Trading venue dYdX has raised $10 million in a Series B funding round led by Three Arrows Capital and DeFiance Capital.

The platform, launched in 2017, offers a spread of decentralized trading products including both bitcoin and ether derivatives. The San Francisco-based startup plans to use the funds to increase its product offering, further decentralize its platform and increase its presence in China, according to a blog post shared in advance with CoinDesk.

“dYdX was the first [decentralized finance] app I ever used and I am elated to have the chance to invest in [it] today,” Three Arrows Capital co-founder Su Zhu said in a statement.

Three Arrows was joined by a lengthy roster of crypto investors in the Series B, including Wintermute, Hashed, GSR, SCP, Scalar Capital, Spartan Group and RockTree Capital. The round was also joined by previous Series A investors Andreessen Horowitz and Polychain Capital.

The trading platform has had a gangbusters year with trading volumes across spot, margin and perpetual contracts jumping fortyfold – from $63 million in 2019 to $2.5 billion in 2020, the firm said.

Margin and spot trading made up the lion’s share of that activity clocking in at $1.9 billion for the year. The startup released its BTC and ETH perpetual products – which operate similarly to a futures contract but without a set expiry date – in May and August 2020, respectively. 

Monthly volumes by dYdX product type
Source: dYdX

Gunning for growth

To date, dYdX’s impressive growth has been overshadowed by other DeFi products such as Compound Finance and Uniswap. 

Indeed, DeFi Pulse ranks dYdX as the 18th-largest DeFi market by total volume locked (TVL) at $150 million.

In a bid to climb the DeFi rankings, dYdX is introducing rollups, a technology designed to increase throughput and reduce gas fees. High gas fees on Ethereum have hamstrung young DeFi markets in recent months.

The dYdX solution involves a product based on StarkWare’s Cairo software and is expected to be rolled out in February.

“Our goal is to become one of the largest crypto exchanges – period. To accomplish this we’re building a Layer 2 system with StarkWare enabling cross-margined perpetuals, allowing for significant improvements to trading at scale,” dYdX founder Antonio Juliano told CoinDesk in a Telegram message.

Correction (Jan. 26, 15:44 UTC): Coinbase co-founder Fred Ehrsam participated in the prior series, not the Series B.

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