dYdX launches decentralized perpetual swaps for bitcoin

dYdX, a margin trading platform for Etherum, announced they are launching a market for perpetual contracts offering up to 10x leverage on bitcoin. The contracts will utilize a similar funding mechanism to centralized exchanges where longs and shorts pay each other based on existing interest. A key difference is that liquidations will occur on-chain rather than through a centralized entity, a mechanism that has been plagued with issues in the past.

Why it matters

• Popularized by BitMex, the “perp” has become the most liquid market in all of crypto trading billions of dollars every day, however, there is no way to trade this contract in a decentralized manner. By automating this market through smart contracts, it should become more transparent and trustworthy.
• DeFi applications have mostly centered around trading or lending Ethereum and ERC-20 tokens while financial applications using bitcoin have remained on centralized exchanges. By offering a product geared towards those looking for bitcoin exposure, dYdX could onboard a new set of users into DeFi.