On Monday, dYdX revealed the launch of the V4 private testnet, a massive milestone that will see the DEX (decentralized exchange) leave the second-largest blockchain, Ethereum.
dYdX also announced that the platform will start running on Cosmos by the end of September. The network provides Cosmos Software Development Kit (SDK), which lets developers create their own native blockchains according to their preferences. Although different, every independent Cosmos-based blockchain is able to interact with others.
The dYdX private testnet, which will be rolled out today, will run for three weeks, and then in July, a public testnet will launch.
Why is dYdX Migrating to Cosmos?
When asked why it decided to move to Cosmos, dYdX said Ethereum’s lack of scalability triggered the decision. Nathan Cha, the platform’s marketing lead, claims that Ethereum’s inability to process transactions faster is a big issue.
The DEX explained that it chose Cosmos over other networks because it makes possible the customization of the blockchain to meet dYdX’s needs. Cosmos also processes transactions quickly.
dYdX becomes the second project to reveal that it’s migrating to Cosmos from Ethereum. The other project to make a similar move is SushiSwap. Last month, the decentralized exchange bought Vortex Protocol, a Cosmos-based trading platform.
dYdX and Centralized Exchanges
Launched in 2017, dYdX currently has approximately $341.6 million in TVL (Total Value Locked), according to data from DefiLlama. TVL usually measures the amount of funds circulating in a particular DeFi protocol.
Former Uber software engineer Antonio Juliano developed the platform.
Even though DEXs like Curve, dYdX, and Curve are growing fast, they still account for a minimal share of transactions compared to CEXs (centralized exchanges). For example, Uniswap posted $641 million in trades over the last 24 hours, while Binance saw $4.29 million in trading volume over that period.
dYdX Vice President David Gogel notes that the DEXs did not benefit from the FTX’s collapse in terms of the trading volume. He claims that many crypto users opted for other centralized exchanges at the time. For this reason, Gogel thinks people need to be educated about self-custody.