In what is seen to be a monumental move, dYdX, a layer-2 decentralized exchange (DEX), is open-sourcing its code as the platform prepares to implement v4. The exchange has a total value locked (TVL) of over $353 million, according to DeFiLlama.
dYdX Open-Sourcing Code Ahead Of V4
According to an X post on October 24, dYdX plans to eventually operate on its standalone blockchain on Cosmos, migrating from being a layer-2 exchange reliant 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.
In blockchain, projects often open source their code, allowing the public to scrutinize how smart contracts operate. By going public, the protocol is helping to build trust with users and community members, boosting security and increasing decentralization. This is especially important because the DEX handles sensitive financial data to facilitate trustless trading for all users.
Antonio Juliano, the founder of dYdX, has already 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. Though the platform will remain a for-profit company as a Public Benefit Corporation (PBC), the founder and the board will “not solely act to maximize shareholder value but act in the public benefit.”
Still, the layer-2 protocol has to receive approval from the community through a vote before the project transitions to v4 on Cosmos. Afterward, as stated by Juliano, dYdX will become fully open-source and decentralized, meaning the community will take over how the protocol evolves through a governance vote effected 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 process more transactions. This way, the development team believes this will “dramatically” enhance the protocol, all without charging trading fees, since it will run on Cosmos, a scalable layer-1 and interoperable blockchain.
Part of these enhancements include making dYdX more efficient in trading. Subsequently, several features, such as batch execution and limit orders, will go live. At the same time, dYdX v4 will support trading new asset classes, such as equities, commodities, and real estate, making the protocol more versatile.
Ahead of this transition, the native token of the exchange is trading at H2 2023 highs, looking at price action. Notably, the token has broken above July to October 2023 resistance levels with increasing volumes. At the same time, looking at the development in the daily chart, bull bars are banding along the upper BB, pointing to strong upward momentum. The region around $3.25 and $3.5, marking Q1 2023 highs, could be immediate targets for optimistic bulls.