dYdX exchange is currently at number 2 in the list of DEXs and plans to become 100% decentralized by year-end. In the last 24-hours, they had a trading volume of $788,182,184. The decentralized exchange is an Ethereum layer-2 project and is a derivatives trading platform. They offer perpetual contracts without an expiry date and share features of both spot and futures trading. The exchange’s V4 update is going to make it completely decentralized.
dYdX exchange
Even now, dYdX falls under the DEX category as a lot of its elements are decentralized. For example, the smart contracts on Ethereum, staking, and governance. However, the order book and matching engine are managed by dYdX Trading Inc. That is a big drawback for the project, but they are going to change it very soon. Even in their latest announcement, they said that the primary area of focus while achieving 100% decentralization is the order book and matching engine.
There will be three main things at play here. Firstly, we have the transaction processing power or scaling capabilities, the fairness of operators, and off-chain trade matching. If they are able to achieve all 3 of these, then dYdX will reach its goal of becoming 100% decentralized by the end of 2022. It will be massive as the exchange will be completely controlled by the community thereafter, and no central authority can control the protocol. The project also plans to roll out new products and zero trading fees in the future.
This is going to change a lot of things
Even now, most decentralized exchnages are centralized in a lot of ways. Most of them have teams with access keys to the code, which is suitable for quick fixing of errors but makes the project lose its basic purpose of decentralization. A while back, SEC’s chairman Gary Gensler said that DeFi is mostly centralized with a small team running its operations. So, with dYdX’s move to a completely autonomous system, the era for true decentralization will take a leap ahead. A lot of other similar projects could soon start making their projects completely decentralized.
What are your thoughts on the dYdX exchange as it plans to become 100% decentralized? And do you think they will be able to achieve the 3 critical aspects of this? Let us know in the comments below. Also, if you found our content informative, do like and share it with your friends.
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