Why is dYdX migrating to Cosmos? with Corey Miller, Growth Lead of dYdX - Ep.65 Podcast Notes

dYdX

dYdX is the current largest decentralised derivatives exchange. It allows users to trade perpetual contracts in a decentralized manner and aims to be the exchange for all derivatives in the future. Perpetual contracts (or perps) are the most traded product in crypto with over $1bn daily trading volume on dYdX alone. 

Corey Miller

Corey Miller has been the growth lead at dYdX for the past 2 years. He previously worked at a Crypto hedge fund and VC fund. 

Ep.65 Podcast Summary / Notes

Why is dYdX moving from Ethereum to Cosmos?

• Currently built on Starkware (L2) (ZK proof system)

  • Starkware is pretty good - Zero gas cost

• dYdX Goal is to build a fully decentralised exchange

  • Currently not fully decentralised on ETH - Matching engine and order book

  • Building own L1 on Cosmos gives dYdX validators the most flexibility

Why Cosmos SDK and not other alternatives i.e. AVAX subnet?

• All of the different options have different pros and cons

• Having our own chain and the ability for customization and upgrades gives more control in the hands of the dYdX community

Potential risks or downside you foresee with this migration?

• Risks

  • Product experience not very good

  • Users don’t trust the security of v4

  • Not enough liquidity to satisfy needs

• Confident that they will be able to deal with risks 

• Goal: Build an experience that parallels web2 as users care about the product, not the underlying chain 

Will dYdX run 2 apps at once concurrently?

• v3 and v4 will be running in parallel for some time

  • v3 users will likely have to wind down positions after some time

Is this migration a bet on the Cosmos ecosystem?

• dYdX is more product-focused, not maximalist

  • Not a bet on Cosmos ecosystem, but more a bet on building their own dApp chain.

• It may have IBC capability, but interoperability is not the focal point

Why migrate now?

• Nothing to do with the bear market 

  • Something they’ve been thinking and researching about for a while

Is there a timeline?

• Release open source by EOY

• Q1/Q2 2023 fully live

What do you think the industry will look like? Will everyone move to decentralisation?

• Hard to predict specifically in advance

• Decentralization allows everyone to access your application and product 

• The world will likely look more favourably on decentralized applications

Biggest challenge for dYdX?

• Bridging (people to port over from v3 to v4)

• Liquidity (getting the largest market makers in crypto)

• Finding a way for the DAO to scale and be better operated

Any liquidity incentives/ airdrops?

• Possibility of ongoing liquidity mining incentives on v3 be transferred over to v4

• Token holders will have to think about and decide on

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Lau Jun Sheng

Jun Sheng is a research intern and is an avid gamer, degen, memer, sleeper. Follow the author on Twitter @jnshngl