Decentralized Crypto Exchange Kicks Off Contest in Pursuit of Real Alpha

Decentralized exchange dYdX Trading on Wednesday kicked off its first trading competition on the cryptocurrency protocol — aiming to pit an influencer against a trader with their money, quite literally, where their mouth is.

Competitors must buy in with $2,500 worth of the stablecoin USDC, an amount they receive back  — along with any profits made — after the event. There are also exclusive non-fungible tokens (NFTs) and cash prizes, denominated in stablecoins.

The growth lead of the decentralized exchange (DEX), Corey Miller, told Blockworks a lot of traders hype up their ability to derive alpha via Telegram groups and Twitter, but there’s not necessarily a public “good way to objectively measure how well people perform.”

Rankings for the savviest traders will be measured both in dollars won and lost and percentage gains and dips. The latter is a bid to eliminate whales coming in and parking their voluminous assets in safe plays to generate medium yield on a large amount of cryptocurrency. 

The idea is for participants to test their mettle across a wide range of liquid cryptocurrencies, including DeFi digital assets. 

The DEX also plans to hold a series of Twitter Spaces to clue the public in on how the best traders “think about market moves,” as well as delve into relevant macro topics. 

The launch comes as crypto markets continue to wobble, having lost trillions of dollars in market capitalization since their record highs, following the demise of Terra stablecoin UST and, more recently, the collapse of insolvent crypto lenders, including Celsius and Voyager.

An argument can be made, however, that traders — and especially those of the retail variety — now more than ever are hungry for access to reputable information. 

The team — which has been adding staffers, even as a number of high-profile crypto companies have been forced to make steep cuts — has an iPhone app and is now working on an Android sister product. The end goal is to make the experience of buying and selling digital assets on dYdX as seamless for traders as it is logging on to centralized exchanges such as Coinbase and executing a transaction.

Though DEXs have come a long way in terms of usability and accessibility, industry participants say, in the murky, difficult-to-understand world of DeFi (decentralized finance), there’s still much work to be done. 

Despite the market downturn, though, Miller said he’s optimistic DeFi is here to stay. 

“How does DeFi win?,” he asked. “It’s about creating a product people will actually want to use.”

The exchange also has its own DAO, complete with a native governance token that dictates how the DAO (decentralized autonomous organization) operates on a day-to-day basis. 

On the whole, DEXs such as dYdX have cut into the trading volumes of centralized titans, including Coinbase and Kraken, in a notable way. But, in Miller’s mind, the “most likely scenario is that the two coexist for a while.” And some DEXs have lower fees than centralized market makers — another potential boon to traders.

The team is also working on the next iteration of its native protocol, an endeavor expected to take six months or so that would, ideally, result in a completely decentralized platform, with the company largely taking a back seat to the community.

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