We are excited to announce the dYdX Margin Trading Protocol that supports both short selling and leveraged long trading. Alongside the Protocol, we’re also thrilled to announce Short and Leveraged Long Tokens — the most user friendly way to get short or leveraged long exposure on crypto assets. We’re targeting a testnet launch in late May 2018, with a mainnet launch soon after.

We are also releasing an updated version of our whitepaper, as well as a new whitepaper specifically on our Short and Leveraged Long Tokens. We welcome feedback from developers, collaborators and users so feel free to reach out!

Why dYdX?

We are building the decentralized infrastructure that enables peer to peer, trustless and efficient trading of derivative products. We have chosen to initially implement short sells and leveraged longs because:

There is a need for advanced financial products to provide greater efficiency in crypto markets The tools available for investors who want to create strategies that hedge portfolio risk are primitive and unintuitive

We are uniquely positioned to tackle this problem — we’re a world-class team with top backers:

Team: Our team has previous experience at Coinbase, Google, Facebook, Uber, Bain & Company, McKinsey & Company, Bloomberg, Goldman Sachs, and TPG-Axon

Our team has previous experience at Coinbase, Google, Facebook, Uber, Bain & Company, McKinsey & Company, Bloomberg, Goldman Sachs, and TPG-Axon Backers: Andreessen Horowitz, Polychain Capital, Kindred Ventures, Brian Armstrong, Fred Ehrsam, and more

What are we launching?

The Margin Trading Protocol

The dYdX Margin Trading Protocol contains a series of smart contracts that facilitate decentralized short selling and leveraged long positions of crypto assets. With dYdX:

Anyone can can offer loans with no counterparty risk for short sells and leveraged long positions

Anyone can take out short or leveraged long positions using loan offerings and 0x buy / sell orders

In addition to supporting leveraged longs, we’ve made a ton of improvements to the protocol since we released our initial whitepaper. We’ve made our smart contracts much more general, switched to continuously compounded interest, implemented automatic position closing via dutch auctions, implemented partial position closing, allowed value to be added onto positions after they are opened, and much more.

Check out our updated whitepaper for more details. We’ll also soon be releasing a series of posts diving into the technical aspects of dYdX.

Short & Leveraged Long Tokens

Going short or leveraging up is now as easy as buying a token. dYdX Short and Leveraged Long Tokens allow ownership of margin positions to be represented as fungible ERC20 tokens.

Each Short or Leveraged Long Token is backed by a dYdX position, which ensures its price is negatively or positively correlated to an underlying crypto asset. Buying and selling these tokens has exactly the same economic model as taking a normal position on the dYdX Protocol. dYdX Short and Leveraged Long Tokens:

Can be easily integrated by any exchange (centralized or decentralized) that supports ERC20 tokens

Work with any ERC20 wallet or dApp

Allow a superior margin trading experience — simply buy or sell a token

Aggregate liquidity for short and levered positions on an underlying crypto asset

Read the Short & Leveraged Long Token Whitepaper for more information!

What’s next?

We’ll be releasing more information soon — specifically technical content around our Protocol, more detailed timelines and potential partnerships. At a high level, we expect the following in the lead up to launch:

May-June

Undergo extensive security audits (2 separate audits)

Continue to develop partnerships with a range of projects and institutional funds to ensure liquidity on day 1 with dYdX

Build user facing applications

Open source code and release on testnet

June-July

Release security audit reports

Conduct dYdX Bug Bounty

Continue testing on testnet, in anticipation of mainnet launch

This is only the beginning for dYdX. If you’re interested to learn more about dYdX, how to take derivative positions, or partnering with us, please get in touch! We are also hiring talented developers to help us build out the future of financial derivatives. You can reach us on our Slack, Twitter or email at jobs@dydx.exchange.