About

DerivaDEX is a crypto derivatives exchange that merges the performance of centralized exchanges with the autonomy of decentralized exchanges into one product. The decentralized exchange, which is built on Ethereum, is community-governed and designed for derivative contracts. The platform also employs a sane liquidity-mining token model to guarantee control is retained by the user.

History

As more derivative products find their way into the cryptocurrency space, traders are increasingly on the search for platforms they can trade on in a secure and permissionless manner, while enjoying the perks of a great user experience. Centralized exchanges offer deep liquidity, robust operational support and appealing user experience, but they are not as secure and permissionless as needed by a true blockchain fanatic. The entrance of decentralized exchanges changed the game as traders now interact with complex smart contracts in a decentralized environment. However, what decentralized exchanges gained in security, they lost in user experience.

In March 2020, Aditya Palepu and Frederic Fortier started working on a decentralized exchange that would be as robust and appealing as a centralized exchange while maintaining the permissionless state of a decentralized exchange. Their new exchange DerivaDEX, which is built on the Ethereum blockchain but yet to be released on the mainnet, is touted to provide both performance and autonomy in one single product. Both co-founders, who have deep algorithmic trading experience, have identified three key features that would allow the project to deliver on its promise:

Decentralized Governance: Through its DAO, the exchange would be community-governed, thereby eliminating censorship resistance and single-point-of-failure risks.

Open order book, On-chain settlement: Unlike other decentralized exchanges that utilize automated market makers, DerivaDEX would make use of the open order book, common with centralized exchanges. Through off-chain price feeds, matching engine and exchange operators, DerivaDEX would offer users a faster, more efficient and cheaper trading experience.

Liquidity mining: Starting from its insurance fund mining to liquidity mining, the protocol would not only drive the growth of deep liquidity and insurance pools but also incentivize users to participate in the governance of the platform.

Just four months after the project launched, a total of $2.7 million was raised from veteran crypto investors in a seed round. These investors include Coinbase Ventures, CMS Holdings, Three Arrows Capital, Polychain, Dragonfly Capital, Electric Capital and angel investors Phil Daian and Calvin Liu. 15.3% of DerivaDEX's governance token, DDX, was allocated to these investors. Exchange liquidity mining received 47.5%, 34% of the total supply was earmarked for the team and the foundation treasury, 2.5% was used to execute the insurance mining mechanism, and advisors got 0.66%.