Trading volume on decentralized exchanges (DEXs) hit $32 billion in seven days in mid-November, posting another high since early June this year. This came after an explosive and tumultuous week in the crypto industry, which led many investors, both experienced and new, to take refuge in decentralized, permissionless, self-custodial trading platforms.
A variety of DEX models are available on the market today; Based on the principles of decentralization and financial freedom for all without restrictions, DEXs have been welcomed for the following reasons:
Elimination of intermediaries monitoring trades, where traders execute their trades based on immutable smart contracts Increased security and privacy, as only traders have access to their data and that data cannot be shared or viewed by others Traders own it of your funds and assets, with multiple alternatives for the recovery of funds in the event of suspensions or interruptions of the platform service. No access restrictions based on locations or geographic profiles, i.e. no KYC requirements Community-focused, where stakeholders share revenue from the platform to provide liquidity, participation, and more.
DEXs like Uniswap dominated the surge in November 2022, and traders are spoiled for choice when choosing a DEX to trust given the multiple options on the market. For experienced traders looking for a derivatives alternative to capture trading opportunities and utilize each trading signal to its fullest, one could turn to derivatives DEXs, where leverage and margin trading options are available for customizable orders on various popular contracts.
Here is a comparison of three DEX derivatives that have appeared on traders’ radars recently, two of which are familiar to most traders: dYdX and GMX. The last DEX we’ll look at is the newly released ApeX Pro, which has gained increasing attention after its beta launch in August with a recorded 6,000% growth in transaction volume.
Let’s dive into the detail
dYdX is a leading decentralized exchange that supports spot, margin, and perpetual trading. GMX is a spot and perpetual decentralized exchange that supports low exchange fees and zero price impact trading and operates on a multi-asset AMM model. And finally, ApeX Pro is a non-custodial derivative DEX that offers unlimited access to perpetual contracts with an order book model.
For this article, we will look broadly at these three measures: (1) security and privacy, (2) transaction and profitability, and finally (3) token ecosystems and reward-generating offerings.
The above is a non-exhaustive list of notable highlights of the respective DEXs. dYdX and GMX are trader favorites for good reason, so let’s see how the new ApeX Pro fares against the other two DEXs.
(1) Security and Privacy
The three DEXs are relatively on a level playing field with respect to privacy-preserving measures, of which self-custody of funds is a common denominator: the importance of a non-custodial trading platform is undeniable in light of events recent.
In particular, both dYdX and ApeX Pro have added protections with the integration of StarkWare’s Layer 2 scaling engine, StarkEx, allowing users of both DEXs to access force requests to recover their funds, even if the DEXs are not. in service. Additionally, STARK tests are used in both dYdX and ApeX Pro to facilitate accurate transaction verification, while GMX relies on Arbitrum and Avalanche security provisions.
DEXs are known for their privacy-preserving measures, which is why GMX and ApeX Pro, in a truly decentralized fashion, are not KYC at all. dYdX, on the other hand, on a previous occasion, implemented KYC to claim rewards for a selected campaign.
Another notable factor would be the provisions for community governance and discussions: on dYdX and GMX, pages to host voting and discussions are readily available. At present, however, ApeX Pro is still working on creating its dedicated community space for people to do things like vote and submit suggestions.
(2) Transaction cost and efficiency
ApeX Pro has decided to go with the order book interface more commonly found on CEXs, and like dYdX, this trading model works because it removes the barrier to entry for both traditional cryptocurrency traders and aspiring DeFi traders. It also uses three types of prices that help prevent market manipulation. However, it would depend on a trader’s preference to view the mid-market price (dYdX) or the last traded price (ApeX Pro) for more accurate trading.
With the StarkWare integration, it’s no surprise that ApeX Pro increased transaction speeds to process approximately ten trades and 1000 order placements every second with no gas fees, along with low originator and receiver fees. dYdX’s tiered fees are incredibly comprehensive and accommodate the different trade sizes of different traders; Without any gas fees, it’s no surprise that DEX derivatives traders have mostly looked to dYdX.
These tiered fees are also familiar to derivatives traders on CEX. GMX, on the other hand, charges network execution fees, which means that the gas fees paid by the merchant for their trade can vary based on market factors.
ApeX Pro doesn’t have tiered fees yet, but considering it just launched in November, it’s likely the differential fees will drop soon with an upcoming VIP program, where the APEX amount staked will determine the discount applied to maker-taker fees.
For traders looking for options on trading pairs, dYdX remains the DEX with the most perpetual contracts, while also providing access to spot and margin trading at the same time on Tier 1 Ethereum. ApeX Pro and GMX do not they offer as many perpetual contracts as dYdX. Still, with the frequent introduction of new trading pairs, it is only a matter of time before traders gain access to multitudes of assets and pairs on the remaining DEXs.
What might be notable for everyone is ApeX Pro’s support for multi-chain deposits and withdrawals on EVM-compatible chains; This is certainly a plus point for traders who engage in dynamic trading across multiple platforms, chains, and asset categories in crypto.
(3) Tokens and rewards
Of all the factors, this is probably the one that interests most traders: how each DEX helps multiple rewards and profits while ensuring that these rewards remain valuable to the individual trader over time.
With dYdX and GMX, the success and popularity of trading events to earn rewards and wagering incentives is self-evident. It is critical that DEXs allow access to revenue-sharing programs for community members and token holders, which commonly involve sharing accumulated trading fees over a single period. Rewards and incentives are usually distributed in tokens native to the platform.
dYdX’s offerings are simple, with a Trading Rewards program that distributes 2,876,716 $DYDX to traders based on their trading volume in epochs of 28 days. On top of that, users can also stake $DYDX in a pool to receive additional staking rewards. This double win track continues to be a hit with traders. GMX, on the other hand, has taken community rewards forward by using deposited tokens in its staking program to further stabilize and maintain the value of the reward tokens its merchants receive.
ApeX Pro follows in GMX’s footsteps by enriching its token ecosystem with deposited and liquidity tokens, enabling greater dynamism to maximize token value and sustain long-term token use cases for the community than using a single token. for all DEX initiatives.
With a total supply of 1,000,000,000 APEX$, 25,000,000 APEX$ were minted to create $BANA. With the year-long ApeX Pro Trade-to-Earn event and weekly reward distributions in $BANA, traders can exchange rewards for tangible incentives in USDC and also redeem $APEX tokens after the event ends. Traders can also add liquidity to a pool of $BANA-USDC in exchange for LP tokens, which they can then exchange for more $BANA.
Furthermore, ApeX Pro maintains the stability of the value of $BANA with a Buy & Burn Pool, which ensures that the holdings of any of its users’ tokens are maximized at any time. $190,000 in $BANA will be distributed weekly for one year, a quick and easy deal that all merchants will no doubt appreciate.
DEX architecture innovations in the nascent DeFi industry abound as DEXs find their place in a CEX-dominated world. This is good news for traders because they can choose DEXs based on the layouts that suit them best or take advantage of their preferred benefits on various platforms. With the growth it has seen in its first week of mainnet launch and an ecosystem that combines the best features of existing DEXs, ApeX Pro is one to watch out for in 2023.
Ending with a quote as always.
“Blockchain-based projects should go back to their roots: decentralization. Decentralization is here to stay and it is the future”.
– Anndy Lian
Guest post by Anndy Lian of the Mongolian Productivity Organization
Anndy Lian is a business strategist with over 15 years of experience in Asia. Anndy has worked in various industries for local, international and publicly traded companies. Her recent foray into the blockchain scene has seen her manage some of the most prominent blockchain companies in Asia. He believes that blockchain will transform traditional finance. He is currently the President of BigONE Exchange and Senior Digital Advisor at the Mongolian Productivity Organization.
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This post Selecting a Derivatives DEX: Overview and Comparison
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