A Take on Good Practices for dYdX Chain Validators and Stakers

Blog Post


On 16 May 2023, dYdX Trading Inc. published a blog post about the technical architecture of the dYdX v4 open-source software – the “dYdX Chain.” The dYdX Chain will be a proof-of-stake blockchain network and, as such, if and when deployed on mainnet, Layer 1 (“L1”) protocol token holders will need to stake to one or more validators to secure the dYdX Chain. Validators will be key stakeholders of the dYdX Chain - they will be responsible for storing orders in an in-memory orderbook, gossipping transactions to other validators, and producing new blocks for the dYdX Chain through the consensus process, among other things.

As a proof-of-stake blockchain, dYdX Chain stakers (referred to as delegators in the Cosmos SDK documentation) would play an important role in determining the strength of the network by delegating the validation rights associated with their L1 protocol tokens to one or more validators and directly increasing those validators’ chances of entering or staying in the active set of validators who can participate in the network’s consensus process.

Further, validators are particularly important in the governance of the dYdX Chain because (1) only staked tokens can be used to vote and determine the outcome of governance proposals, and (2) a validator inherits the voting power associated with the number of L1 protocol tokens (1-1) that a given delegator has staked to the respective validator unless the delegator chooses to vote and override the validator’s vote with its own.

In furtherance of its mission to support and promote the dYdX ecosystem by enabling communities, developers, and decentralized governance, the dYdX Foundation is releasing a list of potential good practices for prospective validators of the dYdX Chain. This list aims to assist token holders in making informed decisions when selecting the validators to stake to and for validators to potentially increase the likelihood that dYdX Chain L1 token holders will stake to them.

Given the critical role that validators will play in the dYdX Chain (if and when mainnet is launched), we encourage the dYdX community to discuss and iterate on the list of potential best practices outlined below.

Some Good Practices for dYdX Chain Validators and Stakers

We have organized our list of potential good practices into six categories: MEV, performance, operations and security, transparency, governance participation, and dYdX ecosystem considerations.


  • dYdX Chain validators should not engage in MEV activities that could harm protocol users, community members, or advantage any trading parties over others.
  • dYdX Chain validators should provide a fair and honest trading experience for end users of the open-source software.
  • The dYdX community should leverage the Skip dYdX MEV Dashboard to introduce social measures to discourage MEV extraction.
  • We expect that the dYdX community will take steps to disincentivize and punish bad actors who engage in MEV activities. As such, a delegator should consider that they may be impacted if they are delegating to a validator engaging in MEV.


  • Validators should strive to keep mempools across the network more consistent to provide a better user experience for traders.
  • Validators should maintain a high and consistent uptime: dYdX Chain validators should ensure their node is online and actively participating in the consensus process.
  • Validators should keep their node software and dependencies up to date with the latest versions and security patches.
  • Validator’s commission:
    • Validators should clearly and transparently disclose their commission rate.
    • Validators should avoid erratic behavior and/or misleading practices concerning determining and disclosing their commission rate.
    • Delegators may want to choose validators with a sustainable commission rate. There are costs associated with maintaining a validator.
    • Validators should notify delegators, with advance notice, of any changes to the commission rate, allowing delegators ample time to redelegate if they choose to do so.

Operations and Security

  • Validator’s self-delegation: Validators with more dYdX Chain L1 tokens self-delegated have more skin in the game and may be more likely to operate in the best interest of their delegators.
  • Slashing: Validators should take necessary steps to minimize slashing risk by actively monitoring their nodes’ performance and staying informed about any conditions that could result in slashing.
  • It’s inadvisable to use “sentries” given increased latency, but instead opt for a threshold signer like TMKMS or Horcrux for redundant infrastructure.
  • Bare-metal setups (i.e., self-owned hardware) are always preferable to data centers, but if they are used, make sure they are high-quality.
  • Downtime Notice: Validators should provide their delegators with sufficient notice of any known or anticipated events that could result in downtime, so delegators can decide whether to unbond their delegation.
  • Validators should publish a Terms of Service for delegators.
  • Validators should ensure that their validator keys and password(s) are stored securely and backed up to server(s) in a separate location.
  • Signing keys should not be stored directly on the validator machine but signed via a remote signer like TMKMS (if not using Horcrux).
  • Validators should maintain a fully synchronized backup node separate from their primary validator node.
  • Validators should implement a system for monitoring node performance and alerting of critical issues. Some examples are Grafana, PANIC, and Tenderduty.
  • Validators should participate in dYdX Chain testnets and conduct test transactions before performing upgrades, where applicable.
  • Conflicts of interest: dYdX Chain Validators should disclose any conflicts of interest or potential biases that may impact their operations to delegators and the community.
  • Given potential conflicts of interest, including MEV, market makers and professional trading firms on the dYdX Chain should not run validators on the dYdX Chain.
  • Limited liability entity: Validators should consider operating their nodes through a legal entity that provides limited liability protection.
  • Validator’s compliance with applicable laws: Validators of the dYdX Chain should ensure that their operations comply with applicable laws, rules, and regulations. Delegators should consider the location of a given validator before staking to such validator.

Governance Participation

  • Validators should use their best efforts to participate in governance votes.
  • Validators should independently assess and critically analyze governance proposals to understand if the proposal benefits the ecosystem.
  • Validators should publish decision-making criteria for governance participation (ideally in advance) to allow delegators to make informed governance decisions.
  • Validators should vote in line with the best interests of the protocol and the ecosystem.


  • Validators should engage with the dYdX Community by introducing themselves on the forums using the community template and maintaining the accuracy of that information.
  • Validators should ensure reliable contact methods are available to delegators and the community.
  • Validators should communicate the rationale behind governance and other key decisions to their delegators and the community (ideally in advance, when possible).
  • Validators should be accessible (within reason) to the community to receive feedback, answer questions, respond to comments, and discuss issues.
  • Validators may choose to be transparent about their operations and provide regular updates to their delegators. This includes publishing information about geographic location, redundancy, physical security, node performance, uptime, and rewards distribution, among other things, and full disclosure of the total number of validators operated and the total stake controlled by them.
  • Validators that experience any issue(s) that could likely result in a delegator deciding to unbond their tokens should publish a status report that details the issue and provides steps to mitigate future occurrences.

Ecosystem Considerations

  • Decentralization:
    • Nakamoto coefficient: Delegators should consider the Nakamoto Coefficient of the dYdX Chain (if and when deployed on mainnet) when delegating to a given validator. The community may choose to stake their tokens to validators that contribute to a higher Nakamoto coefficient, thus promoting the decentralization and security of the dYdX Chain.
    • Geographic distribution: Distributing validator nodes across multiple regions may increase the network’s overall decentralization and resiliency.
  • Contributions to the ecosystem: Delegators should take account of the contributions that a given validator makes to the ecosystem, including but not limited to tooling, educational material, governance participation, block explorers, threat identification, and upgrades.
  • Delegators may want to consider which validators are running IBC relay operations.


The potential launch of the dYdX Chain could mark a significant stride in the evolution of decentralized finance. As the dYdX community embarks on this journey, aligning on potential good practices for validators could be important in guiding responsible participation and decision-making within the dYdX Chain ecosystem. This blog post aims to foster a collaborative and open dialogue around potential good practices for dYdX Chain validators. Given the critical role that validators will play in the dYdX Chain (if and when deployed on mainnet), we encourage the dYdX community to discuss and iterate on the list of potential good practices for validators and stakers in the dYdX Chain.


This is really great. I wish more Cosmos chains had lists like this (though many of these things are now relatively understood as best practices for validators).

One note: it might be good to add a section about upgrade coordination (this could be added to the Operations and Security section). This has the potential to be a significant pain point, especially for consensus-breaking upgrades that may result in prolonged chain downtimes. Having a well-coordinated and prepared valset for the upgrade will cut down on downtimes.

I’m not sure where upgrade coordination will occur, but let’s assume discord for the purposes of this post. A few additions could be:

  • Validators are expected to regularly check dYdX social channels, including discord, for news regarding upcoming chain upgrades.
  • Validators should be present in the insert upgrade coordination channel name here channel in discord up to 30 minutes prior to any anticipated upgrade times to coordinate upgrading their nodes.
  • Validators are expected to promptly upgrade to the latest dYdX binaries when they become available
  • If validators are having trouble upgrading to the latest binary, they may ask dYdX contributors or other validators in the insert upgrade coordination channel name here in discord.

This is a great post so will require a bit of a long reply (bear with me :slightly_smiling_face:). To give you some context about our response, Architect Nodes run validator services (both self owned/self hosted as well as rented bare metal single tenancy servers with remote signer backed by YubiHSM) in Cosmos for almost last 2 years with significant public goods infrastructure including Public API/RPC/grpc and relayers between 22 Cosmos chains. So basically we run a bunch of nodes and deal with infrastructure/performance/security considerations on a regular basis.

Now let’s break different aspects of validation:


  • Validators should maintain a high and consistent uptime: it’s great to aspire for maximum uptime given current hardware and technology limitations but uptime is highly dependent on block times and geographical distribution of validator nodes. In the end, safety of validator shouldn’t be compromised for the sake of higher uptime. Using unsafe practices like hosting validators in multi tenancy environments to maintain higher uptime should be discouraged.

Operations and Security

  • Node monitoring and alerting is most critical aspect of validation. Anyone can run a node, but it requires quite a bit of time and skill to setup robust monitoring and alerting. I would encourage validators to add redundancy in their monitoring by using Tenderduty/Panic (we use tenderduty) and also export metrics to external timeseries databases like Prometheus. Using external metric collection like Prometheus allows you to build redundant alerts similar to tenderduty in case tenderduty decides to not flag for issues.
  • Monitoring should be for both hardware (Node Exporter) as well as validator node.
  • Remote signers are extremely helpful by separating data from state of application (avoids double sign in case of botched up upgrade) as well as providing flexibility to migrate signing to backup nodes. These should be used whenever/wherever you can. Around Horcrux, it’s a cool technology but in our experience, we haven’t found a compelling argument to use Horcrux considering 100% uptime is not the end goal. Consensus design allows for some down time (and yes everyone should take downtime for maintenance, servers need security updates, disk will fill at some time) so no point chasing last .01% of uptime. Use Horcrux if you have done enough testing and are very very comfortable with implementation.
  • Bare metal/Self hosted validation discussion is an age old discussion and in our experience, most of the community don’t care (delegators/chains) with the exception of few techies in the ecosystem. This is very sad. We believe self owned and self hosted hardware is best way to validate but it comes at a tremendous cost/effort and requires quite a bit of skill. We encourage chains like dYdX to evaluate validators based on this criteria, and encourage self hosted validators in both testnet and mainnet. Prioritize selection of self hosted validators and provide them incentives to encourage Bare Metal setup. Change has to start from somewhere :stuck_out_tongue_winking_eye:
  • Backup nodes are important and comes at a cost. Using remote signer, back up nodes can allow for expedited recovery. Should be encouraged but how are validators going to pay for all this infrastructure if there is not enough incentive?

Ecosystem Considerations

  • Decentralization is tricky and current environment/protocol is not optimized for it. We need better frontends to allow for good distribution of stake. However, when you consider other points made earlier, it is possible to improve decentralization while maintaining high standards of security and safety. Geographical distribution is good, but comes at the cost of latency. Your business case should consider practical limitation of technology and come up with a reasonable setup required from validator’s perspective. You can’t have 300ms block times with 50 validators spread across globe with 100% availability :smile:
  • IBC relaying: Probably most overlooked topic in Cosmos that i can think of. Relaying is a public good at this time, where validators spend time and money to maintain multiple chains to move packets and pay fees out of pocket. In reality, most relayers are running it as public good including our team and there is no way we can justify running relayers for over 20 cosmos chains from financial and effort perspective. Maintaining relayers takes 10 times more effort from maintenance perspective as compared to validator node. So yeah, incentivize relayers and include them in your testnet and mainnet with good delegation so they can at least get even. You don’t want to know how many times we see chains asking relayer support on new channels. Not sure why they didn’t consider relayer operators in their genesis so entirely their fault :man_shrugging:

Great to hear that you are putting a lot of effort into that. Glad that I met all the team and I’m not worrying about things can go wrong here,
As you know what and how to do.

Regarding the options which were mentioned, totally agree.

About where the update announcements can be done there is a big variety: discord(but should be special channel and every validator should have a role to get notifications), telegram, element, slack etc.


It’s great to see that the @dYdXFoundation is taking a proactive approach to promote responsible participation and decision-making within their network!

The F5 Nodes team would be happy to add our best practices to this list, which we use to successfully and efficiently support our validators across 30+ networks, with a strong emphasis on the Cosmos Interchain ecosystem.

Let’s get into it:


– Isolate your validator’s resources, such as CPU cores / memory, to prevent interference from other processes running on the same machine;
– Pruning older or unnecessary data to manage data storage efficiently;
– Prioritizing validator traffic over non-critical traffic within your network infrastructure. This way, your validator will not be negatively affected by other network activities.

– Validator’s commission:

  1. Tiered commission rates based on the amount of delegation. Larger delegations = lower commission. This can attract larger stakers and incentivize them to delegate more tokens to your validator. Win-win strategy which our team practices.
  2. Engagement with the delegator community to gather feedback on commission rates and changes. Besides that, offer educational resources that help delegators understand the significance of commission rates and their impact on the network’s overall health. This could be a blog on the validator’s website or organisation of AMA sessions / Twitter spaces, etc.
  3. Additional rewards for delegators who commit to longer delegation periods.

And the most important part of validator performance is collaborating with other validators to share performance tuning strategies, discuss bugs/fixes, and work together to optimise the performance of the entire network.

Operations and Security

– Strong encryption for sensitive data at rest and in transit. Our team uses AES or Triple DES algorithms to protect our data confidentiality;
– Using MFA to access critical systems/data/accounts/backups;
– Using a combination of cold and hot keys for added security;
– A clear and actionable emergency response plan that outlines steps to take in case of critical failures, security breaches, or network attacks. For example, data centre faults;
– DDoS Protection. On the Cosmos Hub, a validator node can be attacked using the DDoS method. We use sentry nodes to prevent this. Read this post on Cosmos Hub Forum.

Governance Participation

– Validators should participate in governance discussions on the dYdX forums and contribute to the decision-making process. As well as take an active part in the life of the network and communicate with the dYdX team and delegators in making governance decisions.

Ecosystem Considerations

– Providing regular updates by validators with ongoing contributions, such as tooling enhancements, educational content or any other useful resources/tools. That will keep delegators and the community informed about your progress;
– Stakeholder Engagement, such as dedicated channels to provide feedback and suggestions (monthly/quarterly collection of information through a google form, for example), AMAs / Twitter spaces, etc.

We hope that our practices will serve as a valuable resource for validators, stakers and the entire dYdX community! #KeepBuilding

Best Regards,

F5 Nodes


(DISCLAIMER: I am replying as an utter noob here. My background is in general IT/coding and day-trading. I only recently started following blockchain-tech in depth for which I chose to dive deeper into the ATOM ecosystem and especially dYdX v4.)

In true decentralised fashion, I would expect there to be some kind of message system (a red telephone) for the truly important stuff (like software/node-updates). This message system should run on-chain by itself with historically reliable time-stamps and messages signed by known wallets. It should not depend on some out-of-band service like Discord or Telegram. Sure there can be pointers to more information and chat-channels for coördination (similar to how voting is now done?) but I think the fundamental information should at least be in these on-chain priority-messages. Taking into account @architectnodes comment about how monitoring and alerting are an undervalued aspect of running a reliable node, this message system should probably be part of such an entire operation.

I just can’t imagine a node validator having to scroll through heaps of Telegram/Discord-notifications for the extremely crucial stuff but maybe that’s just me?

Just my 2 cents. Thanks to everyone building this amazing new infrastructure of the future!


Hello! Chainflow here, it’s good to see the dYdX Foundation be proactive regarding things like this. Here’s our feedback:


  • Validator commission: It’s essential to communicate to delegators with ample time prior to changing the commission rate so they can appropriately decide if they would like to undelegate or leave their stake alone

  • Validator commission: When referring to a sustainable commission rate is it agreed upon that 0% is NOT sustainable?

Operations and security

  • Self Delegation: We feel that this needs a closer look. You can attempt to compare self-bonded stake percentage-wise but the affects are more profound and felt more by smaller validators not receiving funding from large institutions. Validators with access to large amounts of capital and funding from institutions can appear to have self-bonded a lot more with more skin in the game but they are actually not taking as much risk as smaller validators. See The Skin In The Game Staking Paradox for more information.

  • Bare-metal setup: What does a high-quality bare-metal setup look like for dYdX including specs and outcomes?

  • Key management: We think it’s important to mention storage options that are not online, but if keys are securely stored online then these modes should be encrypted.

  • Remote signers: Some people feel like these remote signers introduce risk, suggestions on how to mitigate that?

  • Alerting: Cosmos mission control(GitHub - Chainflow/cosmos-validator-mission-control: Cosmos validator mission control monitoring and alerting tool.) is another tool that can be used.


  • Publishing decision-making criteria: If it needs to be “ideally in advance,” what does the timeline look like? We believe it requires a reasonable discussion period and voting timeline, at least 7 days, 10-14 better.

  • More standardized governance tooling will make the process easier overall

Ecosystem Considerations

Overall we are excited to see how things develop! Great read.


Greetings, dYdX community!

QuantNode team here, and we are delighted to participate in this instrumental for the upcoming network launch discussion.

I would like to add some fresh ideas and suggestions to the excellent comments made by other validators, such as @architectnodes and @Othman-Chainflow.


  • Performance is crucial, and a simple but effective rule is to have only one validation node per dedicated server. Attempting to optimize and accommodate multiple nodes on a single machine is unnecessary, particularly for mainnet infrastructure.

  • Regarding the commission, the Cosmos SDK offers perfect parameters for validation nodes’ Max Rate & Max Change Rate, allowing validators to create a more predictable and sustainable commission policy for their delegators.

  • Regarding upgrades, creating a straightforward protocol for initiating planned network upgrade voting is essential. It is not recommended to schedule these upgrades on Fridays or weekends, as it increases the risk of prolonged chain downtime during an update and overtime work for both the dYdX dev team and validator teams due to unforeseen problems with new network versions.

Operations and Security

  • Clear and comprehensive documentation, the creation of which should take place with the involvement of validators.

  • Great point about MEV and addition about conflict of interest, because many large current DYDX shareholders are involved in trading in one form or another.

As previously stated, it is not recommended for large trading firms to operate their own validators due to potential conflicts of interest. Therefore, Wintermute Trading, Cumberland, CMS, and Sigil must delegate their tokens and voting powers to other validators. The most common option for them is to delegate to tier-1 validation brands such as Figment, P2P, Finoa, Google Cloud, etc. However, this may result in a decrease in the Nakamoto coefficient and lead to greater network consolidation, ultimately reducing its stability and fault tolerance.

One option to avoid this potential issue is to establish a transparent and efficient delegation program for the Foundation. This would enable the ecosystem to attract more medium-sized independent validators who can offer high-quality services equal to those of large companies. Additionally, the program can be used as a reference point for large shareholders when making decisions regarding delegations.

Implementing a quality delegation program can have a positive impact on the network and leads to:

  • Further decentralize the Network (distribute stake more evenly across validators, countries, ISPs) and make the network more robust.
  • Improve ecosystem documentation, connectivity, tooling, and support by encouraging validator ecosystem contributions.
  • Improve the testnet environment setup and validators’ participation.
  • Reducing regulatory risk through balanced capital distribution across the network promotes validators’ independence and inclusivity.

We think that the recent delegation program launched by the Persistence Foundation is an excellent example of success. You can check out the goals they’ve accomplished in this Twitter thread.

I would appreciate receiving feedback from the community regarding this. Let’s collaborate and create the ultimate trading app chain for everyone together :vulcan_salute:


Hi dYdX community, David from Crosnest talking
It’s great to read that the dYdX foundation is putting a lot of effort into the security and decentralization of the protocol.
As a validator team operating on over 45 chains, we want to provide some feedback about these good-practices.


  • Validator uptime: Validators play a crucial role in the blockchain ecosystem by ensuring the smooth operation of the network. Their primary responsibilities include verifying transactions and endorsing blocks, all in an effort to maintain the blockchain in its optimal state. To fulfill these duties effectively, validators are required to consistently update both their hardware and software infrastructure while also ensuring accurate monitoring procedures are in place. This diligent monitoring helps to uphold the integrity and reliability of the blockchain network.

  • Validator commission:
    Delegators should be thoroughly educated about the commissions imposed by validators.

    • These commissions must align with the operational expenses associated with maintaining the blockchain. It’s important to avoid unsustainable 0% commission rates, but simply enforcing a minimum commission does not address the underlying issue.
    • In the event a validator decides to alter its commission rate, best practice dictates that they communicate this change to their delegators. This transparency enables delegators to make informed decisions and potentially redelegate if they disagree with the new rate.

Operations and security

  • Self delegation: We agree with the fact that self-delegation represents the skin in the game a validator has. Self-delegation will however depend on the financial ressources a validator has.
    We recognize a strong difference between a validator with only one self-delegated token and another with hundreds of tokens bought from the market to bond itself.
    We want to join our voices to @Othman-Chainflow about the “The Skin In The Game Staking Paradox”.

  • Hardware and hosting: Running a validator on dedicated hardware is a no brainer decision. Most of the VPS providers are over provisioning and do not give any warranty about performance.

    • Self-owned hardware is not a warranty of better operation, hardware is expensive and needs to be redundant to keep reliable operations.
    • Home hosting is even worse because of the lack of redundancy in infrastructure and the time it takes to repair.
  • Security: The non-usage of sentries is possible with the usage of remote signers and redundant front nodes. Because of the exposure of the validator node public IP to the network, this statement is only true if the remote signer is on a remote machine without public IP.
    All these precautions are useless without strong firewall rules and intrusion detections.

Ecosystem Considerations

  • Decentralization:
    The real meaning of “Delegated Proof of Stake” is too often forgotten in favor of money making.
    Delegating needs to reestablish its real meaning of “proof of confidence”.
    Too many people are only selecting validators based on their influence and the idea that bigger is better.
    This lead a network driven by non-technical validators asking how to operate and to delegator loss because of slashing.
    • Nakamoto coefficient: This represents the voting power decentralization, This coefficient is highly impacted by a validator’s user interface and influence. A well chosen validator interface can be a game-changer in decentralization. What is a good Nakamoto coefficient according to dYdX?
    • Geographic distribution: This comes in pair with the “Operation and security” paragraph. Crosnest is using multiple ISPs and operates from different countries to self-distribute its infrastructure. This comes with a cost that not all validators can assume.


The selection of the genesis validators is a first step in the right direction. An active set needs to contain validators with the right qualifications and with different specialities.
An active set, however, is constantly changing. New actors are joining while others are leaving.
We are aware that the dYdX foundation is not committed to keeping validators active.
Delegations from the foundation are often considered a necessity. We believe that these delegations should not be systematic. Even if the active Genesis set will necessarily have a certain power, without effort towards its community, it should not be saved by foundation delegation.


Feedback and Additional Suggestions from an External Validator’s Perspective @ Nocturnal Labs

Hey dYdX Team and community,

Just had a deep dive into the proposed best practices for dYdX Chain validators. Seriously impressive stuff, folks! :clap: The attention to detail is top-notch. As an external validator who’s been on a couple of other networks, I’ve picked up a thing or two along the way. Thought it might be cool to share some feedback and maybe toss in a few suggestions from our side. Ready to dive in with me?

MEV (Miner/Maximal Extractable Value):

  • Feedback: The dYdX’s meticulous approach towards addressing MEV is indicative of its commitment to ensuring an equitable trading environment. MEV has been a challenge in several blockchain platforms, leading to market inefficiencies. dYdX’s clear stance against MEV extraction stands out and builds trust among its users.

  • Suggestion: For further reinforcement:

MEV Monitoring Software: Validators should integrate tools that identify typical MEV activities, such as transaction reordering or sandwich attacks.

Stakeholder Communication: Any MEV incident should be transparently communicated to stakeholders, outlining the nature of the incident and corrective actions taken.

Educational Initiatives: Validators could produce brief educational content to enlighten dYdX users about MEV and its implications.

These streamlined measures emphasize validators’ proactive stance and commitment to the dYdX ecosystem’s integrity.


Feedback: Performance is the backbone of any blockchain network, and dYdX’s emphasis on consistent mempool management and node uptime mirrors its dedication to seamless operations. The significance of maintaining a synchronized mempool cannot be overstated, as it directly impacts transaction processing speeds and overall network reliability. Similarly, node uptime directly correlates with network availability, affecting every user and transaction on the dYdX chain.


  • Validator Rating System: Building upon the foundation of emphasizing performance, dYdX might consider introducing a sophisticated validator rating system. This system could work on multi-faceted metrics:
    • Mempool Synchronization: Validators can be scored based on how consistently their mempool mirrors the majority or the prescribed state, ensuring transaction consistency across the network.
    • Node Uptime: A continuous tracking mechanism can monitor node uptimes, giving higher scores to validators that maintain near-perfect or perfect uptimes.
    • Update & Patch Adherence: Validators should also be rated on how swiftly they adopt recommended updates and security patches. Delayed adoption can be a potential vulnerability, and thus, a metric in this domain can further solidify network security.
    • Response Time: The speed at which validators respond to network anomalies or disruptions can also be a crucial metric. Quick response times can mitigate potential damages and ensure network resilience.
    • Transparent Reporting: All these metrics can be made transparent and accessible to the community. A dashboard displaying real-time ratings and historical performance data can empower token holders to make informed staking decisions.

By implementing such a rating system, validators receive a clear performance benchmark, while delegators get a transparent, quantified perspective of each validator’s operational efficiency. This fosters competition among validators to maintain peak performance and strengthens trust within the dYdX community.

Operations and Security:

  • Feedback: dYdX’s focus on self-delegation showcases the importance of validator commitment to the network’s stability. Backup protocols enhance resilience against unforeseen disruptions. Additionally, insisting on conflict of interest disclosures sets a clear standard for transparency and ethical operations within the ecosystem.

  • Suggestion: To further secure the network, dYdX could mandate routine third-party security audits for validators. These audits provide an unbiased assessment of security measures and can identify overlooked vulnerabilities. Alongside this, regular stress tests will ensure validators can handle high-load situations and potential threats, fortifying the dYdX Chain’s overall security posture.

Governance Participation:

  • Feedback: dYdX’s initiative of having validators publish their decision-making criteria for governance is a commendable step towards achieving unparalleled transparency. This practice not only aids delegators in understanding the reasoning behind validators’ choices but also elevates the platform’s credibility by shedding light on the decision-making process. Such transparent practices make it easier for the community to trust and engage with the network’s governance mechanisms actively.

  • Suggestion: Building on this foundation of transparency, it might be advantageous for dYdX to establish regular community meetings, either virtually or in-person. These sessions could serve as a platform for validators to engage directly with the community, discussing current challenges, potential solutions, and forthcoming governance decisions. Such interactive forums foster a sense of community and mutual respect, creating an environment where concerns are addressed in real-time, and feedback loops are significantly shortened. Over time, these meetings can evolve into essential touchpoints that further consolidate trust and collaboration within the dYdX ecosystem.


  • Feedback: Engagement and regular interaction with the dYdX community stand as pillars of a thriving and transparent ecosystem. Validators’ active involvement not only cements the trust of the community but also provides an avenue for collaborative problem-solving. By openly discussing challenges and celebrating achievements, the community can better understand the intricacies of validator operations and the broader network dynamics.

  • Suggestion: To amplify this transparent approach, it might be beneficial to introduce a dedicated platform or dashboard specifically tailored for validator interactions. This hub could present real-time metrics related to validator performance, governance decisions, staking data, and more. Validators could share regular updates, ensuring the community stays informed about any maintenance downtimes, software upgrades, or pertinent events. This could be further enriched with interactive features, allowing for Q&A sessions, community polls, or feedback collection.

As an extension of this idea, considering the popularity and accessibility of Discord for crypto communities, dedicated Discord channels could be set up within the current dYdX server. These channels can be segmented based on topics like governance, staking, network updates, and more. With proper moderation and structured engagement schedules, such as monthly AMA (Ask Me Anything) sessions, the community can have a consistent, clear, and immediate line of communication with their validators. This interactive space would be about sharing information and fostering a sense of belonging and partnership between validators and the dYdX community.

Ecosystem Considerations:

  • Feedback: True decentralization is anchored in diverse participant distribution and robust network resiliency. The emphasis on the Nakamoto Coefficient underscores the network’s commitment to reducing centralized power, ensuring that no single entity can compromise the system’s integrity. Furthermore, promoting geographic distribution for validators is an insightful move, ensuring that the network remains resilient against localized disruptions and broadens its reach across various communities globally.

  • Suggestion: While the principles of decentralization are clear, an added incentive for validators could significantly enhance the network’s value proposition. Consider launching a concise reward program for validators who actively contribute to the ecosystem, be it through tool development, educational outreach, or community engagement. This not only motivates validators to add more value but also fosters a proactive, collaborative environment within the dYdX community.

Additional Considerations:

  • Continuous Learning: In the swiftly changing environment of decentralized finance, it’s essential for validators to stay ahead of the curve. Validators must be aware of emerging threats, trends, and technological advancements to maintain the network’s resilience and efficiency. To support this, dYdX could initiate regular training sessions, workshops, or webinars. These educational platforms would delve into the latest research, threat mitigation strategies, and technological innovations, ensuring that validators are equipped with knowledge that reflects the latest industry standards. Collaborative learning, wherein validators share their insights and experiences, can also be integrated into these sessions, promoting peer-to-peer learning.

  • Emergency Protocols: A decentralized network’s strength is often tested during crises. Whether it’s an unexpected network anomaly, a security breach, or an aggressive attack, validators must be ready to respond efficiently. While individual validators might have their protocols, a universal emergency response blueprint provided by dYdX would ensure cohesive action during times of stress. This protocol should detail immediate steps, communication channels, and contingency plans. Having such a guide can reduce the response time, ensuring that issues are addressed promptly and collaboratively, minimizing potential damage.

  • Community Engagement: While technical robustness is crucial, the true strength of a decentralized ecosystem lies in its community. Validators, apart from their primary responsibilities, should also immerse themselves in the broader dYdX community activities. By actively participating in forums, discussions, and community-led projects, validators can gain a holistic understanding of the network’s user base and their needs. This not only fosters trust and camaraderie within the community but also provides validators with diverse perspectives, leading to well-rounded decision-making in their governance roles. Encouraging this could be through community recognition programs or even informal meetups to bolster a sense of community.

Concluding, while the dYdX team has made commendable strides, these suggestions offer avenues to refine validator practices further. Addressing MEV, implementing a validator rating system, bolstering security protocols, and enhancing community engagement are pivotal steps. By embracing these recommendations, dYdX can not only solidify its infrastructure but also set an industry benchmark for validator excellence.

Hey dYdX community!

I’m Max from the MMS team

I read the post and realized that perhaps no one has so clearly described a useful experience and communicated it to the masses, I absolutely agree with what is written above and want to add my opinion about IBC relayers.

As written above - at the moment validators get nothing for it, I think Archway did a very good thing when they selected a few validators for each chain they want to communicate with and provided fee-grant for the selected wallets, thus providing their network with reliable relays and satisfied validators.

This is a very important aspect in the Cosmos ecosystem and for some reason everyone forgets about it. I really hope the dYdX team takes care of this point and doesn’t miss it!

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I think that will happen with all or most networks. Agoric was asking if they can pay monthly fee or per usage of IBC relayers in their last form. That means they are looking in the same direction

Why wouldn’t they try and leverage the ICS29 spec? https://github.com/cosmos/ibc/pull/581

Most of the big wigs that currently exist won’t support it until channel upgradability is live which won’t be until v9.0.0 of IBC. https://github.com/cosmos/ibc-go/blob/main/docs/docs/01-ibc/09-roadmap.md#v900

The reason they are waiting is because their mainnet is live and to implement it now would mean creating a completely new channel. Whereas with the current state of dYdX mainnet it isn’t live yet so implementing it out of the gates would be “easy” or should I say “easier”

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dYdX will not have a lot of use of the IBC layer.
The “only” channel I can see for now is the USDC one with Noble.

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This blog post provides some essential guidance for validators and stakers within the dYdX Chain community. Validators are like the guardians of the network, responsible for its operation and security. They should act ethically, ensure their nodes are always online, be transparent about their commission rates, and prioritize security.

For those of us considering staking our tokens, it’s crucial to pick validators carefully. Validators who self-delegate their tokens have a greater stake in the network’s success, making them a more reliable choice. We should also be aware of the risks involved in slashing and choose validators who actively manage these risks.

Security is a big concern in the blockchain world, and this post rightly emphasizes the importance of securely storing keys and maintaining backups. Redundancy and monitoring are critical for safeguarding our investments.

Lastly, the post touches on conflicts of interest and legal compliance. Validators should be upfront about any potential conflicts, and they might consider operating through a legal entity for added protection. And, of course, we should ensure our chosen validators comply with applicable laws.

In a nutshell, these guidelines are like a roadmap to help us navigate the dYdX Chain ecosystem wisely. They promote fairness, transparency, and security, ensuring that we can make informed decisions as active participants in this exciting blockchain network.