Decentralized exchange (DEX) platform DYdX has announced plans to migrate its entire ecosystem from the Ethereum network to Cosmos, while simultaneously introducing a decentralized order book strategy.
The development was revealed by Charles d’Haussy, CEO of , during an interview at .
The migration signifies a significant strategic shift for dYdX and speaks to the broader push within the cryptocurrency world to uphold decentralization as a core value. Decentralization allows for greater inclusivity and security, limiting the potential for single points of failure or control. dYdX' move to establish a "purely decentralized" order book reflects an industry-wide quest to further these decentralized ideals.
One of the key challenges facing decentralized exchanges like dYdX is the latency in , particularly when it comes to high-frequency trading markets such as crypto derivatives. According to d’Haussy, traditional on-chain order books suffer from lag times as long as one second, which is a significant drawback in a market that demands speed.
“If you have like a one-second block time, you still have a one-second latency. And the market of crypto derivatives is a very high-frequency market. So, you cannot offer one-second latency," d’Haussy notes.
To mitigate this, dYdX is taking an innovative approach by keeping the order book off-chain while still maintaining its decentralized nature. The order book will be hosted within the memory of the validators, a move that d’Haussy described as a "new step forward" in decentralization. Normally, validators are responsible for . However, in the case of dYdX, validators will take on an expanded role by also storing order books in their memory, enabling a truly decentralized yet efficient trading experience.
According to the clarification from d’Haussy, this move is a full migration, not an expansion.
“The Ethereum exchange will close within a few months [...] we are migrating the full ecosystem,” the exec revealed.
The transition is expected to be smooth for dYdX users, requiring only a simple connection of their MetaMask wallets to the new dYdX chain.
According to dYdX Foundation, the community has overwhelmingly supported the migration and the new v4 Adoption, as revealed in a recent vote. The shift to and the introduction of a decentralized order book underscore the significant transformation underway at dYdX, echoing the larger trend in the crypto industry to continually refine and redefine what decentralization can accomplish.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.