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Trading with a DEX: the dYdX case.

Is dYdX really a viable alternative to replace CeFi for crypto trading?



Let's face it: after the collapse of FTX so many traders went completely "down in the dumps." This is not surprising as the very motto of FTX was: "a platform created by traders for traders."

It also offered very interesting, innovative and very useful tools for a shrewd trader. Commissions were very good and FTT actually gave very good utilities for its Holders. In a nutshell: the perfect spell.


But like any powerful magic, it also needs a wizard who can control its power; and SBF proved to be closer to Neville Longbottom than to Dumbledore. In summary, traders found themselves without capital, and those who managed to escape the exchange in time or had made the wise decision in the past to withdraw their essentials from the platform are now without a viable replacement.


Brokers and exchanges, step up!


Something is there, but the problem is always the same.

Little transparency and little security about one's capital. Which one of you traders has the courage to rely on CeFi again?


That's where DEX comes in. Specifically over the past two weeks I have been testing the validity of what purports to be a DEX for traders: dYdX.



What is it like to trade on dYdX?


Although dYdX does not fully represent the concept of DEX but rather a hybrid form positioned between DeFi and CeFi I was very intrigued by its structure. Therefore, I took my wallet, connected it on Testnet network and tried trading on dYdX as I previously did on FTX.


In summary, three tricks:

  • Little volume

  • Little transparency

  • Need for deposit (in part)


If it were not for the low volume, I have to tell you the truth, I would have even thought about it. The slogan states, "zero fees," but don't be fooled, the fees are there (don't get me started on that). Deposit is mandatory, no transactions are made directly from the metamask. The good thing is that in a trade only the margin remains tied up while the remainder is withdrawable by paying a few network fees In a nutshell: you deposit, you invest, they hold back a margin, you withdraw the released capital and risk only what you want to risk, all at a decent speed and security. You don't expect scalping and probably not even intraday trading. You don't expect to open low-margin positions and hold them as holdings because you will only lose capital.


So?


Swing. In my humble opinion, you can only swing it by accepting to possibly lose margin thus trying to work well with leverage.


I will continue to keep you updated.



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