Decentralized cryptocurrency exchange dYdX has unveiled its layer 1 blockchain, launching it with the native DYDX token. This blockchain will operate based on the native DYDX token and distribute all fees to validators and stakers in the form of USD Coin (USDC). This includes transaction fees denominated in USDC as well as gas fees for trades denominated in DYDX or USDC. The network utilizes a proof-of-stake (PoS) blockchain model, constructed using Cosmos’ software development kit and adopting CometBFT as its consensus protocol. Validators are required to stake DYDX to secure the blockchain and perform governance operations.
Antonio Juliano, the founder of dYdX, stressed that the blockchain's launch depends on companies like Circle and Coinbase launching on Cosmos in time to create its genesis block. Juliano has previously described dYdX as the "first decentralized off-chain order book" built on the Cosmos SDK. The blockchain is fully open-source. Prior to the introduction of its native Layer 1 chain, DYDX was an ERC-20 token running on dYdX's Ethereum Layer 2 protocol. The dYdX community conducted a vote to adopt DYDX as the L1 token of the dYdX chain, establish a one-way bridge from Ethereum to the dYdX chain, and introduce wrapped Ethereum DYDX (wethDYDX) with the same governance utility as ethDYDX.
This transition expands the use of the DYDX token to include staking on the dYdX chain, enhancing network security and facilitating governance. Similar to Ethereum's shift to PoS, stakers and validators secure the network and receive rewards in proportion to their staked assets. Fees collected by the dYdX Chain protocol are distributed to validators and stakers through the Cosmos distribution module. dYdX expects that its governance will be more accessible compared to previous Ethereum-based layer 2 protocols.
Unlike dYdX v3's "proposal power" concept, the governance module enables any holder to create governance proposals with deposits. To counter spam proposals, provisions include minimum deposit thresholds and voting mechanisms with veto power. On-chain governance participation is only possible using pledged DYDX tokens. In addition, chain validators will inherit the stakeholder's voting weight, unless a particular stakeholder decides to vote on a proposal individually.
