Penta Lab research report: dYdX-V4 version released, DEX leader can be expected in the future

Source: PentaLab

Project name: dYdX

Token: DYDX

Current fully diluted market value: US$3.2 billion

Estimated fully diluted market capitalization: US$7.6 billion

Upside potential: 140%

Penta Ten-Dimensional Rating: 77

Data as of: February 15, 2024

Download the full report: pentalab.io

Penta Ten Latitude Score:

Transaction volume continues to occupy the leading position in the decentralized exchange track. dYdX is a decentralized exchange platform that provides perpetual trading options for more than 35 popular cryptocurrencies, ranking among the top three decentralized exchanges in terms of trading volume and market share. According to MintScan data, as of February 15, 2024, the transaction volume of the V4 version of dYdX in the past 30 days has reached approximately 19 billion US dollars, which is higher than the 11.8 billion US dollars of the V3 version, and the fee income is 3.07 million US dollars (USDC denominated). That's the same as the V3 version's revenue of $3.02 million.

From Layer2 to Layer1 , CosmosEcology helps development. After the V4 version of dYdX was released, community governance voted to use DYDX as the Layer 1 token of the dYdX chain to be used as a governance token, gas fee and pledge to dYdX chain validators to ensure the security of the chain. The Cosmos SDK and CometBFT PoS consensus protocol feature a fully decentralized off-chain order book and matching engine. dYdX Chain, as a customized L1 blockchain on Cosmos, has more autonomy and better security.

After version iteration, the ability to capture currency value has been significantly improved. dYdX’s V4 version protocol issues staking incentives to DYDX stakers in the form of USDC. According to dYdX data, as of January 31, 2024, the V4 version protocol has issued more than 4 million USDC staking incentives to more than 11,071 pledgers, with a staking annualized rate of return (APR) of approximately 15.13%. Compared with dYdX's V3 version protocol, which issues transaction and staking incentives in the form of ethDYDX tokens, the value capture capabilities of V4 tokens have been significantly improved.

Valuation: In view of the recent concentrated release of circulating tokens by companies, we use FDV valuation. The average ratio of FDV compared to the combined trading volume of V3 and V4 since February is 2.9, the current ratio is at 1.9, which is relatively the lowest since February. Considering that V4 trading volume has been growing rapidly since February, exceeding one billion US dollars on February 13, and the week-on-week growth rate in the latest week has averaged 48%, we conservatively assume that the week-on-week growth rate is 5% to get V4's six-month US$4 billion. Assuming that V3 trading ceases, and then use the FDV of 1.9 to compare with the previous day's trading volume, the six-month estimated fully diluted market value is US$7.6 billion, which has 140% room for growth compared with the current situation.

Main risks: Transaction volume is lower than expected, security, competition intensifies.