Decentralized exchange dYdX is building its own blockchain
The expansion is part of the exchange’s plan to be completely decentralized by 2022’s end.
According to the company, the objective of dYdX V4 is to have a high throughput for the order book while remaining decentralized.
DYdX is positioning itself as the largest decentralized derivatives exchange with a 24-hour trading volume of more than $690 million.
A platform for crypto derivatives based on Ethereum layer-2 blockchains is constructing its own blockchain.
The new dYdX product will be built on Cosmos and verify transactions using Tendermint’s proof-of-stake consensus process. Popular blockchains, such as Ethereum and Bitcoin, are built on top of Layer-2 protocols, which are typically used to increase efficiencies, add features, and scale the technology.
The company’s January plan for dYdX V4 stipulates that the exchange will be fully decentralized by the end of the year.
“Developing a decentralized, off-chain order book and matching engine and moving from Ethereum to a dYdX-specific chain as a major [decentralized finance] protocol is largely untested, but we believe it gives the dYdX ecosystem the best opportunity to have a network that could offer a long-term competitive product experience with centralized exchanges,” the company said in a statement.
Founded in 2017 by ex-Coinbase and Uber developer Antonio Juliano, dYdX is promoting itself as the biggest decentralized derivatives exchange, with a 24-hour trading volume of over $690 million, according to statistics from CoinGecko.
Existing dYdX products conduct around 10 transactions per second and 1,000 order placements/cancellations per second, according to the business.
In accordance with the company’s vision for dYdX V4, each validator will “run an in-memory order book that is never committed to consensus” In the meantime, orders will be matched together in real-time by the network. The ensuing deals are subsequently recorded on the blockchain in each block.”
A firm spokeswoman did not immediately respond to a request for comment. dYdX collaborated with StarkWare in August 2020 to grow decentralized trading. In June 2021, Paradigm led a Series C fundraising deal in which the business received $65 million.