Overview
Chaos Labs is pleased to provide a comprehensive review of the ninth trading season on the dYdX Chain. This analysis encompasses all facets of exchange performance, emphasizing the impact of the Launch Incentive Program.
We are diligently fine-tuning the incentives, ensuring they effectively meet their intended goals. By monitoring a broad spectrum of indicators, we aim to understand the rewards program’s dynamics and outcomes.
Key Stats:
- dYdX Chain has seen over 8.6bn in trading volume across 188 live markets.
- Over 6300 traders were active through season 9.
- Over $190m of open interest, down 45% from the beginning of the season.
- The dYdX Chain has approximately $280m USDC in TVL deposited on the exchange at the end of season 9, down 24% from the beginning of the season.
- Liquidity within 100 bps has increased by around 25% across the top markets
dYdX Chain Trading
The dYdX Chain has seen over $8.6bn in trading volume across 188 live markets. This is a decrease of 4% compared to the preceding 30-day period.
Open interest has decreased over the season from $345m to $190m, a decrease of 45%.
Open interest has historically fluctuated significantly with market conditions. It declined notably during the market crash at the beginning of February and stayed on the same level.
Traders have paid almost $48.6m in fees to stakers securing the dYdX Chain since inception. $1.8m of this came in season 9 of the launch incentive program.
dYdX Chain Liquidity
A focus of the program in its current iteration is growing liquidity across all markets to improve the trading experience for users.
Liquidity in the majors, as measured by median liquidity within 100bps, has continued improving—particularly among the more developed markets—such that large markets now maintain over $4,000,000 in liquidity within 100bps most of the time. Interestingly, however, three markets sitting at the lower end of the top 10 by volume this season exhibited significantly less liquidity—approximately eight times lower than the closest comparable market.
See the table below for liquidity trends in some major markets sorted by traded volume.
| Market | Current | Preceding 30 day | Change |
|---|---|---|---|
| BTC-USD | $33,268,404 | $24,350,344 | 27% |
| ETH-USD | $28,981,751 | $21,774,520 | 25% |
| SOL-USD | $12,258,204 | $9,290,960 | 24% |
| DOGE-USD | $5,217,024 | $3,605,075 | 31% |
| XRP-USD | $4,996,573 | $3,360,615 | 33% |
| ADA-USD | $4,315,219 | $3,257,880 | 25% |
| LINK-USD | $4,171,518 | $2,913,961 | 30% |
| SUI-USD | $558,367 | $578,790 | -4% |
| LTC-USD | $408,317 | $330,044 | 19% |
| FLOKI-USD | $298,050 | $206,851 | 31% |
The impact remains broad across markets, with the long tail increasing dramatically over the season. Overall liquidity within 1% is up 32% on the season.
| Orderbook Liquidity | Above $1000k | Above $500k | Above $250k | Above $100k | Above $50k | Above $10k | Total Liquidity ($m) |
|---|---|---|---|---|---|---|---|
| 30 days ago | 14 | 16 | 49 | 67 | 99 | 137 | 108m |
| Now | 14 | 16 | 53 | 71 | 112 | 145 | 143m |
Funding
During Season 9, average funding rates in most major markets declined, aligning with broader market trends.
| Market | Average | Median | Max | Min |
|---|---|---|---|---|
| ETH | 5.68% | 2.96% | 53.87% | -112.24% |
| BTC | 10.37% | 9.09% | 77.85% | -39.09% |
| SOL | 5.09% | 2.85% | 98.44% | -150.23% |
| DOGE | -2.34% | 1.09% | 158.23% | -267.18% |
| XRP | -0.47% | 0.00% | 131.95% | -173.12% |
| SUI | 2.96% | 0.00% | 124.28% | -346.57% |
| LTC | 3.82% | 0.00% | 70.19% | -4.71% |
| ADA | 0.05% | 0.00% | 22.89% | -20.48% |
| FLOKI | -1.00% | 0.00% | 0.11% | -26.17% |
| LINK | 0.32% | 0.00% | 21.13% | -17.30% |
Liquidations
This season experienced fewer liquidations compared to the prior period, with a total of $32 million liquidated across all markets during Season 9.
The insurance fund now sits at over $12.8m, bootstrapped predominantly by protocol liquidation fees. Over $0.4m of this came over season 9.
TVL and Deposit Metrics
At the end of Season 9 approximately $280m USDC was deposited in the app on the dYdX Chain, down 24% from $367m USDC at the start of the season.
Program Efficiency Metrics
Much of the above analysis focuses on aggregate metrics, which can be influenced by a small number of traders. Our analysis of the program also encompasses a bottom-up assessment of the impact it has in growing the number of active traders.
This section provides a deep dive into trader-level metrics to highlight the program’s impact across a range of dimensions. This, in turn, forms the basis for the long-term projections around the program’s impact and efficiency.
Daily and Weekly Active Traders
The number of weekly active traders in Season 9 has experienced notable fluctuations, including an initial dip over the end-of-year break, followed by periods of both growth and decline influenced by heightened market volatility which, in turn, led to notable trader churn.
Growing the number of average daily and weekly active traders on dYdX is a guiding principle of the Launch Incentive Program, and significant care is taken to ensure that the incentives appeal to a diverse segment of traders.
| Week | Average Daily Active | Weekly Active | Average Weekly Volatility |
|---|---|---|---|
| 2024-09-30 | 1339 | 2172 | 35.03% |
| 2024-10-07 | 1306 | 2242 | 32.18% |
| 2024-10-14 | 1449 | 2481 | 33.61% |
| 2024-10-21 | 1543 | 2716 | 28.74% |
| 2024-10-28 | 1644 | 2899 | 32.75% |
| 2024-11-04 | 1958 | 3475 | 42.58% |
| 2024-11-11 | 2277 | 4225 | 57.39% |
| 2024-11-18 | 2365 | 4176 | 40.48% |
| 2024-11-25 | 2287 | 4435 | 35.36% |
| 2024-12-02 | 2555 | 4527 | 42.76% |
| 2024-12-09 | 2310 | 4657 | 39.27% |
| 2024-12-16 | 2328 | 4320 | 50.31% |
| 2024-12-23 | 1431 | 3817 | 36.32% |
| 2024-12-30 | 1648 | 3306 | 30.78% |
| 2025-01-06 | 2014 | 3789 | 37.27% |
| 2025-01-13 | 2265 | 3949 | 49.38% |
| 2025-01-20 | 2028 | 4035 | 55.07% |
| 2025-01-27 | 2227 | 3866 | 42.38% |
| 2025-02-03 | 1959 | 4533 | 46.12% |
| 2025-02-10 | 1757 | 2948 | 31.71% |
| 2025-02-17 | 1793 | 2949 | 27.22% |
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Weekly active traders are defined as traders who make at least one trade during a week.
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Volatility is measured as the variance of minute-by-minute log returns of BTC. This short time frame accurately measures the volatility experienced by dYdX Chain traders in its largest market better than the traditional daily volatility.
Trader Engagement
Trader engagement is defined as how frequently the active user interacts with the dYdX Chain. This is analyzed across a few dimensions. The ratio of average daily active users to weekly active users broadly signals what portion of weekly active traders make a trade on a given day in the week. When this ratio is high, more traders find value in the product and return for this utility.
From a Launch Incentive Program perspective, the incentives should appeal to traders who are likely to become more regular traders and, therefore, likely to be stickier over the long term.
Another measure analyzed is the number of days traders have been active during season 9. We observe an increase in the cohort of traders who are active on almost a daily basis.
Weekly Trader Breakdown and Retention
Season 9 saw in initial reduction of traders over the end of year break, with mostly existing traders leaving. Most have now returned, however the total is still less than the end of seasons 8 and 7.
The weekly trader retention rate initially dipped due to the end of year holidays over season 9. This has rebounded mostly.
The marginal weekly trader retention rate shows how likely it is for a trader who has traded for a certain number of weeks to trade for one more. This is a slightly different methodology from the retention rate above, as returning traders are treated the same as retained traders here, hence the higher retention numbers.
What is apparent is how much better traders retain the more weeks they have been active. The goal is to get a trader active for at least six weeks, as the data suggests traders are incredibly sticky.
Marginal Weekly Trader Retention Rate
| Week | Retention Rate |
|---|---|
| 1 | 57.32% |
| 2 | 76.47% |
| 3 | 84.44% |
| 4 | 88.23% |
| 5 | 89.41% |
| 6 | 88.25% |
| 7 | 92.36% |
| 8 | 97.02% |
| 9 | 95.97% |
| 10 | 96.46% |
Summary
There are many aspects contributing to the growth in the dYdX Chain since the Launch Incentive Program began. Attributing growth to specific factors is not an exact science, and we acknowledge the impact market conditions have on trading activity. Given that, here are some highlights from our analysis:
- Traders spent $1.8m in fees during season 9, and the program will pay out $1.5m in rewards.
- Liquidity within 100 bps has increased by around 25% across the top markets
- Over 6300 traders used dYdX Chain during season 9.
Disclaimer
This report is for informational purposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation for any security, nor does it constitute an offer to provide investment advisory or other services by Chaos Labs. No reference to any specific security constitutes a recommendation to buy, sell, or hold that security or any additional security. Nothing in this report shall be considered a solicitation or offer to buy or sell any security, future, option, or other financial instrument or offer or provide investment advice or service to any person in any jurisdiction. Nothing contained in this report constitutes investment advice or offers any opinion with respect to the suitability of any security, and the views expressed in this report should not be taken as advice to buy, sell, or hold any security. The information in this report should not be relied upon for investing. In preparing the information in this report, we have not considered any particular investor’s investment needs, objectives, and financial circumstances. This information has no regard for the specific investment objectives, financial situation, and particular needs of any specific recipient of this information, and the investments discussed may not be suitable for all investors. Any views expressed in this report were prepared based on the data available when such views were written. Changed or additional information could cause such views to change. All information is subject to possible correction. Information may quickly become unreliable, including market or economic changes.
Throughout the program, Chaos Labs’ role is confined to providing recommendations regarding the allocation of rewards. The actual implementation and distribution of said rewards are subject to the formal approval process of the dYdX Chain governance votes. Any actions pertaining to reward distribution shall only be executed following affirmative governance votes within the dYdX Chain framework.