Why dYdX is leaving Ethereum and StarkWare for a native chain on Cosmos
Orderbook Decentralized Exchange dYdX leaves the Ethereum blockchain and sets up a native chain in the Cosmos ecosystem. This move is surprising as the project defines that it will provide “advanced crypto finance products with Ethereum blockchain.”
This exchange is a unique platform that offers lending, borrowing, permanent futures, margin and spot trading. Users connect their wallets as they would on a standard decentralized exchange and deposit funds under the control of dYdX via smart contracts. However, unlike centralized exchanges, funds can only be accessed through the user’s wallet. Hybrid products make dYdX unique within the Ethereum ecosystem.
Why cosmos?
dYdX Explained The move is to “rebuild dYdX as a standalone Cosmos-based blockchain with a fully decentralized off-chain orderbook and matching engine.” Rebuilding will be the fourth version of DEX using the Tendermint consensus mechanism.
By utilizing the Cosmos SDK, migration will allow new versions to provide features such as “fully decentralized”. In addition, Cosmos offers nearly unmatched cross-chain interoperability through the IBC protocol. The current dYdX token is an Ethereum-based ERC-20 token that uses StarWare’s StarkEX to promote Layer 2 functionality. However, the move to Cosmos will allow the dYdX platform to offer tokens that are truly acquired through its own blockchain and governance system.
An independent blockchain using the Cosmos SDK dYdX has layer 1 tokens, validators, and staking mechanisms. Therefore, we are not accountable for the Ethereum renewal and are not exposed to any issues that may arise prior to the scheduled merger of Proof of Stakes in September 2022.
“Each validator runs an in-memory orderbook that is never committed to consensus. The orderbooks that each validator stores are eventually consistent. In real time, orders are collated together by the network. The resulting transaction is committed on the chain of each block.
dYdX states that it “accepts fundamental changes in technology,” and Cosmos states that it is an ecosystem that can be continuously improved under that vision.
The main reason to leave dYdX is the high throughput requirements for running distributed systems with live order books. This trading mechanism is “important for the trading experience required by professional traders and institutions” and requires processing over 1,000 transactions per second. By staying on Ethereum, dYdX recognizes this offering scaling issue as follows:
“The fundamental problem with any L1 or L2 we can develop is that we can’t handle anything close to the throughput needed to run a first class orderbook and matching engine.”
After the move, traders no longer have to pay gas charges for transactions, instead they pay based on completed transactions, which are paid to stackers and validators.
Layer 2 abandonment
In Ethereum, dYdX is StarkWare layer 2 To offer some of its products, such as the perpetual contract market.Previously, the platform was Trying to move towards Layer 2 to reduce gas charges and allow exchanges to grow in size.
“Ethereum can handle about 15 transactions per second (TPS), but this isn’t enough to support DeFi’s rapid growth … A layer 2 scaling solution in the form of a rollup is to offload execution. Frees the Ethereum base layer and reduces gas costs. Improves throughput without increasing network load. “
To migrate dYdX itself, the owner of the ERC-20 token must agree to the change. “DYDX, the protocol token for the dYdX protocol, is controlled by its owner … dYdX Trading Inc. has no control over how it is modified. It is being used.” The new protocol is completely open source and is currently available. , Considering introduction New developer Supports movement.
