An In-Depth Evaluation of DYDX Token and dYdX Chain Transition to Layer 1
Evaluating DYDX, the dYdX Layer 1 token
The dYdX Chain, together with its native Layer 1 token DYDX, was released on October 26, 2023. While the original ethDYDX tokens continue to be in circulation, the migration of 75.2% of its total volume to the dYdX Chain signals a swift transition to the new ecosystem.
The security of the dYdX Chain
The dYdX Chain employs a Proof-of-Stake (PoS) security mechanism, where token holders stake their DYDX to Validators to fortify the network’s security. Currently, around 149 million DYDX (14.9% of the total supply) are staked to active Validators on the dYdX Chain. On April 6, the dYdX Community decided to liquid-stake 20 million DYDX with Stride to enhance Validator decentralization, minimize the risk of malicious attacks, and bolster network security.
Staking benefits on dYdX
100% of the protocol’s fees are distributed to DYDX stakers who contribute to the network’s security by staking their tokens to dYdX Chain Validators. This opens up various practical use cases for stakers, allowing them to reinvest their USDC rewards into crypto or other assets or use USDC as collateral for trading on the dYdX Chain.
The decentralized nature of the dYdX Chain
The launch of the dYdX Chain marked a significant milestone in dYdX’s decentralization journey. In contrast to dYdX v3, a non-custodial hybrid Layer 2 DEX on Ethereum with a centralized orderbook and matching engine, the dYdX Chain is a fully decentralized and independent Layer 1 network with 60 active Validators. Governance is thus more accessible, with reduced minimum deposits for proposals and streamlined market listing processes.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.