dYdX
If dYdX reminds you of your Math lessons, it’s because dYdX is a Calculus term that means “derivatives”. Transported to the finance context, dYdX is a decentralised exchange that allows investors to undertake margin trading of perpetual futures contracts.
It’s associated with L2 Roll-ups because since 2021, it has been using a kind of Zk-rollup called StarkEx to yield lower gas fees for its users. StarkEx was chosen because its provider - StarkWare - has had the experience in running spot-trading exchanges in production. This change might have been instrumental to dYdX becoming the largest DEX by trading volume the same year.
According to a blog published by dYdX, an open-source v4 of its portfolio was scheduled to be launched by the end of 2022. It was expected to be fully decentralised and as such, entirely controlled by the community. Not even dYdX Trading Inc. would be able to collect trading fees.
Such decentralisation was brought about by decentralising the orderbook and matching engine, two components that were centralised previously. For instance, the off-chain matching engine would sequence trades and consequently inform traders on the final outcome of their trades.
To give power to the community of traders, dYdX allowed traders to earn a governance token called DYDX whenever they traded on the platform. Having DYDX tokens granted users the right to vote on various community proposals that aimed to upgrade the modules, restore the protocol and distribute grants.
https://www.bitstamp.net/learn/cryptocurrency-guide/what-is-dydx/
https://help.dydx.exchange/en/articles/4797156-what-is-layer-2#
https://dydx.exchange/blog/v4-full-decentralization
originally posted on r/ethtrader
