- Dydx is a decentralized exchange (DEX) that’s transitioning from Ethereum to the interchain network “Cosmos”.
- This Ethereum-based DEX is planning to provide a complete decentralized order book exchange after this migration.
Dydx is migrating its full ecosystem as it’s anticipated to launch its fully decentralized order book over the Cosmos network, an independent network of blockchains that are scalable and interoperable.
The platform decided to make this shift to resolve its existing order book handling method, which was slow, but transitioning to Cosmos can potentially help Dydx achieve great speed by storing it on the validator server. This migration was done in order to significantly host the decentralized order book within the validator’s memory.
What Is Dydx Protocol?
This platform is a decentralized exchange (DEX) for cryptocurrencies that facilitates experienced traders. This DEX enables a wide range of features and services, including borrowing, lending, leverage trading, and margin trading as well. It allows users to trade listed assets without submitting account details and registering as a part of authenticating protocols like KYC (know-your-customer) processes, usually a demand by centralized exchanges (CEXs) such as Coinbase.
In April 2023, the dYdX token achieved a market capitalization of $404.88 Million which made it one of the best liquid derivatives trading platforms developed over the Ethereum network. With time, it strives to address the limitations of its existing protocols, which were time-consuming and slow as well.
As the transition from Ethereum to Cosmos takes place, this platform could provide an enhanced user experience by using validator servers and streamlining the process of its existing order book exchange methods.
How Is this Migration Going to Help?
dYdX announced its plan to launch an entirely decentralized order book exchange to mitigate several limitations of its existing Ethereum-based protocols. The platform has announced its migration to the Cosmos Network to develop a scalable ecosystem along with its decentralized strategy. This development was revealed by this foundation’s CEO, Charles d’Haussy, at Korea Blockchain Week 2023.
This shifting specifies a significant shift strategy for this platform to catapult its wide range of adoption within the cryptoverse to integrate decentralization as its core value. A decentralized approach can lead to enhanced privacy and security while addressing limitations like single-point failure and control. This platform shifted to establish a “completely decentralized” order book and encourage industry-wide adoption of these ideals.
Additionally, one of the major hurdles of these decentralized exchanges (DEXs) such as dYdX is their on-chain latency regarding order books, especially when it comes to trading across high-frequency markets like crypto derivatives. According to Charles d’Haussy, existing on-chain order books are facing time lagging This puts a major paving stone in the way of an efficient market that demands speed.
This platform strives to achieve a fully decentralized order book exchange that could address the limitations of the existing platform’s inefficiencies by providing greater performance and speed via integrating Cosmos Network and its scalable solutions and reducing major challenges like slow latency, which Ethereum was unable to provide.
Conclusion
Latency in on-chain order books remains a major challenge as the high-frequency trading market needs greater performance with enhanced speed and efficiency. This transition is anticipated to resolve all the major problems associated with dYdX’s existing protocols by facilitating its user experience and providing a scalable solution to profitably trade across crypto markets and harness the best of its benefits.
