Thyborg Profile picture
Jun 23 21 tweets 16 min read
Yesterday @dYdX announced their decision to spin up their own chain using the Cosmos SDK, which immediately made the #Cosmos hashtag trending on Twitter everywhere

In this thread, I cover what is DyDx, their decision and the massive impact for both Cosmos & Ethereum roll-ups 🧵
@dYdX dYdX is a decentralised exchange for perpetual contracts

A perpetual contract is a special type of futures contract, which itself is an agreement to buy or sell an asset at a predetermined price at a specified time in the future
@dYdX With futures, the trades are not ‘settled’ instantly ; Instead the two counter-parties trade a contract that defines the settlement at a future date

But unlike regular futures, perps don't have an expiry date and trader can hold a position for as long as they like
@dYdX There are several uses cases for perps:
- Hedging
- Short exposure
- Leverage
@dYdX Perps are the most traded instrument in the crypto derivatives market, but mostly through centralised exchanges (FTX, Binance etc.)

dYdX is the leading decentralised option: because it uses smart contracts, traders maintain custody of their assets, without trusted intermediaries
@dYdX dYdX is currently deployed on an Ethereum Layer2 scaling solution developed by @StarkWareLtd called Starknet

As a roll-up, Starknet moves computation off-chain & only uses Ethereum as a base layer

That means significantly lower gas costs, & in turn lower trading fees for users
@dYdX @StarkWareLtd dYdX is currently facing two major issues on Starknet:

1- Not performant enough to handle the throughput needed to run their order book and matching engine

2- Centralised sequencers which have the ability to censor transactions
@dYdX @StarkWareLtd About performance:

They want to scale up orders of magnitude higher

A dedicated chain gives them full control over everything, including the job validators perform

One part of the solution is apparently for each validator to run an in-memory orderbook, i.e "off-chain"
@dYdX @StarkWareLtd About decentralisation:

Let's explore that one a little bit deeper, as this is a place where Cosmos will likely beat roll-ups for a while
@dYdX @StarkWareLtd Rollups use a smart contract on Ethereum to manage the interaction between the L2 chain & the L1 chain

Users essentially deposit funds into the L1 contract and get an equivalent amount on the L2
@dYdX @StarkWareLtd But you need a third party, known as a sequencer, to receive proof of the deposit in the L1 contract before crediting the funds on the rollup

These sequencer networks have a fundamental limitation in that they operate under their own security assumptions & not from Ethereum's
@dYdX @StarkWareLtd There might in fact be a 3rd factor behind the dYdX decision, which wasn't in the blog post:

Starknet is not entirely open-source, so it requires dealing w/ intellectual property agreements

That means you can't just fork the network & leave: you're dependent on a vendor
@dYdX @StarkWareLtd That's in STARK contrast with Tendermint, the Cosmos SDK or the IBC protocol, which are all public goods:

Osmosis, Juno, Stargaze, Sifchain, Kava & all the other chains can cut ties with the rest of the Cosmos whenever they please

No rent extraction in Cosmos
@dYdX @StarkWareLtd Let's tally the scores:

Performance: Cosmos
Decentralisation: Cosmos
Sovereignty: Cosmos

Looks like the 1998 France-Brazil World Cup Final to me
@dYdX @StarkWareLtd But why is this hugely significant?

Starknet is widely considered the most exciting L2 roll-up solution for Ethereum

dYdX is a Tier 1 team, the biggest decentralised derivative exchange, and one of the top 20 protocols in crypto
@dYdX @StarkWareLtd dYdX's founder @AntonioMJuliano has been vocal in the past about picking the best environment to build on, regardless of politics or loyalty

His decision essentially sends a message to all the ambitious teams in crypto: Cosmos is the best place to build
@dYdX @StarkWareLtd @AntonioMJuliano And that's apparently without even taking into account the real Cosmos superpower: interoperability
@dYdX @StarkWareLtd @AntonioMJuliano In fact, while dYdX is getting excited about Tendermint & the SDK, the other Cosmos chains have been enjoying IBC for a while, and currently looking forward to play with ground-breaking tech like Interchain Accounts & Interchain Security

@dYdX @StarkWareLtd @AntonioMJuliano When dYdX launches, it'll join a large family of sister chains, including multiple awesome orderbook siblings like @InjectiveLabs, @OnomyProtocol and @SeiNetwork

Plus probably a bunch of migrating Solana protocols
@dYdX @StarkWareLtd @AntonioMJuliano @InjectiveLabs @OnomyProtocol @SeiNetwork I'm covering all the major projects joining the Cosmos ecosystem, plus educative & digestible threads on governance, airdrops, wallets & tokens, and you may get a sense of what that looks like in my Data Studio reports
@dYdX @StarkWareLtd @AntonioMJuliano @InjectiveLabs @OnomyProtocol @SeiNetwork If that sounds interesting, you may consider retweeting the first tweet below & giving me a follow @Thyborg_ ✌️

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More from @Thyborg_

Jun 21
A Thyborg exclusive: an upcoming Cosmos L1 with solid backing is in the process of bringing a dozen of disillusioned Solana protocols to their permissioned smart-contract Cosmos chain 🧵
Solana made a name for itself because of the low fees & high

The official documentation had the theoretical transactions per second (TPS) at 65K

For reference, Visa processes an average of 1,7K TPS and the network can theoretically handle 24K

Ethereum is at 12 TPS
Anecdotally, every time I checked the Solana Beach explorer, the TPS was below 3,000 transactions per second Image
Read 13 tweets
Jun 17
$ATOM - the number thread

A complete breakdown of the key metrics of the Cosmos Hub's native token and King of the Interchains 🧵
If you've missed the first $ATOM thread, you may be interested to give a look first
The public fundraiser event for $ATOM was run by @interchain_io and concluded in April 2017. There were five categories of recipients for the initial supply
1) The early adopters received 7.1%
2) The seed contributors received 5%
Read 16 tweets
Jun 16
The ranking working group is now 62 validators strong. Since several interesting viewpoints & feedback came up on both Discord & Twitter in the process, here's a quick thread to share my thoughts on the best questions & observations 🧵
If you've missed the first part and you have time for some reading, here's the original thread
What’s the end goal?

We aim to provide Cosmos delegators with an efficient way to voluntarily distribute their political & economic power across reputable community validators
Read 19 tweets
Jun 14
We're starting a community effort to build an strong unbiased ranking of active Cosmos validators based on a set of agreed-upon quantitative & qualitative criteria

A statement of purpose and an invitation for all community validators to join the effort 🧵
In Cosmos and other PoW blockchains, validators play the critical role of signing transactions and securing the network

However, a major issue all networks currently have to deal with is a massive concentration of economic and voting power in their validator set
In most Tendermint chains, a small group of validators hold a very significant portion of the supply

The Cosmos Hub is one of the most decentralised chains of the network, yet 15 entities hold over 51% of the total voting power
Read 33 tweets
Jun 13
#Terra's meltdown led many native protocols to look outward to the #Cosmos & realise the benefits of joining an ecosystem of fully interoperable & scalable app-chains

One such project is @mars_protocol and in today’s thread I’m running it through the usual quality checklist 🧵
@mars_protocol If you're unfamiliar with my investment framework, you may want to have a look at this thread first
@mars_protocol The first criteria is the total addressable market (TAM) which represents the revenue opportunity available to the protocol

Mars is a lending & borrowing (also called credit or money-market) protocol

On Ethereum, the top 10 actors in the category capture a TVL close to $15 bn
Read 18 tweets
Jun 9
Back in April, @axelarcore rather quietly won the great Osmosis bridge-off to become the canonical provider for non-IBC assets

As they are getting closer to their token launch, I ran the project through a quality checklist to see where it stands 🧵
@axelarcore If you're unfamiliar with my investment framework, you may want to have a look at this thread first
@axelarcore The first criteria is the total addressable market (TAM) which represents the revenue opportunity available to the protocol

Axelar's TAM starts with token transfers between blockchains, which has become an indispensable need for most DeFi users
Read 14 tweets

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