The dYdX Business Model

Antonio Juliano
Mar 3, 2020 · 3 min read

TLDR: dYdX is building a business model around the exchange. We are introducing trading fees starting Mar 10, 2020. There are separate taker and maker fees, based on each trading pair. Our goal is to earn consistent revenue as a company, and incentivize provision of more liquidity on dYdX.

We wanted to be transparent about how we as a company think about business models, and how we came to a decision around trading fees.

Protocol vs Exchange

As a company that has built both a protocol and a product, we have often said publicly that we could eventually capture value on either one of these layers, or both.

We have been excited about the level of token model experimentation across not just DeFi but CeFi too, where tokens have played a role with things like governance (0x, Maker, Compound) collateral of last resort (Maker), fee reduction/rebates and buy/burn (Binance, FTX, Huobi, OkEx etc). We believe there’s a lot of room for continued experimentation and maturation with token models before we start to see truly successful examples of long term business models at the protocol level.

This is why we have decided initially to earn fees based on trade volume. This is a tried and tested path for many exchanges and ensures that we earn fees in line with actual usage of the product.


Users will not pay for products that don’t help them solve problems. That’s why our primary focus so far has been on building a useful and valuable product. We’ve iterated quickly since the earliest versions of dYdX:

  • 2018: P2P lending protocol + expo (front end for minting and burning short/long margin tokens)
  • 2019: Pooled lending protocol + dYdX exchange + native order books / liquidity
  • 2020: Brand new product, soon to be announced

These improvements have brought new and consistent trade volume to dYdX. We believe the product is in a place where the core functionality is wide enough, and retention of users deep enough that traders will continue to use dYdX even with fees in place.

Transaction costs

dYdX has been paying transaction fees for all trades since September. On dYdX, users sign messages to create orders — no transaction fees need to be paid by users. When orders are matched, dYdX submits a transaction to execute the matched trades on-chain. This allows us to offer a smoother and faster trade experience, but it also means dYdX incurs gas costs proportional to the number of trades on dYdX. This has cost us over $40,000 in February alone.

Introducing fees will help cover these costs.

Fee Structure

There are two types of orders on dYdX — Maker and Taker orders. Maker orders are orders that do not immediately fill and rest on the order book — these orders add depth and liquidity to the order book. Taker orders on the other hand immediately fill existing Maker orders. They remove liquidity from the order book.

To minimize transaction costs, we will be instrumenting higher fees for smaller orders than larger orders. There will be 0 fees on the Maker side, to encourage users to open limit orders on the order book.

Fee Structure on dYdX


  1. We will be launching fees on March 10, 2020.
  2. Fees help us cover our transaction expenses, earn revenue and incentivize more liquidity.
  3. Fees will be a % of trade volume, with two different tiers based on volume. DAI-USDC will also have its own fee structure.

Please reach out to the team on Telegram if you have any questions. We will continue to refine these fees over the next few months and beyond. We are grateful for all our users’ support and stay tuned for a new product announcement within the next month!


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