(Bloomberg) -- DYdX Trading Inc., the developer of the namesake decentralized finance exchange, is in talks to sell some of its derivatives trading software for an undisclosed amount to a consortium that includes some of the biggest market makers in crypto, according to people with knowledge of the matter.
Wintermute Trading Ltd. and Selini Capital are among the potential buyers of the dYdX v3 software, said two of the people, who asked for anonymity because the talks haven’t been made public. Perella Weinberg Partners is advising New York-based dYdX Trading, they said.
Representatives at dYdX - whose unusual name is derived from the mathematical notation for a derivative - and Perella Weinberg didn’t respond to requests for comment. Wintermute and Selini spokespeople also didn’t respond to requests for comment.
The exchange allows users to trade perpetual futures contracts directly with each other on cryptocurrencies such as Bitcoin, Ether, Solana and Dogecoin. DYdX was launched in 2017 on the Ethereum network. It later shifted to another layered over the blockchain as the v3 software was instituted to lower fees and increase transaction speeds. The platform switched to the current v4 format in conjunction with the launch of dYdX’s own blockchain last year.
DYdX noted Tuesday that the website for v3 has been compromised and advised against clicking on any links until further notice, according to a post on the X social media platform. The warning doesn’t relate to the v4 platform, the exchange said.
The v3 platform remains appealing to traders because it has a higher level of liquidity for some tokens, according to an analysis by crypto risk modeling firm Gauntlet. Traders also face less slippage on large transactions, referring the change in price between order placement and execution on an exchange, Gauntlet said.
DYdX Trading is backed by venture capital firms including Andreessen Horowitz and Paradigm, and the v3 platform generated $137 million in fees in 2022, VanEck estimated in a March 2023 report. That was based on a total trading volume of $466.3 billion from over 33,900 unique traders. The V3 platform is forecast to generate about $18.67 million in revenue this year, according to tracker DeFiLlama. US residents aren’t allowed to trade on the exchange.
Mergers and acquisitions are rare in DeFi, as the majority of the projects use open-sourced software, meaning that they are available for others to use, modify, and redistribute. Hundreds of new projects based on the leading projects like the DeFi exchange Uniswap emerged in the sector following the so-called DeFi summer, which was coined in 2020 when activity surged after the rise of so-called liquidity mining and yield farming programs that offered participants double-digit-percentage returns for lending their crypto.
DYdX was founded in 2017 by Antonio Juliano, a former software engineer at Coinbase Global Inc. and Uber Technologies Inc. He stepped down as chief executive officer in May, and continues to serve as president. Ivo Crnkovic-Rubsamen, who succeeded Juliano as CEO, was previously a trader at D.E. Shaw.
(Adds that dYdX said that the v3 website has been compromised in the fifth paragraph.)
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