Permissionless Market Listings: A New Era for DeFi Trading?

It hasn’t happened yet in the DeFi space, but it’s an enticing proposal: What if, instead of looking for an exchange to list the pairing you want to trade

dYdX is preparing to roll out its Unlimited suite of tools this fall, and one such tool will allow users to create markets on the exchange without permission. This move is significant as it could potentially open the door to a whole new world of trading possibilities on the platform.

Currently, dYdX offers a limited number of trading pairs, which are chosen by the exchange based on various factors such as demand and liquidity. However, with the MegaVault feature, users will be able to create their own markets by depositing any ERC-20 token into the vault. This will allow traders to trade almost any token pair they want, as long as there is sufficient liquidity.

The MegaVault will also consolidate liquidity across all markets, which means that traders will always have access to the best possible prices. This is in contrast to the current system, where liquidity is often fragmented across different markets, making it difficult to get the best possible price on trades.

Overall, the MegaVault feature is a major development that could potentially revolutionize trading on dYdX. It will give users more control over the platform and allow them to trade almost any token pair they want. This is sure to attract more traders to the exchange and further increase its trading volume.

Here's a look at how dYdX's MegaVault works:

A Long Tail of Pairing Slots

The dYdX version of the “Consolidated Liquidity Vault” solves two critical problems, which is good because the first problem actually creates the second problem. The first problem, as mentioned above, is the series of gaps created for listing token pairs.

This gap is caused by the timing of releases, a lack of perceived interest (the exchange doesn’t create a market listing because it doesn’t see any demand), or it simply doesn’t track all new tokens. Because the most popular token pairs are listed, the majority of trading continues, and there isn’t a major uproar.

However, if the rise of the internet has taught us anything, it is the power of the long tail—using the efficiency of digital technologies to serve smaller and smaller markets, including markets of a single customer. All of those small markets can add up and become valuable when the cost of doing business is very low.

In this case, the cost of creating market listings is quite low. It is just a matter of identifying even small amounts of demand that together build up enough overall activity to excite the community. This buildup of activity can then create the fees, and therefore the rewards, for those who are contributing to make it possible.

If the process can become user-driven, especially as part of a permissionless process, this is even more efficient. In that case, the authorization doesn’t have to involve any centralized body or, if none exists, a governance approval from a DAO.

Having users identify and set up the long tail token pairs, and do so on a permissionless basis, creates a system that generates new ways for users to trade, while using almost zero resources to make it happen.

With decentralized organizations such as DeFi, this is an ideal way to find new products and services, where the market demand and product setup is completed by the users themselves. dYdX roughly follows this process, and it seems like it would be a solid playbook for other exchanges looking to serve up the long tail marketplace for token listings.

This long tail, however, is what creates the second problem: liquidity.

Liquidity on Demand

Having a long tail offering of niche products is well and good, but only when you do not have to use up any capital to offer them, at least until an order has been confirmed. In a traditional model, you might look to assign a certain amount of liquidity to pairings depending on how much demand you anticipate.

This would likely work for the more popular pairings, but doesn’t create any sort of minimum liquidity needed to support a market for those niche pairings to trade. In addition, because they are niche-driven pairings, any estimates you give are going to be rough guesses, meaning that the liquidity either won’t be enough and the market will be ineffective, or the liquidity is more than enough and it’s being wasted. Either way it’s an ugly situation if you care at all about efficiency.

The solution, which was spoiled by the title, is to consolidate the liquidity into a single vault that serves all pairings. Named MegaVault by dYdX, the concept would look similar for any provider.

在 dYdX 中，用戶將 USDC 存入金庫，金庫立即開始創造收益。整合的流動性貫穿整個市場，並在需要的地方準確使用，以便為交易提供服務。這反過來又產生收入費用和其他回報，用於將收益返還給流動性提供者。

USDC可以隨時提取，使金庫成為用戶的低風險資本持有。當然，選擇創建自己的綜合流動性金庫的其他鏈也可以提供無懲罰鎖定，或者可以

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