dYdX “escapes” Ethereum

On June 23, dYdX announced that it will transfer to the Cosmos ecosystem, and will develop a custom application chain based on the Cosmos SDK, and implement the migration in the upcoming dYdX V4 version. This may be the first time that a well-known Ethereum-native DeFi application in the industry has chosen to flee.

The founder Antonio’s words are meaningful: “When choosing a chain, I think people should not think about what kind of users this chain has, but what kind of product experience this chain can achieve.”

The application layer has been suffering from Ethereum for a long time. As early as last November, Antonio, the founder of dYdX, publicly questioned the efficiency improvement of Ethereum on Twitter, and his speech has revealed that he is considering transferring dYdX to other chains.

dYdX "escapes" Ethereum

Antonio believes that for many years, Ethereum has been lacking in technical implementation, and dYdX’s goal is to become a DEX that is “ten times the current scale and can compete with centralized trading platforms in terms of experience”.

dYdX "escapes" Ethereum

Antonio has always been a product manager in the industry. As one of the earliest DeFi projects, dYdX has long been committed to the development of mobile applications and strives to bring decentralized applications (Dapps) into the mass market. In the migration announcement, dYdX mentioned that the team is not satisfied with the current transaction speed of 10 transactions per second and the order/cancellation performance of 1000 transactions per second, and the expansion requires the construction of a centralized off-chain order matching system, which is incompatible with dYdX’s decentralization. The positioning of the chemical transaction does not match. Therefore, in V4, dYdX will build a decentralized off-chain order system, taking into account both performance and concept.

But just because the Ethereum ecosystem really can’t meet the needs of dYdX? The community believes that the reasons behind Antonio’s decision may be more complex and multifaceted.

Crypto KOL polynya said that, technically, the required chain performance of dYdX V4 can be achieved by Rollups. Therefore, it may make this decision out of consideration of chain sovereignty and timing. First, rollup technology is too late to be ready for prime time; second, there is not enough demand in the industry to require rollups. In addition, the use of dYdX as an ecological Token may have security issues and sustainability issues of the chain.

dYdX "escapes" Ethereum

To this, Antonio responded that the migration does have chain sovereignty considerations, and dYdX’s exclusive use of a chain will make it easier for the protocol to recover from vulnerabilities (forkable). In terms of security, the initial stage of the new chain will control the number of nodes to ensure security.

Regarding the rollup technology, Antonio expressed his pessimism about the future scalability of rollup, “dYdX is the largest dapp on rollup now, and he knows rollup too well.”

dYdX "escapes" Ethereum

Crypto analyst @EffortCapital said the impact of dYdX’s selection of Cosmos as the DeFi OG should not be underestimated. Other crypto KOLs are not optimistic about this decision because they do not understand the Cosmos ecosystem.

In addition, Chainlink community ambassador @ChainLinkGod and Cosomos ecological developer Zaki all welcomed and looked forward to the migration.

dYdX "escapes" Ethereum

Solidity developer 0xTomoyo gave an in-depth analysis of the reasons for the migration from a technical point of view. The current dYdX order book runs on a centralized server off-chain, and L2 is only used to settle matching transactions. In theory they could build an in-memory order book on L2, but currently such a tool does not exist. Therefore, dYdX chose to build a new chain on Cosmos with each validator running an in-memory order book. This further achieves the decentralization of the protocol.

dYdX "escapes" Ethereum

StarkNet co-founder @TobbyKitty bluntly stated that the biggest reason for migrating to Cosmos is to allow dYdX Token to run verification nodes on the new chain and lock the value of the protocol, but not on L2.

dYdX "escapes" Ethereum

Finally, on whether the decision should be voted on by the dYdX DAO, which was widely questioned by the community, Antonio responded, “The DAO will vote on this decision. This is just software that the company is developing, and the protocol can choose to use it or not.”

dYdX "escapes" Ethereum

The protocol layer pushes the developer-friendly workload to Layer 2. Next to Layer 2, there are a large number of API providers and node service providers such as Infura and InfStones. The development work is becoming easier and easier after years of ecological accumulation. , or is it getting harder? It is not difficult to feel that Antonio is tired of following the rhythm of Ethereum again and again.

Whether the ecology breeds the application or the application feeds back the ecology is not a matter of the east wind overpowering the west wind. Different aspects of contradictions in different periods lead the development of things.

It’s just the dYdX thing that tells us that in the current time, maybe we should listen to the voices of product managers rather than arguing who is the boss of Layer2.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/dydx-escapes-ethereum/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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