The Rising Star in the Perp Dex Sector: A Deep Dive into $DYDX

Aug 23, 2023

The Rising Star in the Perp Dex Sector: A Deep Dive into $DYDX

Aug 23, 2023

The Rising Star in the Perp Dex Sector: A Deep Dive into $DYDX


When we talk about smart investment, we are essentially discussing decisions based on solid research and data. Over the past few months, those observing closely have noticed a trend: some of the most intelligent funds are showing interest in a particular token: $DYDX. Contrary to what you might have expected, $DYDX operates as a Central Limit Order Book (CLOB) style Perp Dex, matching orders off-chain and executing them on-chain.


Looking at DYDX's metrics, it has a Market Cap of $350m and a Total Value Locked (TVL) of $340m. In the total Perp Dex Market, its volume share is a notable 57%, or about $400b annualized. Its fee share stands at 25%, approximately $70m annualized.


In terms of sector insights for Perp Dexes, they have a large Total Addressable Market (TAM) with a clear Product-Market Fit (PMF). The growth trajectory is evident and supports various assets. This sector leans towards a winner-takes-most scenario, with traders gravitating towards platforms with more liquidity, resonating with classic financial network effects.


Specifically, for DYDX, there's the introduction of the DYDX App-Chain, the emergence of Utility (Validation) and Revenue Share from fees and MEV, moving away from its prior status as a rebate token. It also boasts a decentralized order book and can potentially charge up to three times its current fees while remaining competitive.


However, several risks shadow DYDX. There's a significant token unlock expected in December, jumping from 260m to 440m. It faces fierce competition from other Perp Dex models like GMX, Thena, and the Perpetual Protocol. The anticipated launch of DYDX v4 has its own set of execution risks, and looming regulatory measures could shift the playing field.


From our perspective, DYDX has been an unsung hero, quietly amassing substantial cash flows. The shift to DYDX v4 is set to introduce several enhancements. Notably, revenue payouts will be in the stable $USDC. Major funds seem to concur with this positive outlook on DYDX as the Perp Dex of choice.


Breaking down what some smart funds are doing:

Wintermute has $DYDX holdings of $2.3m and, interestingly, no other investments in the Perp Dex Sector.

Cumberland's $DYDX holdings are valued at $1.4m, and they have been long-time advocates for its potential, often emphasizing fundamentals in their investment strategy.

CMS has invested $2.6m in $DYDX. Their primary holdings share a common trait: they are cash-rich protocols that steer clear of unsustainable growth methods.


For those keen on diving deeper, we've teamed up with @loch_chain, a budding analytics platform. You can find comprehensive wallet data (https://app.loch.one/home/64e6414d32905d96cf2efc60). Don't forget to bookmark this for future reference.


Remember, always undertake your own research prior to making investment decisions.

The Rising Star in the Perp Dex Sector: A Deep Dive into $DYDX


When we talk about smart investment, we are essentially discussing decisions based on solid research and data. Over the past few months, those observing closely have noticed a trend: some of the most intelligent funds are showing interest in a particular token: $DYDX. Contrary to what you might have expected, $DYDX operates as a Central Limit Order Book (CLOB) style Perp Dex, matching orders off-chain and executing them on-chain.


Looking at DYDX's metrics, it has a Market Cap of $350m and a Total Value Locked (TVL) of $340m. In the total Perp Dex Market, its volume share is a notable 57%, or about $400b annualized. Its fee share stands at 25%, approximately $70m annualized.


In terms of sector insights for Perp Dexes, they have a large Total Addressable Market (TAM) with a clear Product-Market Fit (PMF). The growth trajectory is evident and supports various assets. This sector leans towards a winner-takes-most scenario, with traders gravitating towards platforms with more liquidity, resonating with classic financial network effects.


Specifically, for DYDX, there's the introduction of the DYDX App-Chain, the emergence of Utility (Validation) and Revenue Share from fees and MEV, moving away from its prior status as a rebate token. It also boasts a decentralized order book and can potentially charge up to three times its current fees while remaining competitive.


However, several risks shadow DYDX. There's a significant token unlock expected in December, jumping from 260m to 440m. It faces fierce competition from other Perp Dex models like GMX, Thena, and the Perpetual Protocol. The anticipated launch of DYDX v4 has its own set of execution risks, and looming regulatory measures could shift the playing field.


From our perspective, DYDX has been an unsung hero, quietly amassing substantial cash flows. The shift to DYDX v4 is set to introduce several enhancements. Notably, revenue payouts will be in the stable $USDC. Major funds seem to concur with this positive outlook on DYDX as the Perp Dex of choice.


Breaking down what some smart funds are doing:

Wintermute has $DYDX holdings of $2.3m and, interestingly, no other investments in the Perp Dex Sector.

Cumberland's $DYDX holdings are valued at $1.4m, and they have been long-time advocates for its potential, often emphasizing fundamentals in their investment strategy.

CMS has invested $2.6m in $DYDX. Their primary holdings share a common trait: they are cash-rich protocols that steer clear of unsustainable growth methods.


For those keen on diving deeper, we've teamed up with @loch_chain, a budding analytics platform. You can find comprehensive wallet data (https://app.loch.one/home/64e6414d32905d96cf2efc60). Don't forget to bookmark this for future reference.


Remember, always undertake your own research prior to making investment decisions.

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Loch, Inc. © 2023

The content made available on this web page and our mobile applications ("Platform") is for informational purposes only. You should not construe any such information or other material as financial advice in any way. All information provided on the Platform is provided on an as is and available basis, based on the data provided by the end user on the Platform. Nothing contained on our Platform constitutes a solicitation, recommendation, endorsement, or offer by us or any third-party service provider to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. All content on this Platform is information of a general nature and does not address the circumstances of any particular individual or entity. Nothing in the Platform constitutes financial advice, nor does any information on the Platform constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other content on the platform before making any decisions based on such information. In exchange for using the Platform, you agree not to hold us, our affiliates, or any third-party service provider liable for any possible claim for damages arising from any decision you make based on information or other content made available to you through the Platform.

2261 Market Street,

San Francisco, CA 94114

Loch, Inc. © 2023

The content made available on this web page and our mobile applications ("Platform") is for informational purposes only. You should not construe any such information or other material as financial advice in any way. All information provided on the Platform is provided on an as is and available basis, based on the data provided by the end user on the Platform. Nothing contained on our Platform constitutes a solicitation, recommendation, endorsement, or offer by us or any third-party service provider to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. All content on this Platform is information of a general nature and does not address the circumstances of any particular individual or entity. Nothing in the Platform constitutes financial advice, nor does any information on the Platform constitute a comprehensive or complete statement of the matters discussed or the law relating thereto. You alone assume the sole responsibility of evaluating the merits and risks associated with the use of any information or other content on the platform before making any decisions based on such information. In exchange for using the Platform, you agree not to hold us, our affiliates, or any third-party service provider liable for any possible claim for damages arising from any decision you make based on information or other content made available to you through the Platform.

2261 Market Street,

San Francisco, CA 94114