What is DYDX?
DYDX is a governance token of the dYdX Layer 2 Protocol ("the protocol"). dYdX is a decentralized exchange is built on the Ethereum network delivering financial instruments to users such as perpetuals, margin, NFTs and spot trading, as well as lending and borrowing. dYdX equips traders with off-chain order books with on-chain settlement and enables them to short-sell tokens, increase exposure by longing with leverage, or earn interest on deposited tokens.
dYdX leverages StarkWare's Layer 2 to eliminate the need to trust a centralized exchange while trading, and thus combines the security and transparency of a decentralized exchange, with the speed and usability of a centralized exchange.
Holding the DYDX token allows the community to govern the the protocol by enabling shared control of the protocol, it grants traders, liquidity providers, and partners of dYdX access to collectively towards an enhanced Protocol. The token also enables governance, rewards, and staking, all designed to drive future growth and decentralization of dYdX. Staking pools are designed to promote liquidity and safety on the Protocol.
On the technical side, DYDX is an ERC-20 utility token used to power the dYdX trading platform. The total fixed supply of DYDX is 1,000,000,000.
On June 22, 2022, the DYDX team announced plans for establishing its own standalone blockchain, known as the dYdX Chain. This change is being governed by a governance vote overseen by the dYdX Foundation. The dYdX Chain is being built on the Cosmos SDK and utilizes the Tendermint Proof-of-Stake consensus protocol. It promises to deliver enhanced transaction capabilities, with up to 2,000 transactions per second. The dYdX chain was formally launched on October 26, 2023.
Before trading any crypto assets it is important to understand the risks. This overview is a starting point for you to perform your own research prior to investing in a crypto asset.
No securities regulatory authority or regulator in Canada has evaluated or endorsed the Crypto Contracts or any of the crypto assets made available through the platform.
Wealthsimple has performed an assessment of whether DYDX can be supported by Wealthsimple’s platform, including whether DYDX is a security and/or a derivative and is being offered in compliance with securities and derivatives laws.
We evaluated DYDX based on publicly available information, including (but not limited to):
- The creation, governance, usage and design of DYDX, including the source code, security and roadmap for growth in the developer community and, if applicable, the background of the developer(s) that first created DYDX;
- The supply, demand, maturity, utility and liquidity of DYDX;
- Material technical risks associated with DYDX, including any code defects, security breaches and other threats concerning DYDX and its supporting blockchain (such as the susceptibility to hacking and impact of forking), or the practices and protocols that apply to them;
- Legal and regulatory risks associated with DYDX, including any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of DYDX; and
- Statements made by regulators or securities regulatory authorities in Canada and other jurisdictions regarding whether DYDX, or generally about whether the type of crypto asset, is a security and/or a derivative.
Wealthsimple monitors ongoing developments related to crypto assets available on its platform for significant changes that may affect Wealthsimple’s original assessment of those assets, including Wealthsimple’s assessment of the application of securities and derivatives laws. Any significant changes relating to DYDX may result in changes to this Crypto Asset Statement and/or Wealthsimple’s ability to support DYDX.
Like all other crypto assets, there are some general risks to investing in DYDX. These include short history risk, volatility risk, liquidity risk, demand risk, forking risk, cryptography risk, regulatory risk, concentration risk, electronic trading risk and cyber security risk. Please review the Wealthsimple Crypto Product Risk Disclosure for additional discussion of general risks associated with the crypto assets made available through the platform.
Additional Risks / Information
Wealthsimple only supports the ERC-20 version of DYDX and does not support the version of DYDX available on the dYdX blockchain. Wealthsimple cannot bridge or convert the ERC-20 version of DYDX to the token on the dYdX network. If you wish to bridge or convert your ERC-20 version of DYDX, you must first withdraw it and then bridge or convert it using tools provided by the platform or protocol, which may subject you to additional risks.
We emphasize that this Crypto Asset Statement is not exhaustive of all risks associated with trading DYDX. Investors should perform their own assessment to determine the appropriate level of risk for their personal circumstances.
Wealthsimple is offering Crypto Contracts in reliance on a prospectus exemption contained in the exemptive relief decision Re Wealthsimple Investments Inc. dated December 18, 2023 (the Decision).
The statutory rights of action for damages and rescission in section 130.1 of the Securities Act (Ontario), and, if applicable, similar statutory rights under securities legislation of other jurisdictions of Canada, do not apply in respect of this Crypto Asset Statement to the extent a Crypto Contract is distributed under the prospectus relief in the Decision.
Last updated: January 1, 2024