dYdX Launches Layer 1 Blockchain, Expanding DYDX Token Functions for Enhanced User Governance
Summary:
Decentralized crypto exchange dYdX has launched its layer 1 blockchain, utilizing its native DYDX tokens. The dYdX community opted to transition from Ethereum's layer 2 protocol, expanding the functions of DYDX tokens for network security, community governance, and staking. The launch strategy involved several key industry players including Circle and Coinbase. Furthermore, dYdX announced that its governance on the new blockchain is expected to be more accessible to users, with token holders enabled to create governance proposals.
dYdX, a decentralized crypto exchange, has initiated its layer 1 blockchain by creating its first genesis block that will function via the original DYDX tokens. Meanwhile, the dYdX Chain is set to ensure that all associated fees are given to validators and USDC stakeholders. This covers all fees incurred from trading in USDC or to cover gas for transactions in either DYDX or USDC.
This proof-of-stake blockchain network was constructed utilizing Cosmos’ software development kit, leveraging CometBFT as its standard protocol. To ensure the network's security and govern operations, validators stake DYDX tokens. A plethora of companies were responsible for the extensive launch of the dYdX chain network, with Antonio Juliano, the exchange's founder, emphasizing that Circle and Coinbase's timely launch on Cosmos was key to initiating the dYdX Chain.
Before this, the native DYDX token operated on the original Ethereum layer 2 protocol of dYdX, which Juliano characterized as a completely fresh blockchain developed on Cosmos SDK—the first of its kind decentralized, off-chain orderbook. Moreover, the blockchain also operates on an entirely open-source platform.
To facilitate the move to its layer 1 chain, the dYdX community decided to make DYDX the layer 1 token of the dYdX Chain, create a one-way bridge from Ethereum to the dYdX Chain, and grant wrapped Ethereum DYDX the same governance utility as ethDYDX on dYdX v3. This expansion of the DYDX token's utility resulted from community voting, and is now used for staking, network security, and governance assistance on the dYdX Chain. Similar to Ethereum’s shift to PoS, stakers and validators secure the network and earn protocol fees relative to their staked assets, with fees collected by the dYdX Chain protocol being distributed to validators and stakers via the Cosmos distribution module.
In an announcement, dYdX projected that the dYdX Chain governance would be more user-friendly than its previous Ethereum-based layer 2 protocol, negating the dYdX v3 'Proposing Power' concept and replacing it with a governance module that lets any holder propose with a deposit. Spam proposals are managed by setting minimum deposit limits and implementing voting processes with veto capabilities. Meanwhile, users can only take part in chain governance using staked DYDX tokens, and validators inherit the voting power of stakers unless individual holders choose to vote solo.
Published At
10/27/2023 1:50:16 PM
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