DAI / USDC Market Launches on dYdX

Zhuoxun Yin
Jun 10, 2019 · 3 min read

dYdX is excited to launch trading support for DAI / USDC! As part of this, we’ve also integrated 0x as an additional liquidity source on dYdX. dYdX is now sourcing liquidity from Eth2dai (ETH / DAI market) and 0x (DAI / USDC market and others to come).

What can you do with DAI / USDC trading?

DAI and USDC have been available for lending and borrowing on dYdX for the last month. With the addition of this market on the Trade page, you can now:

  • Spot Trade or Carry Trade DAI / USDC
  • Margin Trade DAI / USDC

DAI / USDC Carry Trading

DeFi loves earning interest. With the array of lending options available in DeFi now, it’s clear that lenders are more than willing to move funds around to chase the highest yield possible.

The first clear implementation of this was interest rate arbitrage via Maker’s CDPs. By implementing a stability fee between 0.5% and 2.5%, Maker essentially offered the cheapest credit facility in crypto. This made it extremely interesting not only for traders seeking leverage on other assets, but also for those seeking to profit from lending out DAI at a higher rate than the stability fee.

More recently we’ve also seen users executing what are effectively carry trades (buying high-interest currency against low-interest currency) and doing so by moving between multiple platforms (incl. dYdX) just to earn that positive carry (e.g. USDC traded for DAI via a separate platform, then deposited into dYdX to earn the dYdX DAI supply rate).

Executing this type of trade is now even simpler using the DAI / USDC pair on dYdX. Traders can execute a trade to go long on DAI, borrowing USDC to fund this purchase (using either cross or isolated margin). Since collateral also earns interest on dYdX, this long position will make money when the interest rate earned by the purchased DAI is greater than the interest rate paid by the borrowed USDC, which has historically been true on dYdX.

Executing this trade without the borrow, would simply result in a DAI / USDC spot trade.

DAI / USDC Margin Trading

Earlier this year DAI consistently traded below the peg as demand for DAI outstripped supply. More recently, DAI has traded above $1, leading to the first decreases in the stability fee in over 5 months. The relatively wide band within which DAI moves (driven by sources of demand and stability fee changes) provides traders with an opportunity to long or short DAI against USDC, in a similar way that central banks’ interest rate movements drive the forex market.

The maximum leverage will remain 4x for long and 3x for short, however, we are considering increasing this in the future given the lower volatility of these assets.

To learn more about dYdX

We’re building the future of finance and are always looking for talented individuals to join the team! Check out our job postings — we’re hiring in San Francisco!

Zhuoxun Yin

Written by

Head of Operations at dYdX. Previously at Nimble and Bain & Company


The most powerful open trading platform for crypto assets

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