Why Support dYdX Leaving ETH To Build Its Own Chain

The reason why dYdX Leaving ETH To Build Its Own Chain?

It can be said that the catastrophic devaluation of the LUNA does not mean the total failure of the Terra chain.

Those who used the Terra chain regularly before this ecosystem collapsed will undoubtedly feel the smoothness of the transactions Terra brings. Terra’s transaction speed is breakneck, and there are almost no delays, thanks to the use of a closed ecosystem similar to Apple’s IOS.

Compared to other top chains with hundreds of APP, Terra has only three original APP to date: Anchor, Mirror, and TerraSwap.

Regardless of the failure of Luna and UST, can be sure that an ecologically independent public chain does provide an incredibly smooth interaction experience. No one cares more about fluency than futures traders, and I think that’s the biggest reason to build dYdX as a standalone blockchain (games are also looking for fluency, so some game developers are considering creating a new blockchain for their games as well).

Currently, dYdX’s trading experience with DEX is unmatched, but due to network scalability, there are still many gaps compared to major CEX. Indeed, Rollup can technically meet the needs of dYdX in the future, but how long do we have to wait for that? Moreover, even if rollups work, does enjoying a complete blockchain worsen the transaction experience rather than competing with hundreds of APP on block slots?

There is no doubt that dYdX will be less secure after leaving Starkware. DYdX has not yet encountered money theft, but the chances of such a situation increase significantly after independence. However, the whole chain provides dYdX, so a blockchain rollback (soft fork) is sufficient to fix the error.

For future vision, you can refer to Thorchain (RUNE), which has only one APP, Thorchain DEX, in the whole chain. If the user adds liquidity to the DEX, they must add the exact value of RUNE as a transaction pair, and the node must insert twice the value of RUNE. In other words, $100 million in cash connects $300 million to RUNE. If dYdX did the same, it would significantly increase the value of the DYDX token.

Choice of blockchain

There is no clear official explanation as to why Cosmos was chosen over others, just that Cosmos is the best choice now. It’s not difficult to understand. The chain needs cross-chain functionality and interoperability because we decided to develop another chain for the APP.

“Cross-chain” here is not a third-party cross-chain bridge but a blockchain like Polkadot that allows all parallel chains to be compatible. Besides Polkadot, only Cosmos and Avalanche have a strong consensus in this area.

Polkadot is like Cosmos in that one is developed using the Substrate SDK, and the other is produced using the Cosmos SDK. Avalanche’s p-chains are identical in that they are free to create subchains, but Avalanche has not yet implemented subchain interoperability. The difference between Polkadot and Cosmos is that while Polkadot can provide global security, it is inflexible and slow to develop. The security of each chain of the Cosmos network can only be held on its own, but the benefits are more flexible. For dYdX, which is scheduled to be rebuilt by the end of the year, avalanches cannot be expected, and Polkadot demands too much security and cannot be achieved in a short amount of time.

In the past, the prosperous ecosystem of Ethereum was able to develop slowly and comfortably with rollups. But when the well-funded APP team runs out of patience (and the frustration with Antonio’s rollup is obvious), the Ethereum team doesn’t have much time.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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