29 Apr

On October 26, 2023, the dYdX Chain and its native Layer 1 token, DYDX, were made available.

The migration of 75.2% of the total volume of the original ethDYDX coins to the dYdX Chain indicates a quick transition to the new ecosystem, even though the tokens themselves are still in use.

Specifically, on August 3, 2021, the dYdX Foundation introduced ethDYDX (formerly known as DYDX) as a governance-only token for the dYdX Layer 2 protocol on Ethereum (ETH) — dYdX v3.

EthDYDX created an ecosystem centered on rewards, staking, and governance by empowering the community to manage various parts of dYdX v3.

Voting by the community to accept the new DYDX as the dYdX Chain's Layer 1 token resulted in the wethDYDX Smart Contract and bridge.dydx.trade being launched. 

How safe is the dYdX Chain?

To strengthen the security of the network, the dYdX Chain uses a Proof-of-Stake (PoS) security mechanism in which token holders stake their DYDX to Validators.

On the dYdX Chain, there are now 149 million DYDX (or 14.9% of the total supply) staked to active Validators.

In an effort to strengthen network security, reduce the likelihood of malicious assaults, and improve Validator decentralization, the dYdX Community agreed on April 6 to liquid-stake 20 million DYDX with Stride.

The Stride protocol will automatically compound staking rewards in USD Coin (USDC) and convert them into DYDX, which may then be staked again for more rewards.

This demonstrates the community's dedication to maintaining the community treasury while preserving the security and stability of the dYdX Chain.

Gains from staking on dYdX

Stakers of DYDX who contribute to the network's security by staking their tokens to dYdX Chain Validators receive 100% of the protocol's fees.

This gives stakers a number of useful use cases, such as reinvesting their USDC rewards into other assets or cryptocurrencies, or using USDC as collateral to conduct trades on the dYdX Chain.

Over $20 million in USDC has been awarded to stakers on the dYdX Chain, which has generated over $120 billion in cumulative trading activity to far.

The dYdX chain's decantralized state

The dYdX Chain's release was a critical turning point in the decentralization of dYdX.

Unlike dYdX v3, which is a hybrid Layer 2 DEX on Ethereum that is non-custodial and has a centralized orderbook and matching engine, the dYdX Chain is an independent Layer 1 network that is totally decentralized, with 60 active Validators.

As a result, governance is easier to reach, with simpler market listing procedures and lower minimum deposits for proposals.

April 2024, Cryptoniteuae

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