On June 22, dYdX published a long article “Introduction to DyDx Chain” on its official blog. dYdX will complete the V4 version upgrade at the end of this year and build an application chain based on the Cosmos SDK and Tendermint consensus, thus completing the transition from Dapp to sovereign independence. transformation of the blockchain. So this transformation is the team’s foresight or a whim. Why did you choose to join Cosmos when the haze brought to the Cosmos ecosystem after the Terra chain thunderstorm has not been dissipated? It can be seen from the words on Twitter of the founder Antonio:
“If there is a better technology to build (dYdX), we will use it”, “I 100% don’t care what chain dYdX is built on, I only care about bringing the best product experience to users”. The implication is that he believes that the current construction of a Cosmos application chain by dYdX is the optimal solution to improve the user experience. Before interpreting the above points in more depth, let’s take a look at the historical development trajectory of dYdX.
The dYdX project was officially established in August 2017. It has been running for nearly 5 years so far. It is an old project that crosses the bulls and bears. In terms of financing, dYdX has won the favor of well-known venture capital institutions A16Z and Polychain in the seed round, leading the investment of 2 million US dollars. Up to now, a total of 4 rounds of financing have been completed, and the financing amount has reached 87 million US dollars. As a decentralized derivatives protocol, dYdX was deployed on Ethereum in the early days, and there was no major problem in running on Ethereum in the early days. However, with the rise of Defi in the summer of 2020, the surge in transactions on the chain led to congestion on the Ethereum network, and the gas cost was greatly increased. soaring. At this time, dYdX is in a period of rapid development. In order to continuously improve the user scale and user retention rate, the dYdX team decided to use subsidized gas to reduce user expenses. But the subsidy strategy is only a stopgap measure, the dYdX team is facing a large amount of capital loss every day, and if no other action is taken, all the team’s funds will be consumed very quickly. The dYdX team decided to start charging transaction fees in March 2020, a move that hurt transaction volume to a certain extent and reduced user usage.
dYdX’s Layer 2 Expansion Road – StarkEx
On the one hand, dYdX is affected by the high gas cost of Ethereum. On the other hand, it faces fierce competition from decentralized derivatives such as Perpetual, Deri, Kine and other projects related to the subdivision of the track. dYdX urgently needs to solve the current scalability. question. dYdX finally adopted the Ethereum Layer 2 scaling solution StarkEx to provide better throughput and lower latency than Ethereum, and launched Starkware’s testnet in February 2021 and the mainnet in April. While dYdX’s Layer 2 expansion solution improves scalability, it’s not a perfect solution. In terms of throughput, the V3 version of dYdX can process 10 transactions and 1,000 orders/cancellations per second, which is still several orders of magnitude lower than centralized exchanges; in terms of security, StarkEx’s second-tier expansion plan requires the use of a central A decentralized sequencer is contrary to dYdX’s vision of complete decentralization.
dYdX’s application chain attack road – Cosmos Appchain
In order to solve the problems of insufficient scalability and decentralization currently faced by dYdX, the dYdX team proposed an upgrade and transformation of the V4 version to build a sovereign independent application chain based on the Cosmos SDK and Tendermint consensus. However, in response to the V4 upgrade, the community complained and there were opposing voices, criticizing the proposal for this upgrade as being too centralized. Opponents against dYdX for the Comos Lisk transformation are based on the following main points:
1) It is believed that the improvement of the scalability of dYdX cannot be at the expense of decentralization and security. Transforming the Cosmos application chain means becoming a sovereign independent blockchain, and the security is maintained by the validators on the dYdX chain. Currently, the Cosmos sub-chain The number of validator nodes is generally around 100, which does not rule out the centralization risk brought by several nodes with significant weight;
2) Acknowledging that the current StarkEx layer 2 expansion solution has problems, but in the long run, it will be beneficial to the sustainable development of dYdX, develop a completely decentralized sequencer, and significantly reduce verification costs after EIP-4844 (Proto-danksharding) goes online Wait;
3) The security of bridging assets. Currently, there are a large number of native stablecoin assets on the second layer of dYdX. After the UST storm, the Cosmos ecosystem has no native stablecoin assets. After dYdX becomes the Cosmosy application chain, stablecoins can only be bridged through cross-chain bridges. Cross-chain bridges have frequent security incidents, and the security of bridged assets is questionable.
There are also some community members who do not question the performance and security of the Cosmos application chain itself. What they criticize is that the dYdX team did not initiate proposals in the form of decentralized governance, but adopted centralized decision-making. If dYdX joins the Cosmos ecosystem to realize the vision of complete decentralization, then the centralized decision goes against the original intention of the team.
On the other hand, the benefits of dYdX’s Cosmos application chain transformation are also obvious:
1) dYdX has become a sovereign independent chain, which means that it does not need to rely on any other underlying infrastructure of the blockchain, which is more conducive to token holders to achieve community governance and product upgrades;
2) It can greatly improve the performance of dYdX, optimize user experience, and improve user stickiness;
3) The function of the protocol token DYDX is not limited to governance. As a protocol governance token, it can also be used as a verifier to pledge assets to maintain network security, pay transaction fees on the chain, and expand the application scenarios of the token.
Reflections on dYdX’s embrace of the Cosmos ecosystem
For dYdX, becoming a sub-chain of Cosmos is to realize the vision of complete decentralization and higher throughput. The rise of competitors such as Zigzag on Zksync and ZKX deployed on Starknet makes the competition of sub-tracks It is becoming increasingly fierce and facing serious homogeneity. The core competitiveness in the future will mainly come from the ability to improve user experience. Everyone is seeking innovation and change, and the dYdX team has chosen a more radical approach.
For Cosmos, Terra’s thunderstorm had a great impact on the entire Cosmos ecosystem. Cosmos lost its native stablecoin UST. Now the stablecoins of the Cosmos ecosystem mainly come from cross-chain bridges such as Nomad, Connext and Gravity Bridge. There is currently no better solution to the security and liquidity issues of mapping assets.
The launch of IBC, the cross-chain interoperability protocol of Cosmos, has become the entrance of traffic. As more and more ZONEs are connected to the IBC protocol, the attention of Cosmos has soared, and the thunder of Terra has blocked this entrance. Also avoid it. The launch of EVM-compatible chains such as Evmos and Kava has opened up the connection between Cosmos and the Ethereum ecosystem to a certain extent, but the effect is not obvious. It is hoped that the addition of dYdX, a star project on Ethereum, can reopen the traffic door of Cosmos.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/dydx-embraces-the-myth-of-the-cosmos/
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