Ahmet R.
Ahmet R.
May 08, 2022

DerivaDAO: The Next Generation of Derivatives Trading

tl;drWe all know that decentralised exchanges (DEXs) have a significant role in the crypto market. DEXs offer significant benefits and innovations for trading cryptocurrencies compared to centralised exchanges. The DerivaDAO project, a decentralised exchange, is the decentralised autonomous organisation (DAO) managing DerivaDEX. DerivaDEX is a Coinbase-powered DEX platform, and the DDX coin is the project's native cryptocurrency. Let’s learn more about this project and how it works.
DerivaDAO: The Next Generation of Derivatives Trading
DerivaDAO: The Next Generation of Derivatives Trading
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What Is DerivaDAO (DDX)?

DerivaDAO is a Decentralized Autonomous Organization (DAO) governing DerivaDEX, a Decentralized Exchange (DEX) backed by Coinbase for derivative contracts. DerivaDAO is built on Ethereum and provides eye-catching performance advantages compared to other DEXs, including a real-time price feed, fast trade resolution, and a competitive fee structure. The platform is directly governed by traders and token holders, thanks to the DAO nature of the platform. 

The Problems DerivaDAO Addresses

DerivaDAO aims to fill the gap at the intersection of trading and blockchain by addressing major problems the centralised and decentralised exchanges face. DerivaDAO offers solutions for the regulatory issues and the weak security, eradicating censorship concerns and failure. Moreover, it provides a pleasant user experience that is capital-efficient and performant, with an order book model to solve decentralised exchanges' liquidity and UX issues. DerivaDAO leverages the speed and efficiency of centralised exchanges by having off-chain price feeds, matching engines, and liquidation operators.

What Makes DerivaDAO Unique?

By utilising a unique architecture, DerivaDAO aims to stand out among the other DEXs in the market. While other exchanges handle trading and other transactions on public blockchains, DerivaDAO does so on its DerivaDEX operator network. The DAO manages two funds, i.e., the tranches of staked insurance funds from its insurance mining program and the organic insurance funds from its exchange fees. The management is handled on layer-2 to backstop traders against auto-deleveraging.

How Can DerivaDAO Compete with Centralised Exchanges?

Deriva can compete with centralised exchanges thanks to this custom layer-2 solution, which guarantees sub-second transaction finality to make high-frequency trading possible. In this case, users can enjoy reduced transaction costs compared to Ethereum gas fees. This architecture allows Deriva to focus on enabling the main functionality of centralised exchanges in a non-custodial manner. The Ethereum network secures all funds. Unlike other layer-2 solutions such as zk-rollups or optimistic rollups, the centralised order sequencer used in Deriva has no discretion over the order flow, and users do not need to wait too much for on-chain transactions.

How Is the DerivaDAO Network Secured?

Quantstamp has audited Deriva DAO's smart contracts and verified them to be high quality. Ethereum, one of the most popular blockchains for DAOs, is used to secure the protocol, which uses a proof-of-work consensus process that requires miners to mine more Ether. The Ethereum blockchain is secured and validated via a network of decentralised nodes. Its proprietary layer-2 solution is a sidechain of operators that execute programs in trusted execution environments. This ensures that code in this environment cannot be changed and that executions in this environment can be verified.

DerivaDAO DDX Token

The DDX coin is an ERC-20 governance and utility token that can be used for a variety of purposes. With their token ownership, DDX allows token holders to participate in the governance of DerivaDAO from the beginning, determining the exchange's evolution. The token is staked by operators that run price feeds or matching engines, and it can also be used to pay reduced trading fees on the platform. Finally, holders of the DDX token can stake it to obtain higher referral payouts from traders they've introduced to the platform.

Main Features of DerivaDEX

The DerivaDEX project's team wants to create a platform that bridges the gap between trading and blockchain engineering. The team aims to satisfy traders' desire to hedge with and speculate on leveraged derivatives in a secure and censorship-resistant manner. This project was also created to lower traders' custody risk. The concept combines the benefits of both centralised and decentralised exchanges, such as lots of liquidity, user-friendly interfaces, and cryptographic security. To create a more stable exchange, DeriveDEX combines advantages with the critical features or properties, which are as follows:

  • Liquidity-mining
  • Decentralised Autonomous Organization (DAO)
  • Open order book, no AMMs; on-chain settlement

DerivaDAO (DDX) Financial Analysis

DDX’s Return On Investment (ROI) was -54% over the last year, a disappointing figure for its investors. Although the average ROI of the top 1500 projects in the market was also negative (-14%), DDX saw a worse ROI. There are currently almost 2k wallets holding DDX with total transactions of over 34k. Its Twitter account saw an increase of 66% over the last year, surpassing 9k followers when writing this post, while its Telegram channel subscribers went down by 7% over the same time frame.

DerivaDAO Market Cap Info

Except for a peak at the rank #174 on Aug 31, 2021, DDX’s market cap rank followed a negative trend during the last year, reaching #530 on May 3, 2022, with approximately $56 million market cap. Its liquidity score is 24%, which is less than the market’s average score, making it a challenging sale when the market is falling.

Disclaimer: Don’t take this article as financial advice. You need to DYOR (Do Your Own Research) before investment.

DerivaDAO Price Prediction

Knowing what financial experts think about the future of a crypto project would help in making investment decisions. In the following, we will review the report Priceprediction.net published about DerivaDAO’s token, DDX. However, beware that these should not be considered financial advice but only predictions, and you need to do your own research.

DDX Price Prediction for 2022

Experts believe that DDX's price will be at least $2.89 in 2022 and can go up to reach a maximum of $3.36. They predicted that the average trading price of DDX could be $2.98.

DDX Price Prediction for 2023

Experts expect DDX to be traded with a minimum price of $4.18 in 2023. Optimistically, it is forecasted that its price can peak at $5.10. Experts reported that DDX could be traded with an average price of $4.33.

DDX Price Prediction for 2025

It is expected for DDX's price to be at least $8.46 in 2025. However, the price can touch a maximum of $10.21, while the average trading price is forecasted to be $8.70 throughout 2025.

DDX Price Prediction for 2030

It is predicted that DDX's minimum price will be $53.17 in 2030, with the maximum expected trading price being $65.51. DDX is expected to be traded for an average price of $54.74 over 2030.

Other DEX Projects

In case you’re looking for some DEXs to invest in, check out the following list:

Conclusion

According to the information provided, DerivaDAO has a clear purpose, innovative technologies, and cutting-edge concepts. However, it’s worth noting that volatility and change are intrinsically tied in the crypto market. When it comes to investing in cryptocurrency, you should never invest irrationally! Cryptologi.st is here to help you make confident crypto decisions with analytical project reviews, breaking news, and educational content. Keep an eye out for more innovative projects!

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