Nikolas Sargeant
The dYdX Foundation announced on Friday, October 27th, that the first block of the dYdX Chain mainnet was created (“Genesis”) by the dYdX Chain Validators on October 26 at 17:00 UTC.
In a press release shared with Cryptowisser, the foundation said the creation of the first block of the dYdX Chain and the adoption of DYDX as the Layer 1 token of the network lead to new utility for the DYDX token on the dYdX Chain.
The team also provided some details and highlights about the role of DYDX within the dYdX Chain, how the token has evolved and how protocol fees are distributed to Validators and Stakers on the dYdX Chain.
The dYdX Chain is a proof-of-stake blockchain network built using the Cosmos SDK and leveraging CometBFT for consensus. The dYdX Chain requires a Layer 1 protocol token that can be staked to Validators to secure the chain and to assist with the governance of the network.
On this chain, all fees (trading fees denominated in USDC and gas fees for DYDX-denominated transactions or USDC-denominated transactions) collected by the protocol are distributed to Validators and Stakers.
The DYDX token (ethDYDX) was the governance token of the dYdX Layer 2 protocol on Ethereum (“dYdX v3”) since it was released on August 3, 2021. However, the dYdX community voted to adopt DYDX as the L1 token of the dYdX Chain, adopt a one-way bridge from Ethereum to the dYdX Chain and give wrapped Ethereum DYDX (“wethDYDX”) the same governance utility as ethDYDX in dYdX v3.
Increased Utility Of DYDX On The dYdX Chain
Following the decisions of the dYdX community, the utility of the DYDX token has expanded: DYDX may now be used for staking, securing the network, and assisting with governance on the dYdX Chain. Some of these utilities include;
Staking
On the dYdX Chain, DYDX holders have the option to serve as Validators or to delegate their stake to existing Validators. Staking secures and protects the network and enables the Staker to receive dYdX Chain protocol fees in proportion to their stake weight.
The team explained that all fees (trading fees denominated in USDC and gas fees for DYDX-denominated transactions) collected by the dYdX Chain protocol are distributed to Validators and Stakers. The distribution of protocol fees on the dYdX Chain is facilitated through the Cosmos x/distribution module.
Security
Validators on the network are incentivized to maintain the integrity of the ledger so that they don’t suffer substantial losses. Staking DYDX directly contributes to dYdX Chain security. This is because as more DYDX holders choose to stake their tokens across a diverse range of Validators in the network, and the total amount of stake on the network increases, the more difficult it becomes for a coordinated attack to influence a consensus decision.
Governance
The dYdX Chain uses the standard x/gov module within the Cosmos SDK. This means that the team anticipates that governance on the dYdX Chain will be more accessible than dYdX v3 governance.
Keep in mind that only staked DYDX tokens will be able to be used in dYdX Chain governance. Furthermore, dYdX Chain Validators inherit the voting weight of their Stakers unless a Staker decides to vote on a proposal themselves.
dYdX Foundation was formed to support the current and future implementations of the dYdX protocol and foster community-driven growth in the dYdX ecosystem.
The foundation explained that the dYdX Chain software is solely open-source software to be used or implemented by any party in accordance with the applicable license.
