Takeaways Key
- dYdX left Ethereum and built its own chain in the Cosmos ecosystem.
- The developers believe the move will allow the protocol to increase its processing capacity by at least ten. The new chain will also not charge gas costs, only trade costs.
- The market responded positively to the news, with DYDX tokens up 10% on the day.
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dYdX, a decentralized exchange focused on providing continuous contracts, migrated away from Ethereum and played its own blockchain thanks to the Cosmos SDK. The team hopes the move will help decentralize and protocol processing capacity.
Moving With 10x in Mind
dYdX is a blockchain based on the Cosmos itself.
The team behind the protocol declare today in a blog post a new version of dYdX that, instead of being based on Ethereum, will be its own blockchain in the Cosmos ecosystem. The upgrade, called V4, aims to fully decentralize the protocol, which according to the team means ensuring “decentralization [the project’s] the most decentralized component. “
dYdX is a decentralized crypto exchange (DEX) focused on the trading of eternal contract. While spot DEX such as Uniswap and Sushiswap experienced remarkable growth during bull racing, dYdX and other DEX derivatives have yet to see meaningful adoption.
One of the problems facing derivative protocols is the creation of “first -class” order books and matching machines (instruments that allow “pro -trader trading experience and institutional demands”) that can handle the extremely high throughput required by customers.
The Cosmos SDK was chosen by the dYdX team over the Layer 1 and other Layer 2 chains because the blockchain building framework allows the protocol to decide its own chain parameters, thus creating the tools needed. The dYdX validator is expected to open an off-chain order book in-memory, with orders matched in real time by the network and trading results to be processed in-chain. The order book and the corresponding machines are therefore not a chain, but have been fully decentralized.
The team believes that, after these steps, dYdX will be able to increase its processing capacity by up to ten. This also does not require the cost of trading gas, but uses a structure of trading costs based on the same percentage as that used by centralized exchanges. Charges will be received for validators and stackers via DYDX tokens.
The market responded positively to the announcement, with DYDX tokens up 10% on the day and trade at $ 1.47 at the time of writing.
Disclosure: At the time of writing, the author of this piece owns ETH and several other cryptocurrencies.
