Meet DerivaDEX, a Coinbase-backed decentralized derivatives exchange

By Andrew Hayward

DerivaDEX, a decentralized exchange focused on the trading of derivatives contracts, has come out of stealth ahead of a proper launch later this year. And it already has a sizable list of well-known backers onboard.

The exchange has already raised $2.7 million in financing through a pair of rounds, bringing on such investors as Polychain Capital, Coinbase Ventures, Electric Capital, Dragonfly Capital Partners, CMS Holdings, Three Arrows Capital, Compound strategy lead Calvin Liu, and cryptocurrency researcher Phil Daian.

Built on Ethereum, DerivaDEX will be a community-owned exchange with “a (sane) liquidity-mining token model,” writes co-founder and CEO Aditya Palepu in a Medium post. The exchange’s DDX token will let holders participate in governance and operations.

“DeFi has, for the most part, been led by teams with very theoretical mindsets. These projects sound nice on a whitepaper, but ultimately don’t lead to material adoption and user acquisition,” writes Palepu. 

“We owe a lot to the pioneering teams that have come before us in our space. But one thing has been clear—DeFi has a glaring problem converting crypto-enthusiasts from centralized venues, much less winning over the masses.”

Palepu contends that while centralized exchanges typically offer polished interfaces and significant liquidity, they are hampered by security concerns and regulations. Meanwhile, he suggests, decentralized exchanges are less established, not very liquid, and may suffer from poor interfaces.

DerivaDEX aims to address those issues via use of a DAO (decentralized autonomous organization)  to mitigate single point of failure and censorship resistance concerns, plus it will have on-chain settlement without the use of an automated market maker (AMM) format used by many other DeFi projects. And liquidity will be boosted via DerivaDEX’s incentivized mining model, Palepu writes.

DerivaDEX is planned to go live sometime this quarter following an array of onboarding opportunities for early adopters, including testnet competitions, insurance mining, early access to the platform and affiliate referral program, and opportunities to earn pre-launch DDX tokens.

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