DYDX/USDT intensifies competition among decentralized exchanges through strategic initiatives

The decentralized derivatives track is entering a new phase of competition. Protocols like dYdX are facing rapidly emerging competitors and more severe macro market pressures, while traders are demanding better pricing, deeper liquidity, and genuine token value capture. Against this backdrop, the latest initiative around DYDX—especially for users focused on the dYdX/USDT trading pair—is not just a marketing campaign but a key strategic deployment in the decentralized exchange (DEX) wars.

As a Gate content creator, this article will analyze how these changes impact the dYdX/USDT market, including zero-fee promotions, large-scale buyback plans, transition to an application chain, and how Gate users can position themselves amid this transformation.

dYdX/USDT and the Zero-Fee Offensive in the DEX Wars

The most notable move is dYdX’s zero-fee promotion launched in certain perpetual contract markets. With the community upgrading to v9.4 protocol, the project gains flexible permissions to temporarily set maker and taker fees to zero in specific markets and dates, while other markets retain standard fee tiers.

In practice, this mechanism has been implemented during promotional periods for BTC and SOL perpetual contracts. Traders can enjoy:

• Zero trading fees during the promotional period;
• Up to 50% rebate on positive trading fees before the end of the year, as part of an incentive scheme.

Additionally, dYdX continues to maintain a staking-based fee discount mechanism, where locking DYDX tokens grants users dynamic fee benefits based on staked amounts.

For Gate’s dYdX/USDT market, the significance of these measures includes:

• Making the underlying protocol more attractive to high-frequency traders, which can improve overall liquidity and market attention for DYDX assets;
• Strengthening dYdX’s position as a professional trading-focused DEX, with competitiveness rooted not only in branding but also in fee structures and incentive mechanisms.

Gate users watching the dYdX/USDT market are essentially witnessing the token’s role as a lever to participate in the broader on-chain derivatives capital race.

dYdX/USDT and Token Economics: DYDX 75% Revenue Buyback Mechanism

Fees are only part of the story. A major structural change is how protocol revenue feeds back into the DYDX token itself.

In November 2025, the dYdX community approved governance proposal #313, increasing the share of net protocol revenue used for DYDX buybacks from 25% to 75%.

Core impacts on dYdX/USDT include:

• Increased buyback pressure: Most of the protocol revenue is now used to repurchase DYDX tokens from the market, with some allocated for staking or distribution under the new framework. This aims to gradually reduce circulating supply and support the price, assuming healthy trading volume.
• Closer association between usage and token value: The more the protocol is used and the higher the fee revenue, the larger the buyback budget. DYDX becomes less just a governance token and more deeply tied to actual cash flow.
• Alignment with long-term holders: This mechanism is explicitly designed to reward users who hold and stake DYDX, rather than short-term liquidity arbitrageurs.

For Gate traders, dYdX/USDT now represents a token with a clearer value capture mechanism, but its performance also heavily depends on governance execution and sustained protocol revenue.

dYdX/USDT in the Application Chain Era: From Ethereum L2 to Cosmos-based dYdX Chain

On the architectural level, dYdX is no longer just an Ethereum-based protocol. With the launch of dYdX v4, the project migrated to a self-developed Cosmos application chain (dYdX Chain), moving order book matching and settlement entirely onto a dedicated Layer-1 optimized for derivatives.

This architecture introduces several structural changes that directly impact dYdX/USDT:

• Autonomous fee and incentive models: As a sovereign chain, dYdX can flexibly run zero-fee promotions, complex distribution tiers, and experiments, while ensuring validator and protocol economic stability.
• Cosmos ecosystem integration: Thanks to IBC cross-chain connectivity, assets can more easily transfer between the application chain and the broader Cosmos ecosystem.
• Decentralized order book: On-chain design supports a decentralized off-chain order book combined with on-chain settlement, blending centralized exchange (CEX) experience with DeFi transparency.

From Gate users’ perspective, dYdX/USDT allows investors to gain token exposure supported by a dedicated derivatives application chain, rather than traditional ERC-20 experiments.

dYdX/USDT Market Overview: Price, TVL, and Liquidity Signals

Despite frequent upgrades, market data presents a complex picture.

According to public data, DYDX currently trades around $0.20–$0.22, with a market cap between $160–170 million, and a circulating supply above 800 million tokens.

Analysis from Bitget highlights these “strategic moves,” noting:

• Early in its launch, DYDX’s fully diluted valuation soared to nearly $1.9 billion, with strong open interest, but TVL and open positions declined sharply between 2023–2025;
• Long-term TVL remains in the low hundreds of millions, with open interest falling below $150 million, reflecting cooling derivatives markets and fierce competition from other platforms.

In summary:

• Structurally, dYdX/USDT is a protocol betting on application chain architecture, zero-fee experiments, and revenue-driven tokenomics;
• Cyclically, DYDX is still digesting the impacts of a prolonged bear market, large unlock pressures, and waning speculative enthusiasm.

This characteristic makes dYdX/USDT a high-beta DeFi token: highly volatile when market sentiment improves, but prone to deep retracements if trading volume or TVL underperform.

How Gate Traders Can Currently Position in dYdX/USDT

On the Gate platform, dYdX/USDT is a direct tool to express views on the future of decentralized derivatives and application chain DEXs.

Here are some practical strategies for Gate users:

1. Trend and news-driven trading Protocol decisions (like 75% buyback or zero-fee promotions) directly influence market sentiment. dYdX/USDT often reacts strongly to governance announcements and new feature launches. Active traders should follow news, governance proposals, and trading volume anomalies, and seek confirmation signals on the dYdX/USDT chart before entering.

2. Tokenomics-oriented position management The new buyback mechanism suggests that sustained protocol revenue growth could support structural buying of DYDX. But this depends on long-term genuine usage rather than one-off events. Traders can see buybacks as positive signs but not guarantees, and should allocate dYdX/USDT positions reasonably.

3. Risk management with Gate tools High volatility is normal. Using limit orders, stop-loss, and preset take-profit strategies can help avoid emotional decisions during sharp swings. Including DYDX in a diversified portfolio with BTC, ETH, and other DeFi tokens can also reduce concentrated risk.

4. Clarify your investment horizon dYdX’s strategic initiatives (buybacks, application chain, fee experiments) are multi-year plays. Traders should define their participation scope:

• Short-term trading around specific events; or
• Medium-term positioning on dYdX application chain and buyback models outperforming other DEXs in the midterm.

dYdX/USDT Outlook: Strategic Gains and Execution Risks

dYdX’s recent series of decisions—from key zero-fee promotions, to 75% revenue buyback, to dedicated application chain deployment—demonstrate its proactive stance in the DEX war. For the token and dYdX/USDT on Gate, this creates an investment profile that combines attractiveness and risk:

- Positives: Clearer value capture, more flexible fee leverage, architecture built for derivatives trading.

- Risks: Long-term low TVL and open interest compared to peaks, fierce competition from on-chain and off-chain platforms, and ongoing macro volatility in crypto markets.

For Gate users, the most prudent approach is to see dYdX/USDT as a DeFi speculative asset with real fundamentals, rather than a guaranteed rebound story. The protocol’s strategic moves are significant, but whether they translate into sustained price increases depends on execution, user adoption, and the overall DeFi derivatives cycle.

As always, any decision to trade or hold dYdX/USDT on Gate should be based on independent research, a clear understanding of personal risk tolerance, and strict position management.