From the Founder of dYdX: Lessons I've Learned in 5 Years of Entrepreneurship

Here's a brief history of dYdX so far. I think this should be a good background for anyone interested in dYdX. The journey we've been through may also be useful to anyone working in the broader DeFi/crypto space.

2015–2016, worked at Coinbase
Before joining Coinbase, I knew nothing about cryptocurrencies. Shortly after starting work at Coinbase, I was very excited about the future of cryptocurrencies. When I first started working at Coinbase, basically the only orthodox cryptocurrency (as we knew it) was Bitcoin. We are all 100% confident that Bitcoin will be the only interesting thing in cryptocurrency because if any other chain does something interesting, Bitcoin will integrate it and use its superior network effects to crush the other chain. Of course, this ends up being wrong.

When I finally discovered Ethereum, I was especially excited: I realized that it was a new paradigm of computing — for the first time, programs could run completely autonomously, deterministically, and not under the control of anyone else. I'm sure something has to be built on top of Ethereum that will eventually become huge.



2017

Weipoint

Before creating dYdX, I had been working full time on a search engine for decentralized applications. I've been working on this for 4-5 months and no one is using it - I used to have about 10 users. This idea is too early. There were only a few dozen dApps in the world at the time. What's the point of a search engine if there's no searchable content?

Lesson: This taught me the importance of time in entrepreneurship. Too early or too late is wrong.



dYdX Launched - July 27th


After Weipoint, I was determined to do something useful for the market. The primary way cryptocurrencies were used at the time (and still today) was for trading and speculation. Around this time, the first decentralized exchanges (0x, Kyber) appeared. I looked at this and thought it was really useful stuff built on top of Ethereum.

Given that, I think the logical next thing to build is decentralized margin trading and derivatives. This seems logical since margin trading (led by Bitfinex) was taking off in the crypto space at the time. Financial markets have evolved over time from spot → margin → derivatives. It seems that cryptocurrencies should be no different.

I came up with the name (my main contribution to dYdX) and started dYdX on my own.

Trading volume



preliminary progress


I wrote the first version of the dYdX whitepaper (now super outdated) and the first basic version of the smart contract (which was never put to work). The original white paper had protocols for margin trading and (fully collateralized) options. I decided to set up margin trading first.



$2 million seed round


dYdX raised a $2 million seed round at a $10 million valuation, led by Andreessen Horowitz and Polychain. We were fortunate enough to also bring in 15-20 top angel investors. dYdX is now starting to look like a real company!



2018


early


Brendan, Zhuoxun (Head of Operations, who has now left to found Magic Eden) and Bryce (Senior Software Engineer) join the team! Going from one person to multiple people helps us move faster! We started out in a private WeWork office in Soma and moved to our first office near Jackson Square in mid-2018.