Coin Metrics: Internal Analysis of dYdX

Author: Tanay Ved Source: Coin Metrics Translation: Shan Ouba, Golden Finance

Key Points

• The DYDX token plays a core role in the dYdX ecosystem: it is used for governance, securing the chain through staking, and incentivizing trading behavior with rewards denominated in DYDX.
• The number of market orders on dYdX has rapidly expanded, currently covering 267 perpetual contract markets, including blue-chip assets and emerging tokens.
• The size of open contracts in the second quarter grew to 200 million USD, with the Bitcoin and Ethereum markets accounting for 80% and the majority of trading volume.
• The liquidity on dYdX remains deep, but compared to centralized platforms, the volatility is greater, reflecting differences in the market-making model and user behavior.

Introduction

The attention on the cryptocurrency derivatives market is continuing to rise, and perpetual contracts are becoming one of the most popular trading tools.

Perpetual contracts allow for continuous exposure to crypto assets without the need for expiration and settlement. With mature market mechanisms and good liquidity, they have become important tools for both speculation and hedging for users of centralized exchanges (CEX) and decentralized exchanges (DEX).

Currently, the weekly trading volume of Bitcoin perpetual contracts exceeds $65 billion, far surpassing the spot and options markets. At the same time, competition is intensifying—Coinbase and Robinhood have recently launched perpetual contract products, while major DEXs are vying for market share.

With the increasing adoption rate, on-chain order book DEXs are building specialized infrastructure to match the performance of centralized exchanges while retaining the transparency and self-custody advantages of on-chain systems. dYdX is a pioneer in this trend, launching an application chain specifically designed for perpetual contract trading - dYdX Chain.

Building on previous reports on dYdX, this article further analyzes the evolving role of the DYDX token, the market expansion of the exchange, as well as recent dynamics such as trading volume, liquidity, and funding rates.

The Role of DYDX Token

With dYdX migrating to an independent Layer-1 blockchain, dYdX has become a decentralized blockchain network specifically designed for perpetual contract trading.

Its architecture combines off-chain order books and matching engines with on-chain settlement, providing high throughput while retaining the transparency and self-custody features of decentralized exchanges.

The DYDX token has evolved from an initially Ethereum-based utility token to the native asset of dYdX Chain under the Cosmos ecosystem. Its core functions include governance, securing network safety through staking, and aligning incentives for trading.

Governance: As a governance token, DYDX holders can stake their tokens to validators, thereby gaining voting rights on matters such as protocol software upgrades, fee adjustments, new market additions, and treasury expenditures. Voting rights are proportional to the amount staked.

Staking: DYDX ensures chain security through a Delegated Proof of Stake (DPoS) mechanism. Delegators and validators stake DYDX and can earn rewards from protocol trading fees (denominated in USDC).

Trading Rewards/Incentives: Trading users can receive trading rewards valued in DYDX, with the reward amount based on the net trading fees they pay (calculated in USDC), and up to 90% of the trading fees can be refunded.

This model transforms DYDX from a purely governance token into a core asset that closely aligns the behavior of validators and traders with the growth of the protocol, making it a key element of on-chain operations.

As of June 29, the price of DYDX is approximately $0.54, with a market capitalization close to $400 million. The price and market cap of DYDX have fluctuated with peaks in market activity, reaching a high of $4.3 in March this year.

However, despite the price decline in the later part of 2025, the market value remains high, indicating an increase in the circulating supply of tokens. Based on the ratio of estimated market value to benchmark price, the supply of DYDX has grown to approximately 780 million tokens, reflecting the ongoing unlocking process towards the maximum supply cap of 1 billion tokens by July 2026.

DYDX can still be traded on centralized exchanges (such as Binance, OKX, Huobi) and decentralized exchanges, with most of the spot trading volume concentrated on these mainstream CEXs. The spot trading volume experiences periodic peaks, which usually coincide with protocol upgrades and broader market fluctuations.

Market Orders and Diversity of dYdX

One of the core advantages of perpetual contract DEX is its wide market coverage and ease of access. dYdX allows markets to go live quickly, enabling traders to access a variety of crypto assets ranging from major tokens to emerging long-tail assets. As of June 30, 2025, dYdX has supported 267 perpetual contract markets, marking a significant increase from the previously launched 127 markets.

This growth is attributed to the "dYdX Unlimited" feature launched at the end of 2024, which introduces the "Instant Market Listings" mechanism, allowing anyone to immediately create and trade perpetual contracts for any asset without governance approval. At the same time, dYdX also launched a new main USDC liquidity pool called "MegaVault," where users can deposit USDC to provide liquidity for new markets on their launch day. Some of the recently launched new markets include SRYUP-USD, FLR-USD, and DAI-USD, with order expansions continuing until late June.

In addition to a fast listing speed, dYdX's market coverage is also very diverse, covering Layer-1 tokens, DeFi tokens, memecoins, as well as various thematic categories such as artificial intelligence (AI). This diversity allows traders to express their views in emerging narratives and niche segments in a timely manner, and the trading process is relatively low-friction, making it more flexible compared to centralized exchanges, which often require longer approval or listing processes.

Volume and Open Interest Trends

The Bitcoin and Ethereum markets continue to dominate dYdX's trading activity, accounting for the vast majority of daily perpetual contract trading volume in Q2 2025. The open positions of these two major assets also reached 80% on dYdX (approximately $163 million), an increase from 66% ($93 million) at the end of Q1, when the share of "other" assets had briefly risen.

Although the number of long-tail markets is continuously increasing, the trading depth of most markets remains limited, with transaction volumes often exhibiting short-term or cyclical bursts rather than sustained activity. This indicates that the use of dYdX is still highly concentrated in its most liquid core markets.

Funding Rate and Liquidity Conditions

Market scope and open interest are just part of the story. For perpetual contract exchanges like dYdX, liquidity is a key indicator for achieving efficient trading and reducing slippage. To assess market quality and tradability, we need to analyze the liquidity situation of dYdX and compare its funding rates with those of other exchanges.

The BTC-USD order book data shown in the figure below indicates the accumulated buy and sell depth of limit orders within a range of ±2% from March to early May. Compared to centralized exchanges, the depth profile of dYdX is more volatile, with both buyers' and sellers' depths experiencing significant fluctuations in stages. This may stem from the passive liquidity provided by dYdX's MegaVault and the more proactive market-making activities that arise as market conditions evolve.

In comparison, although the BTC perpetual contract market of Coinbase International has overall lower depth, the liquidity distribution is more stable near the midpoint price. This difference between platforms reveals the varying market structures and participant behaviors, which are important factors to consider when assessing the liquidity quality of each platform.

The funding rate is the core mechanism that anchors perpetual contract prices to spot prices. On dYdX, the funding rate for BTC shows greater volatility and more frequently falls into negative territory compared to Binance or OKX. This indicates the presence of periodic short position pressure on dYdX, or structural differences in participant behavior. Such funding rate discrepancies may also signal arbitrage opportunities between CEX and DEX.

Conclusion

As perpetual contracts become increasingly the most active trading tool in the cryptocurrency market, their influence continues to grow, and dYdX has emerged as one of the leading on-chain platforms supporting this growth. Over the past year, dYdX's open interest has steadily increased, benefiting from the continuous launch of new markets, while also maintaining stable trading volumes with the majority of trading activity concentrated on BTC and ETH.

By combining a high-performance trading experience with on-chain transparency and diversified market access, dYdX continues to play a central role in shaping the future of on-chain derivatives infrastructure.