Ethereum-based decentralized trading platform dYdX will be deployed as an independent blockchain on the Cosmos ecosystem. The team behind the project created the announcement this morning leading to a positive reaction for its board of directors, DYDX.
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At the time of writing, this token is trading at $ 1.50 with a gain of 8% over the last 24 hours for its USDT trading pair and a 10% gain on its ETH trading pair. In the meantime, larger cryptocurrencies face obstacles and may continue to consolidate to their current levels.
The standalone blockchain is part of the fourth iteration of this platform, dYdX v4. The team behind the project expects “open source dYdX V4 by the end of 2022” but, as they explained, this iteration will provide “critical” improvements, thus “requiring months of heads-down development”.
The team behind the Ethereum-based trading platform chose Cosmos and its Proof-of-Stake (PoS) Tendermint consensus because of its security, decentralization, adaptability, cross-chain capabilities, and leveraged scalability.
Thus, the platform will be able to process more transactions, and potentially increase its market share, number of users and trading volume, while moving to its next development phase: full decentralization. The team behind the project said:
The most important requirement for the V4 protocol is full decentralization. The decentralization of a system is equal to the decentralization of its least decentralized component. This means that every part of V4 needs to be decentralized while also remaining efficient.
The ultimate goal, according to the announcement, is to make dYdX “one of the largest exchanges in any crypto”. This requires an infrastructure that can process many transactions and support the engine of the exchange without compromising the level of decentralization.
The team behind the project added,
Developing a decentralized off-chain orderbook and moving Ethereum to a dYdX-specific chain as an important DeFi protocol is far from being tested, but we believe this gives dYdX the best opportunity to provide a competitive product experience with centralized exchanges.
Is leaving Ethereum the best choice for dApps?
The fourth iteration of dYdX will have new features, such as an off-chain order book, and no commercial gas costs. The fee structure will be the same as that of centralized exchanges. The governance token DYDX will remain the most important component of the exchange’s governance model.
The announcement has been made across part of the crypto community, the market seems to be responding positively. Others, however, have expressed concern because they believe a standalone version of dYdX will lack security and compatibility, as well as design flexibility.
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Analyst Ryan Watkins sei the following on the dYdX announcement:
While I understand the desire for sovereignty and the need to scale faster, I’m not convinced why an app chain is the best way forward. Losing security and compatibility (as opposed to deploying on Starknet) with the Ethereum ecosystem seems risky.