dYdX Trading, the U.S.-based firm developing the decentralized derivatives exchange dYdX, has released the open-source code for its independent blockchain to the public.
Today’s launch marks the initiation of dYdX Chain, a new upgraded version (dYdX V4) of the popular derivatives exchange.
dYdX Trading Founder and CEO Antonio Juliano said in a statement that, “With the dYdX Chain, dYdX brings transparency and security to derivatives trading with an exchange that is run solely by code, and controlled by its users.”
Importantly, the upgrade involves a transition from an Ethereum-based layer-2 blockchain to a Cosmos-based proof-of-stake protocol, secured and governed by DYDX token holders.
The trading firm has introduced the code as a governance proposal. This proposal will seek approval from DYDX token holders and support from a “series of third-party validators, nodes, and other community contributors” to facilitate the launch of the dYdX Mainnet.
The existing dYdX exchange will not be impacted by the dYdX mainnet launch, with the exchanges running concurrently for an undisclosed period of time, according to the press release.
The dYdX Chain testnet was first launched in March this year and has seen a number of upgrades since then.
Nathan Cha, marketing lead at dYdX, told Decrypt that the testnet “has been going very well to work out any kinks and is performing well.”
An audit by blockchain auditor Informal System found no critical errors in the open source code, according to the release.
Cha told Decrypt that “dYdX Trading will no longer run and operate any of the infrastructure behind the dYdX Chain. It will all be run by third parties.”
The firm also recently announced a transition in its company charter to become a Public Benefit Corporation (PBC). A PBC serves the dual purpose of accruing profits with a commitment to benefiting society and the environment.
Laying the foundation for a permissionless platform
Cha also added that dYdX Chain will be permissionless, allowing users to access the chain from anywhere.
The current dYdX interface blocks U.S. users, along with citizens from nations that have economic sanctions imposed on them by the U.S., including Cuba, Iran, North Korea, and Myanmar.
The new version of the protocol “will not be available to U.S. users,” according to a recent tweet by Juliano.
He added that dYdX Trading has no control over the validators, “as that is up to staking,” and that since the code is open source, “we can’t enforce how it’s used.”
However, he noted that the open-source license is written in such a way that it can be revoked if used for unlawful activity, and that the firm will only provide tech support to non-U.S. users.
Cha told Decrypt that, “dYdX Trading monitors all laws to be as compliant as possible. However, we as a company will no longer be running any of the infrastructure behind the new dYdX Chain and it will all be run by third parties.”
Edited by Stephen Graves.
