dYdX Ditches Ethereum for Its Cosmos Blockchain

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

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dYdX, a decentralized exchange focused on providing perpetual contracts, is migrating away from Ethereum and spinning its own blockchain thanks to the Cosmos SDK. The team expects this step to help significantly with the decentralization of the protocol and its processing capacity.

Move with 10x in mind

dYdX has become its own Cosmos-based blockchain.

The team behind the protocol announce Today in a blog post, a new version of dYdX which, instead of being built 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 least decentralized component. “

dYdX is a decentralized crypto exchange (DEX) focused on trading permanent contracts. While topical DEXs such as Uniswap and Sushiswap have seen exponential growth during the bull run, dYdX and other derivative DEXs have yet to see meaningful adoption.

One of the problems with the derived protocols is the creation of “first-class” order books and matching engines (tools that enable “professional order traders and institutions” trading experience) that are able to handle the extremely high throughput that their clients demand.

The Cosmos SDK was chosen by the dYdX team over other Layer 1 and Layer 2 chains because the blockchain framework allows protocols to define their own chain parameters, thus creating the tools they need. dYdX validators are expected to run an in-memory off-chain order book, where orders are matched in real time by the network and the resulting trades are subsequently executed on-chain. Thus, both the order book and the matching engine will be off-chain, but completely decentralized.

The team believes that after this step, dYdX will be able to multiply its processing power by ten. It will also not require any gas trading fees, instead, the percentage basis trading fee structure is similar to that used by centralized exchanges. The fee will accrue to auditors and contractors through the DYDX code.

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

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

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