number of markets available. With Isolated Markets, each market now has a distinct collateral pool, enabling the launch of up to 800 new markets on the protocol.

Isolated Margin is another key feature in the update. It allows traders to treat each market as an isolated position with distinct risk parameters, rather than having all positions cross-margined against a single pool of collateral.

“Traders have the ability to confine collateral to a specific position and manually adjust the collateral for that given position,” dYdX said in an announcement. “We believe this will allow users to more intuitively understand and adjust their collateral management.”

The update includes price oracle integrations from Slinky and Raydium, a Solana-based limit order book DEX. The Slinky integration will enable block-by-block price updates with improved latency by leveraging dYdX’s validators, while the Raydium oracle provides price data on all assets traded on the Raydium exchange.

V5 also introduces batch order cancellations allowing users to cancel up to 100 short-term orders simultaneously.

The update will additionally introduce liquidity provider (LP) vaults providing automated LP strategies in the coming weeks.

Season 5 incentives

DYdX’s v5 launch will likely coincide with the project’s fifth season of incentives for users. The campaign will offer $5 million in DYDX tokens to traders and will run until mid-July 2024, pending a governance vote.

The season will also introduce a multiplier for DYDX stakers, enhanced points for front-end trading activity, and separate trading reward allocations for major markets including BTC, ETH, and SOL. Season 5 will also distribute $100 deposit bonuses to the first 500 new accounts that sign up.

Migration from Ethereum to Cosmos

In 2017, Antonio Juliano launched dYdX as an Ethereum-based decentralized exchange.

DYdX ranked among Ethereum’s top DeFi protocols for several years, with the project migrating to a dedicated Layer 2 appchain with the launch of its v3 iteration in April 2021. However, dYdX exited the Ethereum ecosystem to deploy a Cosmos-based appchain with the deployment of its fourth version in November 2023.

The project attracted funding from top crypto investment firms including Paradigm, Polychain, and Andreessen Horowitz over four funding rounds.