Decentralized Derivatives DEX dydx out surges Coinbase by volume in the wake of the China FUD.
As fears of a further Chinese crypto crackdown have circulated this year, the decentralized derivatives exchange dYdX has seen a jump in trading volume, processing more volume than Coinbase for the first time.
According to CoinGecko, dYdX has facilitated over $4.3 billion in deals in the last 24 hours, approximately 15 percent more than Coinbase’s $3.7 billion. Antonio Juliano, the founder of DYdX and a former Coinbase employee, tweeted on Sept. 27 to mark the occasion.
5 years ago I left @coinbase and eventually founded dYdX Today, for the first time, @dydxprotocol is doing more trade volume than Coinbase pic.twitter.com/QzoKAUpH29— Antonio | dYdX (@AntonioMJuliano) September 26, 2021
The dYdX’s explosive growth comes amid growing concerns about the harm that heavy-handed Chinese regulation could have to the global cryptocurrency business if it continues.
On September 24, Beijing stepped up its attack on cryptocurrency holdings by prohibiting all digital currency transactions altogether. cryptocurrencies are “illegal and should not and cannot be used as currency in the market,” according to the People’s Bank of China, which issued a statement on the subject.
According to Cointelegraph, China has “banned” or spread misinformation about the cryptocurrency industry on 19 distinct occasions since 2009.
Colin Wu, a crypto writer living in China, observed a recent increase in demand for decentralized exchanges and other DeFi goods among Chinese customers in a Sept. 26 tweet, stating:
“A large number of Chinese users will flood into the DeFi world, and the number of users of MetaMask and dYdX will greatly increase. All Chinese communities are discussing how to learn defi.”
Huobi, one of China’s leading cryptocurrency exchanges, said in late June that it will no longer allow domestic futures trading. The following month, Huobi shut down its China-based exchange operator as pressure from Beijing increased, and on September 24, the company stopped accepting new Chinese user registrations altogether.
According to CoinGecko, the daily exchange transaction volume of dYdX has increased by 19,700 percent in the previous six months, from a low of $22 million at the end of April to a high of $1 billion today.
Compared to other exchanges, Coinbase’s exchange volume growth has been relatively flat during the same period, increasing by approximately 6% each month. Nevertheless, Coinbase volumes reached an all-time high of $19 billion in late May, at a period when cryptocurrency markets were also at their zenith.
Another point of interest raised by Wu was the fact that other derivatives exchanges were seeing an increase in Chinese registrations, noting that “FTX registrations may be on the rise as well.” The Chinese community is disseminating the link to its registration page.”
On the DYdX platform, traders can trade perpetual contracts on a variety of cryptocurrencies, allowing them to retain leveraged positions without the need to use contracts with a defined expiration date.
As reported by L2beat, a company that tracks data for layer two protocols, dYdX is currently ranked second overall in terms of market share, with approximately 19 percent of the total market share and $478 million in total value locked, representing a 20 percent increase over the previous seven days.
Coinbase made a USDC Bootstrap Fund investment in dYdX in September of this year, putting 1 million USDC stablecoins into the exchange. This year, dYdX raised $65 million in a Series C fundraising round headed by venture capital firm Paradigm, which closed in June.