I’m aware there’s a feedback page for this but I think it’s important to post it here since we have Unlimited being released any time now, and I think anyone interested in the protocol should be aware of just how unready DYDX is to release prediction markets to the public
I felt like betting on Trump yesterday and opened long positions on seven different accounts with some play money. Here’s what happened:
the max allowed leverage was around 1.15x to 1.30x (which completely defeats the purpose of leverage trading, you might as well bet directly on Polymarket and avoid paying funding fees)
out of the seven accounts, five of them got ‘deleveraged,’ meaning the protocol closed my positions at about $0.75, which means I lost about 33.33% in profit that I would have made if Trump had hit $1, which he eventually did since he won. The bizarre thing here is:
I was hardly leveraged (remember, the max allowed leverage was around 1.15x to 1.30x)
there were hardly any price wicks yesterday (which is when I got deleveraged)
it seems completely random that five accounts got deleveraged, while two didn’t. I opened all positions minutes apart on each account with the same max allowed leverage of 1.15x to 1.30x. The only difference is that some of the accounts had slightly larger positions than others
is this really what we’re about to release at scale? Can we get some feedback on what happened here and any planned improvements to ensure this is ready for launch
I’ve already been banned from the Discord for discussing this situation, but I also placed bet which was not honored.
DyDx team can twist words in all sorts of creative ways here, but your team put out a broken system without thinking through it and from a users perspective it’s no different than DyDx being hacked for a fourth time.
I am a supporter of DyDx from pre-airdrop Ethereum days. I had continued to support DyDx through 3 hacks and also getting smashed in YFI market manipulation…but I can’t support something like this at all.
I would like to see this situation resolved fairly with the cancellation of DyDx pursuing any “leveraged prediction markets”, the review of whoever didn’t think through the process, and especially the refunding of those users who used it.
The amount of incompetence and carelessness in releasing this product is beyond anything acceptable. Exactly as I saw someone else scream out in the chat, THIS IS UNACCEPTABLE.
The situation that has occurred in this market was quite foreseeable and will happen in many more markets where there isn’t sufficient liquidity, or even in highly liquid markets experiencing extremely volatile movements. It’s an unlikely scenario in very liquid markets because it requires very sharp movements, but I already experienced deleveraging in one of my trades during one of these moments. In low-liquidity markets, this is going to be a very common occurrence.
One way to make these markets operational is to allow the same collateral to be used as guarantees, so in such cases, the collateral itself can be delivered directly, or executed on the market if necessary. This could also be a highly profitable activity for those who engage in this type of short operations backed by the asset’s collateral. We wrote an article a while ago suggesting the implementation of allowing other types of collateral deposits to provide tools to partly avoid these kinds of situations, while also offering returns to users who provide this counterparty.
It was only a matter of time before we’d encounter these kinds of situations if we don’t truly decide to address the problem. The solution of deleveraging, which will occur much more frequently, ultimately creates a futures service that, as we can see, falls far short of the reasonable expectations of an investor, as in this case.