Prominent cryptocurrency derivatives exchange, dYdX has announced that it will be developing dYdX V4 using an independent Cosmos based blockchain and the Proof-of-Stake Tendermint consensus protocol.
DYDX set to support larger scale orders
The dydx Exchange stated that it features a fully decentralized orderbook, off chain, and matching engine. The exchange claimed that it will be able to scale a huge number of orders than any existing blockchain can support.
The creation of the V4 will complete the decentralization of the dYdX protocol, according to the announcement. It will provide a complete blend of decentralization, scalability, and customization with the aid of Cosmos.
It added that its native token DYDX happens to be the best fit to serve as the L1 token for dYdX V4.
The price of the dYdX token has increased by more than 7% since the announcement. At the time of writing, the token was trading at an average price of $1.52. Its 24-hour trading volume has increased by 25% to stand at $78.6 million.
Complete decentralization in V4
The derivative exchange emphasized that its V4 code will be open-source. It basically means that everything will run without the permission of networks where no service will be run by dYdX trading inc. This is done in order to improve the protocol. Its community will be controlling every aspect of the stack.
The exchange explored the potential of current and upcoming blockchain technologies. Following this, they decided to use Cosmos to create a completely decentralized protocol. It added that a huge benefit of developing it in Cosmos is that it suits the need of the dYdX network.
The release mentioned that traders would pay no gas fees. However, trades executed similarly to dYdX V3 will determine fees. Additionally, it said that validators’ and their stakeholder’s fees would increase over time.