Decentralized Exchange DYdX to build its own blockchain

by Arthur · July 10, 2022

The goal of the dYdX V4 is to have high throughput for the order book while remaining decentralized, the company said
DYdX positions itself as the largest decentralized derivatives exchange, with more than $ 690 million in trading volume in the last 24 hours

A cryptocurrency derivative platform based on Ethereum layer-2 blockchains is developing its own blockchain.

The new product from dYdX plans to be based on Cosmos, using Tendermint’s proof-of-stake consensus protocol to validate transactions. Layer-2 protocols are built on top of popular blockchains, such as Ethereum and Bitcoin, and are commonly used to increase efficiency, add features and scale technology.

The game plan for dYdX V4 – the stock exchange that was launched by the company in January – must be completely decentralized by the end of the year.

“Develop a decentralized order book outside the chain and matching engine and move from Ethereum to a dYdX-specific chain as a large [decentralized finance] The protocol is very untested, but we believe it gives the dYdX ecosystem the best opportunity to have a network that can offer a long-term competitive product experience with centralized exchanges, the company said in a statement.

Founded in 2017 by ex-Coinbase and Uber engineer Antonio Juliano, dYdX is positioning itself as the largest decentralized derivatives exchange – with more than $ 690 million in trading volume in the last 24 hours, according to CoinGecko data.

The company listed the existing dYdX product processes at approximately 10 trades per second and approximately 1000 order placements / cancellations per second.

In the company’s vision for dYdX V4, each validator will “run an order book in memory that is never committed to consensus”, for example outside the chain. Meanwhile, on a real-time basis, “orders will be matched together by the network. The resulting trades are then committed on the chain each block.”

A company spokesperson did not immediately return a request for comment.

In August 2020, dYdX entered into a partnership with StarkWare to scale decentralized trading. The company raised $ 65 million in a Series C financing round in June 2021 led by Paradigm.

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Jocelyn Yang

Block works

Journalist

Jocelyn is a New York-based reporter. Prior to joining Blockworks, she covered wealth management for the Financial Times’ B2B publication Financial Advisor IQ and wrote about the crypto markets for Forkast.News. Jocelyn holds a bachelor’s degree in journalism from Emerson College. She was born and raised in Beijing, China, and is originally in Mandarin. You can contact Jocelyn at [email protected]