A crypto derivatives exchange is the latest to foray into the prediction markets. DYdX caters to risk-hungry investors. The move is close to Polymarket in forecast markets.
Crypto prediction markets are so hot right now that everyone wants to join the party.
DYdX, one of the largest decentralized derivatives exchanges globally, is the latest player to jump into the space. But it has a twist – dYdX allows investors to make a 20x bet on the winner of the 2024 presidential election.
The offering, which hit the market late on Thursday, combines two of the riskiest bets in the markets — speculation and trading with borrowed capital.
DYdX's offering is supported by Polymarket data, which is available on an open source basis.
An exchange that caters to advanced traders, Polymarket is a little late to the party. More than half a dozen other crypto-powered prediction markets have already gone live this year.
Protocol Solvency
With just $1,000, traders can take a $20,000 position and be long for Trump to win the election, said David Gogel, head of strategy at the dYdX Foundation.
For a platform that offers 100x leverage over other crypto trades, Gogel says that's a reasonable cap for a new market.
“We want to provide the tools that people want to trade, but without, for some reason, jeopardizing the solvency of the entire protocol,” he said.
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DYdX's entry into the 2024 prediction game is a clear sign that Polymarket has opened up new revenue opportunities for crypto exchanges.
Backed by billionaire investor and Donald Trump supporter Peter Thiel, Polymarket predicts election higher than polls A $1.7 billion bet On who will win on November 5th.
Going mainstream
Polymarket is also fast going mainstream. Its markets are featured on Bloomberg's Terminal platform for professional traders.
In July, Polymarket brought on polling whiz Nate Silver as a consultant. It has over 100,000 users across all markets, including weather events, basketball games and monetary policy.
Given Polymarket's liquidity, Gogel said dYdX Market uses it as its data provider or oracle to ensure price accuracy in its election market. It is also not without risks.
“There's a heavy reliance on polymarket data versus a large token like bitcoin that's listed on multiple exchanges,” he said.
Other projects, including Solana-based Drift Labs, Speculate and D8X, are also jumping into the speculation market. Coinbase Ventures has also invested in several prediction markets built on the base blockchain. Information.
However, Gogel sees the new election market at dYdX as less of a competitor to Polymarket and more of a tool for more sophisticated traders.
What is TRUMPWIN?
Its TRUMPWIN offering is a perpetual futures contract that allows traders to bet on whether the Republican nominee and former president will win on November 5.
Perpetual futures are financial contracts to buy or sell an asset that never expire. They allow traders to make long bets to make small bets that the asset will continue to rise in price or that the asset's price will fall in the future.
This kind of trading is not possible in polymarket today.
Microscopic view
“With a permanent exchange like dYdX, you can take a more favorable view of the market,” says Gogel.
“Even in the polymarket today, there are people trying to hedge their losses, but having a spot-only exchange doesn't allow for a new, more nuanced view of things.”
TRUMPWIN is an experiment, Gogel said, and business activity here will dictate whether dYdX opens additional markets after the election.
The period after the November vote will also be a critical test for the appropriateness.
with Over 75% As for the polymarket volumes happening around the elections, the question of how the markets will fare post-election is a big one.
“Do I think launching a prediction markets or TRUMPWIN market will provide as much liquidity as Bitcoin or Ethereum? Probably not,” Gogel said News.
“But could it be a top 50 market in dYdX in terms of volume in a few weeks? Maybe.”
Liam is a Berlin-based correspondent News. Got a tip? Email him [email protected]
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