dYdX to Launch Isolated Markets and Isolated Margins

dYdX Introduces Isolated Markets and Isolated Margins

dYdX, the decentralized trading platform, is set to launch Isolated Markets and Isolated Margins. This upgrade is part of the upcoming Release 5.0 of dYdX Trading’s v4 open-source software suite and is anticipated to take effect in the next few weeks.

Benefits of Isolated Markets

Isolated Markets, unlike the current cross-margined markets, have segregated collateral pools and their own insurance fund. This arrangement allows each market to have its distinct risk properties, enabling the protocol to safely support a broader range of market types.

The introduction of isolated markets will significantly expand the number of markets available on dYdX. The new market widget, which sources markets from v4-web, currently lists approximately 20 markets. With the advent of isolated markets, this figure is expected to soar to over 800 potential markets.

Expanded Market Universe

The markets that can be listed via the new market widget will include those available on at least two centralized exchanges or at least one decentralized exchange, subject to specific liquidity and market-cap guidelines. The methodology for the new market widget universe will be open-sourced at docs.dydx.exchange.

This release will also see the first-time querying of prices directly from decentralized exchanges on dYdX Chain. The initial protocol validators will be able to query from is Raydium, resulting in Raydium markets being available for listing on dYdX.

Role of Isolated Margin

Isolated Margin makes trading easier for traders by allowing them to trade any market as an isolated position. They can confine collateral to a specific position and manually adjust their collateral for that given position. This flexibility enables users to have more control and understanding of their collateral management.

While all isolated markets will need to be traded with isolated margin, markets that are cross-margined on the protocol can either be traded with user cross or isolated margins via the UI.

Adding New Markets

The process of adding new markets will remain the same as it is today, through governance. Eventually, adding new markets to dYdX Chain will be fully permissionless, enabling markets to be listed instantly without any governance process.