🚨 Major shakeup in Ethereum’s Layer 2 ecosystem: dYdX v3, a long-standing decentralized exchange, has shut down, leaving over $70M in user funds not withdrawn.
What happens to assets on an L2 when it stops, and what role does L2BEAT play? 🧵👇
What happens to assets on an L2 when it stops, and what role does L2BEAT play? 🧵👇
Enter “Escape Hatches,” a built-in safeguard of StarkEx tech by @StarkWareLtd, which powers @dYdX. This fallback mechanism is designed to protect users' funds when an exchange becomes “frozen” - as dYdX v3 now is.
When an L2 like dYdX v3 shuts down, users can still withdraw their assets directly from Layer 1 by leveraging this process. 
So how do you trigger an escape? 🧩 Users initiate a series of 3 Ethereum transactions: first, they “initialize” the escape, then “finalize” it, and finally, they “withdraw” funds to the position owner.
This requires providing a “Merkle Proof” to verify their asset state. However, generating this proof isn’t easy for the average user…
This is where L2BEAT comes in. We created an open-source StarkEx Explorer with a user-friendly interface to access the Escape Hatch.
dYdX and StarkWare partnered with us to make this available to all at . So far, users have withdrawn almost $30M since the shutdown.explorer.dydx.exchange
Keep in mind, this Escape Hatch mechanism only works with specialized, non-general L2s like dYdX – ones without smart contracts. For general L2s that do support them, we need more robust options including decentralized sequencing and forced transactions.
The endgame? Confidence. Users need assurance that if an L2 fails or misbehaves, they can always interact with Ethereum and, without anyone’s permission, reclaim their assets. No sidechain or sovereign L1 can provide similar guarantees to users.
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