Translation: Vernacular Blockchain dYdX plans to launch its V4 version on its Cosmos-based application-specific blockchain. The chain is scheduled to launch in the second quarter of 2023 and will make the exchange more decentralized as it will no longer have a centralized matching engine, so why is dYdX launching its own chain? This article will focus on the following points:
What’s interesting about dYdX? dYdX History and Storyline
Migrate to StarkWare
Reasons to transition to V4 and launch your own chain
Potential Impact of dYdX Changes
What is the future of dYdX?
1. What’s interesting about dYdX?
From a researcher's perspective, dYdX is interesting because: 1) Its existence itself is a counterexample to Rollup extremism. 2) It proves that in the battle between infrastructure and applications, infrastructure still matters. Challenges and repeated attempts of dYdX Until the beginning of 2020, dYdX was the application with the highest trading volume among DEXs in Layer 1 of Ethereum, and it was a very successful product from the beginning. Ironically, the difficulties began during the “DeFi Summer,” when DeFi began to boom. With the advent of Uniswap and the creation of various DeFi governance tokens actively traded on Uniswap, all of dYdX’s trading volume was lost to Uniswap. In addition, DeFi summer led to a surge in on-chain transactions, which in turn led to a sharp increase in Ethereum transaction costs. For dYdX, this change has had a fatal impact on product operations by paying transaction costs for user convenience.
If they continue to subsidize transaction costs, bankruptcy is inevitable. At that point, @dYdX only had a few months left to survive. 2. Migrate to StarkWare Later, dYdX had to leave Ethereum. If they don't leave, they'll go bankrupt. At this time, the best choice for dYdX is StarkWare Ltd. StarkWare is one of the ZK Rollup solutions based on Ethereum. What made StarkWare different from other ZK Rollup solutions at the time, which could only handle simple transactions, was that it was able to handle many more types of transactions.
Of course, StarkWare Ltd is not compatible with the Ethereum Virtual Machine (EVM) and uses a separate programming language, but at the time, it allowed dYdX to take advantage of the Ethereum ecosystem while ensuring scalability and keeping fee costs to a minimum. Subsequently, dYdX became known as the leading DEX in the blockchain industry. While dYdX has been a huge success, its founder Antonio (@AntonioMJuliano) still has a major concern. This concern relates to the "ambiguity" of the product. How could it be "blurred" when it's clearly done so well? But ambiguity does exist. dYdX is nominally a "decentralized" exchange, but its order book and matching engine operate in a centralized manner. Indeed, some claim that dYdX is not a decentralized exchange but a “hybrid exchange.” “dYdX needs a change, a change that can differentiate it from traditional centralized exchanges. 3. Transition to V4 This is why they chose to “launch their own chain”. The purpose of the @dYdX chain is to achieve “complete Decentralized”. The previously mentioned order book and matching engine are also intended to operate in a decentralized manner in @dYdX V4.
Governance Transformation In order to achieve "complete decentralization": 1) Foundations and companies will not intervene in the governance of @dYdX 2) Transaction fees are redesigned and will be distributed to $DYDX token holders This is also a statement announcing the intention, That is, the foundation and the company will no longer interfere with the direction of the product. 4. Potential Impact of Changes in dYdX dYdX quickly and flexibly adjusts their products and infrastructure to changing technology and market environments. Ultimately, they know how to make the right decisions when necessary. Impact of dYdX changes 2: Rollups are not a panacea. Some people say that dYdX became “centralized” after leaving the Ethereum ecosystem, but from a product perspective, it only achieved “real decentralization” after building its own chain. centralization”. These changes support the idea that Rollup is not a panacea. For dYdX, Rollup is not the answer, but a "temporary measure." This also prompts us to rethink whether leveraging Ethereum’s security is the only way to achieve “decentralization.” 5. What is the future of dYdX? It's too early to judge the success of the V4, which launched just a month ago. However, the author believes that "independent Layer 1 is absolutely necessary" and hopes that dYdX's recent move will be successful.
