dYdX Trading Announces Code Release for Forthcoming Version 4

dYdX Trading, a leader in decentralized derivatives trading, has open-sourced the code for its highly anticipated version 4, built on the Cosmos SDK. This marks a crucial development, as the platform transitions to an independent blockchain tailored to its unique needs, pushing it closer to full decentralization.

The move to the mainnet is pending a governance vote spearheaded by the dYdX Foundation. If approved, all components of version 4, from the order book to the matching engine, will integrate into a community-led, decentralized project on a secure blockchain, supported by thoroughly audited smart contracts.

Currently, dYdX stands as the largest decentralized derivatives trading platform, facilitated by StarkEx, an Ethereum Layer 2 scaling solution, boasting a daily trading volume surpassing $1 billion. The pivot to a Cosmos-based blockchain, detailed in the version 4 update, is now complete.

The forthcoming dYdX Chain aims to offer a secure, transparent platform for derivatives trading, fully managed by its user community. This initiative is expected to democratize access to financial opportunities. Antonio Juliano, dYdX Trading’s founder and CEO, highlighted the platform’s commitment to transparency and security, emphasizing user control over the exchange.

In this transition, dYdX Trading also plans to decentralize various protocol aspects and stop collecting trading fees, transferring governance and decision-making power entirely to the dYdX community and stakeholders.

To ensure a smooth transition, the existing dYdX exchange, version 3, will remain operational alongside version 4 for a transitional period. This shift also involves moving to a Cosmos-based proof-of-stake protocol.

The dYdX Chain testnet, launched in March, has undergone several upgrades. A recent audit by Informal System confirmed the robustness of the open-source code, finding no critical errors.

However, Antonio Juliano recently announced via Twitter that U.S. users will not have access to the new protocol version, as the firm prioritizes compliance with existing laws. Despite this, with the launch of dYdX Chain, the infrastructure is set to be completely managed by third-party entities.