Hey, everyone, I’m an experienced solidity developer and crypto trader/investor. In the past, I rarely used centralized exchanges, especially after the release of Uniswap. However, for leveraged trading, CEXes were the only viable option for a long time. With recent events like the FTX failure and ongoing regulatory pressures, I’ve noticed an increasing number of traders who have never touched DEXes starting to trade on platforms like DYDX and GMX.
While there is clearly some demand, I do see some potential issues with the current offerings. DYDX is a 100% CEX based on a proprietary protocol, and GMX operates as a liquidity pool where you are essentially trading against the casino. While everything works fine when you lose, I worry about what will happen to the pool if every single trader starts winning during a bull run. This is why I’ve been developing a protocol that can leverage liquidity from the entire market, similar to platforms like 1inch and Matcha, for leveraged trading up to x10.
To ensure that the protocol meets the needs of potential users, I’d love to get your feedback on the following questions:
1. If you are already using DYDX, GMX, or any other DEX protocol that allows trading with leverage, what important features are you missing?
2. If you’re currently using a CEX for leveraged trading, such as Bybit or Binance Futures, what is preventing you from using DYDX, GMX, or similar DEXes?
3. Let’s imagine that you’re able to use an ideal DEX for leveraged trading. What features would it include, and on what principles would it be based?
I’m looking forward to hearing your thoughts and suggestions, and I appreciate your time and input!
>If you’re currently using a CEX for leveraged trading, such as Bybit or Binance Futures, what is preventing you from using DYDX, GMX, or similar DEXes?
Liquidity, actually!
rough copy from a previous comment of mine, because questions like this appear regularly:
info about my use: (used CEX a while, now they are only there for On/Off ramp. DYDX user for leverage trading, Uni/1inch for Spot)
– Customizable skins would be nice, especially if they are (in a way) “sharable”.
– statistics: If it’s a Dex and trading happens on a Blockchain anyway, give us stats or even better: a way to create them and then integrate them in the trading engine.
– Follow up to statistics: offer a toolbox for indicator creation and technical analysis. Gate.io has some rudimentary feature like this.
– Gamification: dydx has weekly competition where you get put into different tiers (silver, gold,Platin, etc). It isn’t thought out properly, sadly. (It is centered around %gains. So there nearly only accounts with the minimum deposit fighting for the first place. Make it about sustainable trading, consecutive profit trades or some other elaborated metric.
– Copytrading: make a way to copy trade successful traders and give those traders a incentive (% of fees/Volumen /Profitshare). Copytrading is somewhat controversial, because it easily sets false incentives for the Master-trader. But it can be a powerfull tool and is almost always loved be the ones who use it (the ones who “copies”) and consequentialy, pay for the feature (with their fees)
Feel free to ask if you want me to go into detail on certain points.
If I had to pin it down to one feature, it would be “statistics”. As for yourself to trac/understand you results as well as broader statistics like long/short ratio on a pair, open positions, etc…like everything that can be pulled from the blockchain by someone who has the skill to do so – but make it easiliy available to everyone.
Given the increasing concerns around wallet security, it might be worthwhile considering privacy features that can protect users’ anonymity and enhance their overall security. Such measures could also potentially appeal to a wider pool of investors, contributing to the success of your Dex.
I really like that you are planning on doing this, build it as securely as possible, imagine the worst (those N’Korean’s will try it for sure) if done well though it should be massive, a lot of us are heading in that direction, if you make it, we will come, try and make it bot friendly and it will help, you may even be able to make extra money by supplying bots yourself… PureWicked.AU
This is super interesting, I love the idea. If you are considering a blockchain to deploy it on, I will suggest you look at [Zetachain](https://np.reddit.com/r/zetablockchain/comments/116x61y/understanding_zetachain_technical_details_and_use/?utm_source=share&utm_medium=android_app&utm_name=androidcss&utm_term=1&utm_content=share_button), Zetachain prides itself as one chain that connects every chain. It is designed to be DEX friendly.
I will personally ask around from other DEX users to see what I find as regards to leverage trading and update this thread with it, I am fully in support of all things DEX. Because cex are not our friend.
First thing I’d suggest is dive deeper into existing offerings. And there’s a lot more than you mention with different designs. And new ones launching all the time. Odd you didn’t mention any based on a synthetic design, for example. Which have diff pros and cons.
Based on your post I’m not sure you understand the competition. For instance, you highlight the concern with GMX if every trader wins during a bull market. With GMX (GLP) design that’s not a key issue, the risk to GLP is on the short side. A massive (winning) short position could wipe out GLP in an edge case.
Why reinvent the wheel?
[https://app.dem.exchange/](https://app.dem.exchange/) has all leverage trading features and cross-chain capabilities. It is an app built on top of [https://carbon.network/](https://carbon.network/), which is a fully decentralized trading protocol.
Might be worthwhile to build you own exchange powered by Carbon.
https://docs.carbon.network/
Just curious if you’re familiar with Gearbox? They’ve been working on this for 2-3 years. Fully decentralized leverage accounts. They also have one of the smartest discords I’ve been on, which you might find satisfying as an eth dev. I’d recommend checking them out, not only because this tool may help you to do the trading you want to do, but you might also get better answers to your questions in their community because they’ve been working on a project with similar intentions.
NFA but their gov token $gear is also ridiculously undervalued IMO.
Your idea to come up with a unique platform to enhance our future trading experience sounds novel. Though I’m getting used to trading futures on CEXs like #MEXCGlobal and Bybit.
I will suggest you consider introducing features like a 1-second interval feature on the DEX trading candlestick which will allow the trader to analyze price action in different time frames and give a more holistic approach to future market behavior
This feature has given Investors on #MEXC the ability to redefine their analysis with the second price updates to maximize their profit record while building more confidence in the CEX.
You ain’t building shit no offense. Dydx is leading the charge by open sourcing everything.
>This is why I’ve been developing a protocol that can leverage liquidity from the entire market, similar to platforms like 1inch and Matcha, for leveraged trading up to x10.
Gearbox already offers this on Ethereum and has >$100 million TVL, there are similar projects on Arbitrum (Sentiment, $10m TVL), Avalanche (DeltaPrime $15m TVL) and a few other chains. They all support trading, but their primary use is leveraged farming due to issues with leveraged trading on-chain.
The issue with using on-chain spot markets for leverage is that price impact gets very expensive when you lever up 5x or 10x, so you can only trade small. However, TX fees make small trades way more expensive than on CEXes.
You also have to worry about MEV (front-running attacks) and be VERY good at liquidating traders whose positions become unprofitable, or the protocol can become insolvent. Overcollateralized lending markets rarely allow for more than 2x leverage with looping, and they still get into bad debt sometimes when prices fall or rise sharply in a short period of time.