How To Short dYdX (DYDX)

    • James Page

James HeadshotAuthor: James Page - Last Updated on June 28, 2022

Summary: Shorting dYdX is pretty straightforward, all you need is a cryptocurrency exchange that allows for short selling. While there are a few exchanges out there that have added the ability to short crypto, our recommendation is to use eToro. They’re well-known, have a global presence, and are trusted by millions of users from 100+ countries.

We’ll be using eToro in our guide, you can sign up with one of the sign-up buttons below.

Global: Sign up with eToro

USA: Sign up with eToro US


Before we get started, let’s quickly explain what shorting is (for those that are new to it). Shorting is the practice of selling a cryptocurrency hoping it will drop in price so you can buy it back later for cheaper… which, if successful, will give you a net profit.

It might sound a bit complex but don’t worry, it’s a lot easier than you might think.

How to Short dYdX

Shorting dYdX can be done in 4 steps:

  1. Find a cryptocurrency trading platform
  2. Sign up with the exchange
  3. Fund your account with fiat or crypto
  4. Short dYdX

1. Find a crypto trading platform

As mentioned before, for this guide we’ll be using eToro as they offer the ability to short the most common cryptocurrencies.

You can, of course, use any other cryptocurrency exchange that allows for short selling.

etoro crypto

2. Sign up with the crypto exchange

Let’s start with creating an account on eToro.

Global: Sign up with eToro

USA: Sign up with eToro US


eToro sign up form

The sign-up process is very easy and quick, as is the verification that needs to be completed afterwards so you can get started.

3. Funding your eToro account

Next is funding your account. You have several deposit methods to choose from when depositing funds into your eToro Account. These include a bank transfer, credit card, debit card, PayPal, and more.

4. Short dYdX

These are the steps to follow to execute a short sell:

  1. Go to the search bar at the top, find dYdX by entering the name.
  2. On the crypto page/section, on the right side, hit the TRADE button to enter the trading interface.
  3. At the top of the trading interface: Click on sell to short the crypto.
  4. Enter the amount for which you want to sell dYdX and click on “Open Trade”.

Once you’re ready to close the trade, hopefully when the value of dYdX has dropped, go to your Portfolio, find the dYdX trade, and click on the red cross to close the trade.

If your assumption/prediction was right, then the profit will be added to your account after closing the trade. If you were wrong on the other hand, you’ll incur a loss which will be debited from your eToro account.

Congratulations, now you know how to short dYdX!

Global: Sign up with eToro

USA: Sign up with eToro US


Disclaimer: Trading, investing, and dealing with digital and cryptocurrencies might involve a lot of risks. Their prices are volatile and performance is unpredictable. Their past performance is no guarantee of future performance.

Affiliate Disclosure: This site is supported by its users. We may receive commissions for purchases made through the links on our site. This does not impact our reviews, guides or comparisons.


Where to Short dYdX (DYDX)

Aside from eToro, the other major exchange you can use is Binance.

While Binance tends to be a bit more advanced when compared with eToro, they do have a lot more digital assets to trade with.


Frequently Asked Questions

Can I short dYdX on Binance?

Yes, you can short dYdX on Binance. They have over 300 cryptocurrencies on offer, have a decent phone app and a lot of advanced trading features.

About dYdX

DYDX, or dYdX, is the governance token that powers layer 2 in the eponymous non custodial decentralized cryptocurrency trade exchange. It is used to facilitate layer 2's operation.

Token holder have the ability to propose changes to the dYdX's Layer 2 and the chance to profit through token stake and trading fee discounts.

Starkwire StarkEx scalability engine layer 2 allows for cross-margined perpetuals trading on the platform. The scaling solution allows the dYdX protocol to improve transaction speed, eliminate gas cost, reduce trading fees, and lower minimum trade sizes.

dYdX a platform open-source with smart contract functionality. Users can lend, borrow, trade and trade in crypto assets. Although spot trading can be supported on dYdX but the platform's primary focus is on margin and derivative trading.

The exchange was created in 2017 with more than $10,000,000 in seed venture capitalist financing and went live in 2019. DXDY token On September 9th 2021, the initial coin offering (ICO), was held.

dYdX combines advanced financial tools, decentralization and cryptocurrency exchanges. Margin trading -- a financial product that allows investors and traders to increase their exposures to digital assets by using leverage -- is supported on the platform. dYdX's isolate margin allows users the ability to assign funds to an account for a trade. Cross margin, on the other hand, makes use of all the assets a trader holds on the platform. The dYdX also offers the option to trade perpetuals, which are futures contracts that do not have a selling date. The exchange currently allows for a maximum 25x leverage on synth assets with no expiry.

Users of dYdX can earn interest by depositing funds into their account. The global lending pool is tailored to each cryptocurrency and assets are entered into it. Lenders are guaranteed security by the platform, which ensures that borrowers always have enough collateral in their accounts. Users can instantly buy any asset through dYdX by borrowing funds from the platform. Unlike other automated market makers, such as Uniswap and others, dYdX uses an order book architecture.

dYdX Layer 2 increases scaleability of the network by using a form of zero knowledge rollup -- zkSTARKS. The technology accepts proofs and validates a batch off-chain transactions. These proofs can then be sent back onto the blockchain and verified using a smart contract. zkSTARKS allows for the removal of expensive computations from mainnet. This is done without any compromises to decentralization.

Together with trading and liquidity provider incentives, dYdX introduces retroactive mine benefits. This allows the platform, in addition to showing appreciation to users who have used it before, to encourage them to trade layer 2 protocol. The token holders have the ability to place their tokens within dYdX’s liquidity or safety pools. The platform has a safety pool that provides a buffer in the event of an emergency, and the liquidity pool helps to attract market leaders.