Digital Assets: Crypto Lender dYdX Sees Sharp Spike in Business Due to Virus

April 24, 2020 | Digital Assets, FinTech, News
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Defi Crypto lender dYdX, which is backed by Andreessen Horowitz, lent $1B.

Coronavirus-related market volatility lent a huge boost to the lending activity of crypto lender dYdX. About 70% of the total amount of $ 1.14 billion which it lent over the past 12 months was borrowed during the virus-stricken months of February and March. (Bitcoin.com)

The virus triggers massive volatility

dYdX is a decentralized finance (defi) margin trading exchange and lending platform. About 45% of its total loan portfolio is denominated in ether, 33% in dai loans, and the balance in USDC loans. The exchange did not break down its portfolio by type of borrower or end-utilization, the company’s founder attributed the surge to coronavirus linked volatility.

Antonio Juliano, the founder of dYdX, said the margin trading facility offered by the exchange was in high demand by traders as volatility spiked massively.

“People like to trade (and especially trade with leverage) when there is volatility,” he said to CoinDesk via email.

However, that trend is now in decline.

dYdX operations

dYdX users can trade with leverage of up to 4x, borrow or lend the crypto assets of ether, dai, and USDC. Users can borrow at 1.25x the collateral value that is held in a smart contract, rather than by the exchange itself.

Andreesen Horowitz, Polychain Capital, and Coinbase founder Brian Armstrong are investors in San Francisco-based dYdX.

Decentralized finance (Defi) platforms provide financial inclusion to the unbanked and underbanked citizens. The Defi space is, therefore, showing rapid growth.

dYdX perpetual contracts

Earlier this week, dYdX launched trading in bitcoin perpetual contracts. Unlike traditional futures contracts, perpetual contracts do not have any expiry date.

Traders can, therefore, hold onto a position as long as they want to. These futures products, pioneered by BitMEX,  have proved to be extremely popular with crypto traders.

These contracts offered by dYdX will offer leverage up to 10X and will be cash-settled in USDC. USDC is a stable coin linked with the US dollar.

Related Story:  Digital Assets: Singapore’s MXC Exchange to Launch Leveraged Crypto ETFs

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