In what is seen as a monumental move, dYdX, a layer-2 decentralized exchange (DEX), is open-sourcing its code as the platform prepares to deploy v4. According to the exchange, the exchange has a total value (TVL) of more than $353 million DeFiLlama.
dYdX open source code prior to V4
According to an X after on October 24, dYdX plans to eventually operate on its standalone blockchain on Cosmos, migrating from a layer-2 exchange that relies on Ethereum for security. The standalone blockchain, dYdX Chain, will be built using the Cosmos software developer kit (SDK) and powered by the Tendermint proof-of-stake consensus algorithm.
With blockchain, projects often open source their code, allowing the public to scrutinize how smart contracts work. By going public, the protocol helps build trust among users and community members, increasing security and increasing decentralization. This is especially important because the DEX processes sensitive financial data to enable reliable trading for all users.
Antonio Juliano, the founder of dYdX, has already done that said the exchange developer, dYdX Trading Inc., is updating its charter to become a Public Benefit Corporation. The exchange developers will work on an open project without benefiting from it. While the platform will remain a for-profit company as a Public Benefit Corporation (PBC), its founder and board “will not act solely to maximize shareholder value, but will act in the public interest.”
Still, the layer 2 protocol must receive community approval through a vote before the project moves to v4 on Cosmos. After that, as Juliano states, dYdX will become fully open-source and decentralized, meaning the community will take over how the protocol evolves through a board vote conducted by the dYdX Foundation.
Will new features propel the token to 2023 highs?
With v4, dYdX will build an off-chain order book and release an equally scalable matching engine that can handle more transactions. This way the development team believes this will “dramatically” improve the protocol, all without charging trading fees, as it will run on Cosmos, a scalable layer-1 and interoperable blockchain.
Some of these improvements include making dYdX more efficient when trading. Subsequently, various functionalities, such as batch execution and limit orders, will go live. At the same time, dYdX v4 supports trading in new asset classes, such as stocks, commodities and real estate, making the protocol more versatile.
Ahead of this transition, the exchange’s native token is trading at H2 2023 highs looking for price action. Notably, the token has broken through the resistance levels from July to October 2023 with increasing volumes. At the same time, if we look at the development on the daily chart, the bull bars are forming along the upper BB, indicating strong upward momentum. The region around $3.25 and $3.5, which marks the highs in the first quarter of 2023, could be an immediate target for bullish bulls.