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
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
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 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
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
throughput
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
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%
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
We aim to provide Cosmos delegators with an efficient way to voluntarily distribute their political & economic power across reputable community validators
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
#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