Decentralized finance (DeFi) lending platform dYdX recently announced that it will be launching Bitcoin perpetual contracts for trading on its platform. The alpha version of this service has already been launched.
Bitcoin perpetual contracts
Perpetual contracts have gained popularity as viable crypto derivatives. These contracts are similar to traditional futures contracts. However, they do not have an expiry date, unlike traditional futures which expire every day or every month. This helps traders in holding the contracts for as long as they want.
Perpetual futures contracts were first introduced by derivatives trading giant BitMEX in 2014. Other exchanges saw the potential and launched their own products soon after. dYdX suggests that their product is the first to be offered on a decentralized platform. All other perpetual are available on centralized platforms. This is also the first offering of a non-Ethereum asset on the platform.
The Bitcoin futures contracts on the platform will provide users up to 10x leverage. The cash-settled contracts will be in USDC, a stablecoin pegged 1:1 to the USD dollar, backed by Circle. dYdX has also suggested that it will run a new order book, separate from all its existing Ethereum markets for the future.
DeFi platforms see growth
dYdX is one of the leading decentralized finance platforms around with a $22.8 million locked-in value. It has facilitated over $1 billion in loans since launch. Decentralized finance is one of the most active areas in the crypto sector. Reports suggest that a large chunk of users are in here for experimental purposes, but it only strengthens the fact that crypto investors are interested in building new financial paradigms.
dYdX is backed by some of the top VC firms in the business like 1confirmation, Polychain, and 16z and has raised $12 million in funding to date. These platforms are being seen as true disruptors to the world of traditional finance, powered by blockchain and cryptocurrency. The projects are still in infancy and have several vulnerabilities, including security and design issues. Recently, a Chinese DeFi platform dForce suffered a $25.9 million breach while bZx was attacked numerous times.