dYdX Ditches Ethereum for Its Own Cosmos Blockchain

Key Takeaways

• dYdX is leaving Ethereum and building its own chain in the Cosmos ecosystem.
• Developers believe the move will allow the protocol to increase its processing capacity by at least ten. The new chain will also not be charging gas fees, only trading fees.
• The market responded well to the news, with the DYDX token being up 10% on the day.

Share this article

dYdX, a decentralized exchange focused on providing perpetual contracts, is migrating away from Ethereum and spinning up its own blockchain thanks to the Cosmos SDK. The team expects the move to greatly help the protocol’s decentralization and processing capacity.

Moving With 10x in Mind

dYdX is becoming its own Cosmos-based blockchain.

The team behind the protocol announced today in a blog post a new version of dYdX which, instead of being based on Ethereum, will be its own blockchain in the Cosmos ecosystem. The upgrade, called V4, aims at fully decentralizing the protocol, which according to the team means ensuring the “decentralization of [the project’s] least decentralized component.”

dYdX is a crypto decentralized exchange (DEX) focused on the trading of perpetual contracts. While spot DEXs such as Uniswap and Sushiswap experienced tremendous growth during the bull run, dYdX and other derivative DEXs have yet to see meaningful adoption. 

One of the issues plaguing derivative protocols is creating “first-class” orderbooks and matching engines (instruments that enable the “trading experience pro traders and institutions demand”) capable of dealing with the extremely high throughput required by their customers.

The Cosmos SDK was chosen by the dYdX team over other Layer 1 and Layer 2 chains because the blockchain-building framework allows protocols to decide the parameters of their own chain, and therefore to create the tools that they need. dYdX validators are expected to run an in-memory off-chain orderbook, with orders being matched in real-time by the network and the resulting trades being subsequently committed on-chain. Both orderbook and the matching engine will therefore be off-chain, yet fully decentralized.

The team believes that, following the move, dYdX will be able to multiply its processing capacity by ten. It will also require no trading gas fees, instead sporting a percentage-based trading fee structure similar to the ones centralized exchanges use. Fees will accrue to validators and stakers through the DYDX token.

The market responded positively to the announcement, with the DYDX token being up 10% on the day and trading at $1.47 at the time of writing.

Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies.

Share this article

The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.

You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.

See full terms and conditions.