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dYdX Transitions to Cosmos Blockchain in DeFi Evolution

Discover how dYdX is revolutionizing DeFi by shifting from Ethereum layer-2 to a Cosmos-based blockchain, enhancing decentralization and community governance.
Published on 2023-10-24

dYdX's Strategic Shift in DeFi

dYdX, a leading decentralized exchange, is making a transformative leap by transitioning from an Ethereum-based layer-2 network to its own blockchain within the Cosmos ecosystem. This move, part of the version 4 (v4) upgrade, marks a significant evolution in the decentralized finance (DeFi) space.

Embracing Open-Source and Decentralization

The v4 upgrade involves open-sourcing dYdX's code to enhance transparency and decentralization. By doing so, dYdX aims to become a fully decentralized, community-operated platform. This shift allows developers worldwide to contribute to the platform's reliability by identifying and rectifying potential issues.

Community-Driven Governance

With the transition, dYdX will relinquish control over the protocol, ceasing to collect trading fees. Future changes and upgrades will be determined through governance votes by the dYdX community, facilitated by the dYdX Foundation. This approach empowers the community to steer the platform's future.

Testing on Cosmos and Future Implications

The test network for this transition was initiated on Cosmos in July. Once the v4 upgrade is live, all protocol changes will undergo community-led governance. This transition sets a precedent in the crypto industry, showcasing technical adaptability and a commitment to decentralized governance.

Setting New Benchmarks in Crypto

dYdX's move from an Ethereum layer-2 network to a standalone blockchain within Cosmos underscores a new era in DeFi. It highlights the exchange's dedication to fostering a vibrant, self-governed community that will shape the future of finance. This transition not only reflects foresight but also a firm commitment to the DeFi community.

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