dYdX Acquires Pocket Protector: A New Era in Trading

Decentralized derivatives exchange dYdX has acquired Pocket Protector, a platform specializing in crypto social trading, which marks dYdX’s first external acquisition. This acquisition brings the majority of Pocket Protector's engineering team into dYdX, along with co-founders Eddie Zhang, who will take on the role of president, and Kaiser Kinbote, who will be the head of growth. dYdX founder and CEO Antonio Juliano shared that Pocket Protector had a total of nine employees. Negotiations began in March, and the deal was finalized just over a month later. While details of the deal size were not disclosed, it was financed through a mix of cash and dYdX tokens. The current trading price of dYdX tokens is $0.67, with a market capitalization of approximately $507 million and a fully diluted valuation nearing $645 million, according to The Block. Founded last year, Pocket Protector raised $7 million from notable investors such as Electric Capital and Dragonfly. Their Telegram-based trading bot allows users to trade alongside their friends, follow successful traders, and explore real-time trading ideas. They also developed an iOS app that is currently in private beta, but due to the acquisition, it will not be launched publicly. The acquisition aims to broaden dYdX's trading capabilities and integrate social features into its core offerings. However, Juliano did not disclose specific product plans. He pointed out the strategic importance of having Zhang and Kinbote in leadership roles. Zhang brings experience from leading product development at Messenger at Meta and co-founding the social app Fam, while Kinbote has a decade of experience in product-led growth, tokenomics, and community building in the crypto sector. This acquisition follows recent restructuring within dYdX, where the company streamlined its marketing, business development, and solutions teams by forming a new international subsidiary under dYdX Trading Inc. This restructuring occurred alongside a significant layoff of 35% of the workforce in October, which Juliano stated was not due to financial issues but instead aimed at repositioning the company's structure for a leaner, startup-focused operation. "It has been important to me to keep the team lean and intentional to adapt to the fast-changing landscape," Juliano mentioned. "Since then, we have been strategically adding key roles and new leadership to scale our product for the future." Since its inception in 2017, dYdX has handled over $1 trillion in cumulative trading volume. Meanwhile, Pocket Protector, launched in the previous year, attracted 50,000 users and achieved a peak annualized trading volume exceeding $1 billion. dYdX’s acquisition of Pocket Protector aligns with a growing trend of mergers and acquisitions in the crypto space this year, which includes significant deals like Coinbase's acquisition of Deribit for $2.9 billion, Kraken's purchase of NinjaTrader for $1.5 billion, Ripple's takeover of Hidden Road for $1.25 billion, Stripe's $1.1 billion deal for Bridge, and Robinhood's acquisition of Bitstamp for $200 million.