We’re excited to share the biggest update (and most requested feature) to the dYdX platform since launch — Limit Orders are now live for ETH-DAI trading via a brand new native order book on dYdX!
dYdX has built a real-time trading experience that is still grounded in blockchain based settlement. By implementing an off chain matching model, dYdX traders can now trade with speed, instant execution and no fees (including no gas costs).
Introducing a New Trading Experience on dYdX
dYdX has launched an entirely separate ETH-DAI market. Previously, the ETH-DAI market sourced liquidity via the Eth2Dai exchange and only supported market orders. There is now a new, native market that supports both limit and market orders, with a brand new execution engine behind it.
There’s a number of reasons we decided to build it this way. Fundamentally, we wanted to offer our traders an excellent trading experience, one with liquidity, speed and execution finality in mind. We prioritized things such as:
- Instant order creation and cancellation
- Fast matching and instant balance updates
- Limit orders on margin
- Tighter spread and lower slippage
Unfortunately, utilizing other existing markets meant sacrificing on at least one, or often many, of those factors.
How do dYdX Markets Work?
dYdX Markets use off-chain orders, with a matching implementation that requires a predetermined address to send the fill transactions. These orders are created by a user cryptographically signing a message indicating their intent to trade at a specific price and amount.
Orders are stored by dYdX until they can be matched with a crossing order and executed by sending a transaction to the blockchain. Our smart contracts verify that all trades are authorized by users, and then update the balances on chain.
Users can create and cancel orders instantly and for free via the UI or through an API request.
The dYdX ETH-DAI market will support the following trading types to start. Limit orders for Isolated Margin will be launching in the coming weeks.
Benefits of Trading on dYdX
dYdX combines the security and transparency of a decentralized exchange, with the speed and usability of a centralized exchange. This is in addition to all the features that are already being offered on the existing product — borrowing, lending and margin trading.
Borrow, Lend, Spot Trade, Margin Trade in the One Product
There’s now no need to borrow DAI using one protocol and trade it on other venues or markets. It can all be done in the convenience of dYdX’s single UI. You can now use a limit order to buy ETH for DAI at a specific price to enter a margin long ETH position with control and convenience.
Capital Efficient Trading
Limit orders can be placed using less capital (on margin), whilst also earning interest at all times. As an example, if you have 10 ETH deposited into dYdX and if 1 ETH = 100 DAI, you could place a limit order for up to ~30 additional ETH, (borrowing DAI for this trade) at a specific price. Limit orders use the same account that is used for borrowing, lending and trading today on dYdX. As such, the account needs to be funded in order to place limit orders.
Simultaneously, any collateral on dYdX continuously earn interest based on the global supply rate for that asset. In the above example, the account would be earning the supply rate on 10 ETH to start, and 40 ETH once the trade executes (whilst paying interest on the borrowed DAI).
Fast Trading Execution
Trades are matched and balances are updated instantly — creating an experience more akin to the speed of centralized exchanges. Additionally, the order book is constantly updating, rather than updating on a block by block cycle. Order creation and cancelation are instantaneous.
No Fees and Gas costs
There are currently 0 maker and taker fees on dYdX. Additionally there are no gas costs to trade after your account has been funded.
Alongside the product updates, we have also released new API endpoints for creating, canceling, and querying orders.
For simpler implementation, we recommend using our full-featured Python client or TypeScript client. We may build additional clients in the future, depending on what languages and frameworks are most requested.
We’re committed to bringing you the best trading experience. To that end, we’ll be working on the following in the short term:
- Isolated Margin (including limit orders) on the dYdX ETH-DAI Market
- Additional Markets (eg. WBTC)
- Other types of orders (e.g. Stop loss)
Head over to trade.dydx.exchange to start trading today!
If you’re interested to help us build the future of finance, take a look at our open roles!