dYdX Chain Enables Bridging & Staking To Bring More Liquidity To Its Nascent Network

Source: Depositphotos

The dYdX Foundation, a part of the dYdX ecosystem has announced another big milestone as it seeks to migrate away from Ethereum to its own, Cosmos-based blockchain network. 

The foundation announced the open-sourcing and deployment of a new Bridge User Interface that will facilitate the simple transfer of ethDYDX tokens to the native dYdX blockchain. It’s a key move that should enable more liquidity to flow into dYdX and encourage its users to stake their native DYDX tokens, boosting the network’s stability and security, which is essential if it’s to become a viable platform. 

The dYdX DEX looks similar in many ways to Uniswap or SushiSwap, with the key difference being that it’s focused specifically on perpetuals trading. Perpetuals refers to perpetual swap trading contracts, which are essentially derivatives, or financial instruments that derive their value from the underlying asset they’re linked to. Just as with futures and options, perpetuals provide a way for traders to speculate on the future value of an asset, with the key difference being that contracts do not have an expiration date. 

dYdX also differs from the likes of Uniswap and SushiSwap with its reliance on a traditional orderbook and matching model to facilitate traders, rather than the automated market maker model used by most DEX platforms. Despite being a niche platform, dYdX has become a hugely popular trading venue, with more than $367 million in total value locked. 

Last year, dYdX Trading announced plans to migrate from Ethereum and replace its StarkWare-based platform with its very own, native blockchain built on Cosmos. In a blog post, the dYdX Foundation said it had come to the conclusion that no existing L1 or L2 chain had the ability to provide the required throughput needed to run a first-class orderbook and matching engine. Although it did consider moving to a different model, such as an AMM or RFQ system, the Foundation ultimately decided that only an orderbook could provide the kind of professional trading features and performance demanded by experienced traders and institutions. 

According to the Foundation, the Cosmos ecosystem will provide a better user experience with customizable fee structures and transaction fees. It will feature a decentralized, off-chain orderbook that can scale as the exchange grows. 

Over the last week, a number of key developments that pave the way for dYdX to migrate to the dYdX chain were announced. First, dYdX Trading announced the release of the dYdX Chain open-source software, followed two days later by an announcement from the dYdX Operations subDAO that it had completed the mainnet genesis of the dYdX Chain, with genesis validators participating in the creation of its first block. 

Now, the dYdX Operations subDAO says it has deployed its Bridge User Interface, enabling anyone to bridge their DYDX tokens from Ethereum to the dYdX blockchain. The launch will be followed by the publication of a DYDX token staking guide in the coming days. 

The dYdX Operations subDAO has previously announced two stages within the dYdX Chain’s post-genesis. During the current alpha stage, the focus is on boosting the stability and security of the network. As with any Proof-of-Stake blockchain, the dYdX Chain needs to encourage users to participate in the network as validators by staking their DYDX tokens. As more DYDX tokens are staked across a diverse range of validators, the chain will become more secure, making it more difficult for malicious actors to coordinate an attack on the network and influence consensus-based decisions. 

The dYdX Chain will only transition to its beta stage when specific performance metrics have been established and a governance vote is passed by the dYdX community. The beta stage will see the dYdX Cain become publicly accessible with limited trading functionality to battle test the network ahead of its mainnet launch. 

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.