dYdX Approves Upgrade to v4, Transforms DYDX into Token of dYdX Chain

The dYdX community has approved a proposal to upgrade to version v4, marking the first step for this DEX platform to move away from Ethereum and launch on its own layer-1 blockchain.

dYdX approves upgrade to v4, transforms DYDX into token of dYdX Chain

Proposed by Wintermute, a leading market maker in the industry, the dYdX board has preliminarily agreed on upcoming protocol improvements, including:

Upgrading to the next version, dYdX v4.

Transforming the token DYDX into the token of dYdX Chain.

Building a one-way bridge allowing DYDX to move from Ethereum to dYdX Chain.

Implementing a token based on Ethereum called wethDYDX, which will serve governance and utility functions for both v3 and v4.

The first three changes will not require any adjustments to smart contracts. Only the proposed wethDYDX will require a more thorough voting process regarding token deployment.

According to the proposal, Wintermute encourages validators to reference the Ethereum Smart Contract authorized by the dYdX Foundation when initiating the DYDX redistribution process on dYdX Chain.

The Snapshot proposal was approved with 20 million votes, including 10 million from Wintermute. Next, dYdX will proceed to the on-chain voting phase from September 1-8.

dYdX debuted on Ethereum in 2017 and quickly rose as a leading decentralized exchange (DEX) supporting leveraged trading.

Subsequently, dYdX transitioned to Layer-2 on StarkWare in 2021 as Ethereum network gas fees significantly increased. The scalability improvements allowed dYdX to deploy new features and increase the number of supported trading pairs from 3 to 30, positioning dYdX as a leading Ethereum Layer-2 network at the time.

By June 2022, dYdX announced plans to build its own chain on Cosmos and entered the public testnet phase in July of this year.

Some functionalities to be provided include wallet connection, order book viewing, market order placement, and account information viewing. Initially, the public testnet will only be available for Bitcoin and Ethereum markets, with plans to expand to 30 other markets in the future.