dYdX Chain Season 2 Mid-Season Review

Summary

Chaos Labs presents this mid-season review of full trading on the dYdX Chain All aspects of the exchange performance are covered with a focus on the impact of the launch incentive program.

Incentives continue to be closely monitored and tailored to specifically target their objectives as efficiently as possible. A wide range of indicators are tracked to gain holistic insights into the cause and effect of the rewards program.

Key Stats:

• The platform has seen more than $21.6b in trading volume spread across 34 different markets.
• Over 2078 traders and 1101 market makers are actively earning points through the Launch Incentives Program.
• To date, there have been over $33m in total liquidations, contributing approximately $166k to the insurance fund.
• Since the start of the season, the majority of markets have experienced positive realized funding rates.
• The dYdX Chain has attracted approximately 42m USDC in deposits.

dYdX Chain Trading

There has already been over $11.6 billion in trading volume across 34 markets this season. This compares reasonably favorably to over $14.3 billion across dYdX v3 markets over this period and $4.3 billion across GMX v2 markets during this period.

The launch incentive program’s focus on rewarding traders migrating their activity to dYdX Chain early has had a significant effect as daily volumes have grown to sustain around 50% of v3 for the past 7 days.

Approximately $2.0m in net trading fees have been paid by traders this season. Driving volumes and fees is the primary objective of the launch incentive program.

Daily open interest and volumes have both continued to grow. The recent market sell-off has stalled momentum over the past week.

Long-tail markets continue to grow and contribute meaningfully to trading activity.

Season 2 Leaderboards

Leaderboards have launched with over 2,087 traders and 1,101 market makers earning points already this season.

Over 131m trading points have been earned with the following distribution of points earned by bucket:

Over 37m market-making points have been earned with the following distribution of points earned by bucket:

Both trading points and maker points are quite heavily dominated by the top earners. 84% of trading points and 75% of maker points have currently accrued to the 10 top accounts in each category. This is before any wash trading removal, which is covered in a separate report.

Trading Leaders

Market Making Leaders

Funding

Markets have mostly traded with positive realized funding rates since November 28th. This could be a function of positive market price action over this period or due to early retail adopters having a natural long bias.

There was one instance over the past two days, where the NEAR market averaged significantly negative funding rates, this has since reverted and the market is trading in line currently with a 0% funding rate.

Daily Average Realized Funding Rates Annualized %

Liquidations

dYdX Chain has cleared over $33m in total liquidations so far, earning approximately $166k for the insurance fund. These were mostly long positions liquidated on January 3rd and 12th sell-offs. This week’s volatility has caused significantly fewer liquidations.

TVL and Deposit Metrics

USDC deposits continue to grow, providing a potential leading indicator to further growth in trading volumes.

There are currently approximately 43m USDC deposited on the dYdX Chain, up from 30m USDC at the beginning of this season.

There is still much room to grow towards the approximately $302m TVL in dYdX v3.

Disclaimer

This report is for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation for any security, nor does it constitute an offer to provide investment advisory or other services by Chaos Labs. No reference to any specific security constitutes a recommendation to buy, sell, or hold that security or any additional security. Nothing in this report shall be considered a solicitation or offer to buy or sell any security, future, option, or other financial instrument or offer or provide investment advice or service to any person in any jurisdiction. Nothing contained in this report constitutes investment advice or offers any opinion with respect to the suitability of any security, and the views expressed in this report should not be taken as advice to buy, sell, or hold any security. The information in this report should not be relied upon for investing. In preparing the information in this report, we have not considered any particular investor's investment needs, objectives, and financial circumstances. This information has no regard for the specific investment objectives, financial situation, and particular needs of any specific recipient of this information, and the investments discussed may not be suitable for all investors. Any views expressed in this report were prepared based on the data available when such views were written. Changed or additional information could cause such views to change. All information is subject to possible correction. Information may quickly become unreliable, including market or economic changes.

Throughout the program, Chaos Labs' role is confined to providing recommendations regarding the allocation of rewards. The actual implementation and distribution of said rewards are subject to the formal approval process of the dYdX Chain governance votes. Any actions pertaining to reward distribution shall only be executed following affirmative governance votes within the dYdX Chain framework.