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Layer-2Tokenomics

L2 Sector Brief: dYdX Delays Private Token Unlocks and Migration from L2

Stephanie DunbarJan 30, 2023 ⋅ 6 min read

Top of Mind

dYdX migrated from Layer-1 (L1) Ethereum to a StarkEx-powered, app-specific rollup in April 2021. The derivatives exchange is an industry first mover. It launched its margin trading protocol in October 2018 and became one of the first projects to make the jump to Layer-2 (L2) in response to rising Ethereum gas fees. The migration resulted in a cheaper and more efficient trading experience for end users optimized by dYdX’s hybrid architecture.

dYdX offers non-custodial, on-chain settlement but uses an off-chain order book and matching engine hosted on the centralized servers of dYdX Trading Inc. It also relies on StarkWare to operate StarkEx’s centralized sequencer and prover to post transaction data to Ethereum. These pieces of infrastructure represent single points of failure for the exchange until it moves to a standalone Cosmos app chain. The migration to dYdX V4 was first announced in January 2022 and was planned to take place before the end of the year.

Delay Announcements

Starting out 2023, dYdX is still running on L2, but a quiet announcement by the project team on January 17 further delayed the release of V4 to sometime around the end of Q3 2023.

An additional announcement on January 25 revealed an agreement between dYdX Trading, the dYdX Foundation, and private investors. It states that "among other things,” the parties agreed to delay portions of a massive token unlock scheduled for this week.

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Stephanie Dunbar

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Stephanie graduated with a BSc in Psychology and began her career in startup operations and consultancy. Prior to joining Messari, she specialized in crypto technical communications. She was an early member of Messari's Diligence Team with ownership over product design, project management, and research quality. She produced and oversaw professional cryptoasset due diligence reports and helped scale the team to 20+ members. On the Enterprise Research team, Stephanie is best known for her work on validator decentralization, scaling, and the modular blockchain landscape.

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Author
Stephanie Dunbar
Stephanie graduated with a BSc in Psychology and began her career in startup operations and consultancy. Prior to joining Messari, she specialized in crypto technical communications. She was an early member of Messari's Diligence Team with ownership over product design, project management, and research quality. She produced and oversaw professional cryptoasset due diligence reports and helped scale the team to 20+ members. On the Enterprise Research team, Stephanie is best known for her work on validator decentralization, scaling, and the modular blockchain landscape.
27 Reportssunnydece
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