dYdX Community Votes On Appchain Migration and V4 Deployment
The dYdX community is voting on a governance proposal formalizing plans to convert its DYDX token into a network token ahead of the project’s appchain migration and v4 launch.
The proposal, floated on Aug. 28 by Wintermute, a top crypto market maker, outlines plans to make DYDX the network token for the forthcoming dYdX Chain. The roadmap includes launching a one-way bridge allowing users to migrate DYDX from Ethereum to dYdX Chain.
The plan has garnered unanimous support so far, although voting has only been live for a few hours. The DYDX token is up 2% in the past 24 hours.
dYdX is the leading decentralized perpetuals exchange, routinely processing over $500M in daily trading volume. The protocol exceeded $1T in cumulative all-time volume on July 14.
dYdX v4
If passed, dYdX would exit the Ethereum ecosystem and launch its v4 iteration on a Layer 1 appchain exclusively dedicated to it.
dYdX first launched on Ethereum in 2017, quickly emerging as the top decentralized exchange supporting leverage.
dYdX then moved to its own StarkWare-based Layer 2 in 2021 after mainnet gas fees surged following DeFi summer in 2020. The increase in scalability enabled dYdX to roll out new features and increase its number of supported pairings from three to 30, and positioned dYdX as a top three Ethereum Layer 2 network by throughput from mid-2021 until Q2 2023.
But last June, dYdX announced that its forthcoming v4 protocol will launch on a dedicated Cosmos-based blockchain. dYdX said the move will enable the launch of advanced features including a decentralized, off-chain orderbook and matching engine “capable of scaling to orders of magnitude more throughput than any blockchain.”
wethDYDX
Wintermute also recommends launching a new Ethereum-based token, wethDYDX, to perform governance and utility functions for dYdX v3 — which will continue to exist on Ethereum after the launch of dYdX Chain and dYdX v4.
Per the proposal, users that bridge their tokens over to the new chain will automatically receive a corresponding wethDYDX balance on Ethereum, further incentivizing holders to migrate their tokens onto the dYdX Chain.
Wintermute notes that launching wethDYDX is the only aspect of its proposal requiring changes to the protocol’s smart contracts. As such, launching wethDYDX would require a secondary “long-timelock proposal” following the approval of the current proposal.
All other items contained in Wintermute’s proposal (launching dYdX v4, adopting DYDX as the network token of dYdX Chain, and launching a one-way token bridge for DYDX from Ethereum) would be fully ratified by the Snapshot poll that is currently live.
Voting will end on September 1.
