This is how the dYdX V4 protocol could be a game changer for DeFi cryptocurrency trading

In the world of cryptocurrency trading, security, speed and commercial rates There are three main factors that traders are most concerned about, which makes sense: You would like your exchange to be able to handle transactions in the most efficient way.

From a trading exchange point of view, that’s only really possible if they have full control over their product and for a decentralized exchange, the solution is right there in the name: be as decentralized as possible with a sovereign chain that processes transactions quickly and is communicates. with other blockchains in the ecosystem, making it optimal for the world of open finance.

in the cosmos

This simple principle led dYdX, the leading decentralized derivatives exchange, to announce in June 2022 that the latest version of its platform, which the company calls V4, would be developed as a standalone blockchain built on the Cosmos ecosystem. At the time, Antonio Juliano – Founder, dYdX said, This may seem like a risky and surprising decision, but I am sure that it is the best way to achieve our long-term goal of becoming one of the largest crypto exchanges.

The decision to build their platform on a Cosmos network allows dYdX to create a fully decentralized and custom product that is not governed by any external blockchain system, with the dYdX community in full control of the stack.

Calling himself the Internet of Blockchainscosmos is a blockchain ecosystem which are built independently of each other, but are all interconnected with their Inter-Blockchain Communication (IBC) protocol. This allows DeFi products like dYdX to facilitate the transfer of assets with little to no transfer fees and without the network congestion that has plagued conventional blockchains.

Better in every way

With the current protocol analyzing approximately 10 trades per second and 1000 orders/cancellations per second, dYdX he needed to consider scaling his product. No blockchain, including Cosmos, is even close to a thousand transactions per second right now. We don’t feel… that anything that could be done to decentralize sequencers is necessarily more decentralized than what we could achieve with our own base-level validators on the dYdX chain,Antonio told Bankless Shows around the time of the announcement.

The exchange says that V4 will feature an in-memory order book that runs off-chain, with orders and cancellations stored by validators consistent with each other as with regular blockchain transactions, and corresponding trades executed on-chain. . This gives V4 higher performance for faster transactions.

V4 will also have the current protocol feature of no gas fees, thanks to the customization offered by Cosmos.

dYdX also says that your current DYDX governance token, being a Layer 1 (L1) token, would be the natural fit to be used as the L1 token that V4 is also based on, but would allow its user community to make that decision, in line with its policy of being completely decentralized and user-governed. The community could also vote and decide on the introduction of new features, such as spot trading, options, multiple collaterals, or improving the core underlying technology.

karan ambwani – India Lead, dYdX Foundation says, dYdX V4 will allow even more control of the protocol by its participants, as well as making it faster, more transparent and more robust for the future of finance. The dYdX Foundation is driving the community to achieve this vision and align the ecosystem to accelerate its growth and development.

climbing for the future

With the goal of going live in Q2 2023, development of the dYdX V4 protocol is now underway and has met its first milestone goal of deploying a Developer Testnet, enabling basic testing and trading.

Anthony added, One of our values ​​is Think 10 times biggerand the way I articulated it is that we need to focus on what we can achieve rather than protect what we have… If you look at the reputation, the brand that we’ve built, we think we can go out there and build a very decentralized system, at least minus an order of magnitude, it will be at a similar level of resistance to censorship.

If you’d like to help dYdX define its vision of a truly decentralized platform as it builds V4, please join the discussion and share your ideas on the community forum.