The decentralised trading platform dYdX’s native token ($DYDX) is currently undergoing a major transformation. The cryptocurrency is migrating from the platform’s previous Ethereum ($ETH) layer-2 solution into the newly launched layer-1 network.
DYDX investors have recently been holding onto the token with trading volume on the increase. But this is ahead of a token unlock scheduled for 21 November.
DYDX price predictions are mixed with some stating that recent gains are not sustainable. However, other sites have pointed to a more profitable future.
What is dYdX?
dYdX has carved out an area of the decentralised finance (DeFi) landscape for itself. This platform, known for its advanced financial offerings, primarily focuses on derivatives and margin trading within the cryptocurrency market.
dYdX leverages smart contracts to facilitate direct peer-to-peer transactions, bypassing the need for traditional financial intermediaries.
The platform’s decentralised nature is a significant departure from conventional exchanges, offering users a more autonomous trading experience.
dYdX’s specialisation is in derivatives, which allows traders to speculate on the future prices of cryptocurrencies. Additionally, its margin trading feature enables users to borrow funds, amplifying their trading positions and potential gains, albeit with increased risk.
Its CoinMarketCap page said: “Together, with trading and liquidity provider rewards, dYdX introduces retroactive mining benefits, allowing the platform to show appreciation to historical users and incentivize them to trade.”
The dYdX has recently undergone a major shift in its protocol. It migrated away from being an Ethereum layer-2 solution, into its own layer-1 blockchain built with the Cosmos SDK.
A blog post said: “Creating a stand alone app-chain allows us to execute on one of our core beliefs, full decentralization, while increasing the speed and ease of use our traders demand to execute their strategies. The new dYdX Chain could offer transactions of up to 2,000 transactions per second which is unprecedented within the world of DeFi.”
On 26 October, the exchange officially deployed its dYdX Chain open source software and the validators created the first ever block of the new dYdX Chain.
The DYDX crypto
The native DYDX token was central to the layer-2 protocol of the decentralised cryptocurrency exchange. However, like the protocol, this cryptocurrency is currently undergoing a migration to the newly established dYdX Chain. This move is said to mark a pivotal step in enhancing the platform’s scalability and efficiency.
The current Ethereum-based DYDX serves as the governance token for the original layer-2 protocol, playing a crucial role in the decentralised governance structure of the exchange.
It empowers token holders with the ability to actively participate in shaping the protocol’s future. This involvement includes proposing and voting on changes to the layer-2 protocol, thereby fostering a community-driven approach to the platform’s development.
Beyond governance, the DYDX token offers other benefits to its holders. These include the opportunity to earn rewards through token staking and to enjoy discounts on trading fees.
These incentives are designed to encourage active participation and investment in the platform, aligning the interests of traders, liquidity providers, and partners with the long-term success and evolution of the dYdX exchange.
The new migrated version of the dYdX crypto will have similar benefits. Investors will have a say in the governance of the decentralised platform. They will also be able to stake the cryptocurrency to secure the new layer 1 network.
dYdX price history
While the decentralised trading platform went live in late 2020, dYdX launched in the bull market of 2021. After going live at $13.77 on 9 September, it quickly saw some initial volatility and rocketed to its all-time high of $27.78 towards the end of the month.
This correlated with major gains in the total value locked (TVL) into the DeFi protocol. The TVL climbed from $441million at the beginning of September to a staggering peak of $1.12billion on 28 October.
However, the dYdX token was unable to sustain this momentum. It crashed back to the $20 mark, where it stayed throughout October.
It soon after continued its downward trajectory, closing the year at $8.40.
The bear market of 2022 exasperated this price decline as it continued to fall throughout the year.
While the trading platform’s TVL managed to maintain its $1bn level throughout the first half of the year, the eventual collapse of the Terra ecosystem had a significant impact. By July, the platform lost half of its value. Its TVL stooped to $390m by the end of the 2022.
Similarly, the native cryptocurrency had crashed to the $1 level by the end of December. dYdX has been unable to break back past the $5 level since, spending most of 2023 fluctuating between $1 and $3.
However, at the time of writing, dYdX has broken past the $4 level for the first time this year and is trading at $4.01. The token appears to be gaining attention by the community as it prepares to migrate to the layer-1 chain.
As of 15 November, the Ethereum version of dYdX was up 23% in the past day and 59% in the previous week.
DYDX price prediction
It is a mixed bag when it comes to DYDX coin price predictions. Financial publication FX Street said the “price gains may be unsustainable”, especially as the asset gears up to abandon this version and switch to its new layer 1 chain.
The site’s DYDX price prediction for 2023 said: “The long-term outlook is bearish when token unlock and whale distribution is considered. The unlock event on November 21 could trigger a crash in the asset’s price.”
CoinCodex said there is currently “bullish” sentiment with its DYDX crypto price prediction. A huge majority of 26 out of 27 of its indicators pointed towards buy. The DYDX price prediction for 2024 said it would trade between $ 3.40 and $ 9.05.
The DYDX forecast from PricePrediction similarly said it would average out at $3.74 next year. Its DYDX price prediction for 2025 gave a maximum price of $6.27. This figure was said to increase to $40.72 by the beginning of the next decade.
DigitalCoinPrice was even more bullish with its DYDX token price prediction. It said the cryptocurrency would average out at $8.15 this year and $13.70 in 2025. The site’s DYDX price prediction for 2030 gave an optimistic target of $41.87.
Should I invest in dYdX?
It depends. DYDX price predictions are mixed. FT Street does not think the recent gains are sustainable, whereas DigitalCoinPrice anticipates new all-time highs.
The cryptocurrency market is known for its volatility and you should never invest more than you can afford to lose.
Is dYdX a good investment?
The DYDX cryptocurrency went live in 2021. Despite an initial price spike, it has been on a downward trajectory over the past two years. Investors should be cautious and always conduct thorough due diligence.
Disclaimer: The information provided in this article is for informational and educational purposes only and should not be construed as financial advice. CoinNews and its authors are not financial advisors or experts. We recommend that you consult a professional financial advisor or conduct thorough research before making any investment decisions. Cryptocurrency investments carry a high degree of risk, and you should only invest an amount you are willing to lose. The opinions expressed in this article are those of the author and do not necessarily reflect the views of CoinNews or its affiliates.