[DRC] dYdX Chain Protocol v5.0.0 Software Upgrade

dYdX Chain
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TL;DR: (summary)
We would like to put up for consideration a software upgrade proposal to dYdX Chain Protocol v5.0.0 (release date TBA). This upgrade introduces new features including Isolated Markets, Batch Orders, and Liquidity Vaults, Risk and Safety Improvements, performance enhancements, and the Slinky price oracle provided by Skip.

Introduction:

Hello dYdX Community,

We are excited to highlight the dYdX Protocol v5.0.0, which includes Isolated Markets, Batch Orders, Liquidity Vaults, Risk and Safety Improvements, performance enhancements, and the Slinky price oracle provided by Skip. Note, the implementation of the v5.0.0 software is subject to a software upgrade governance proposal.

Specification:

Detailed information on the v5.0.0 features can be found in the pre-release notes.

Key updates include:

  • Isolated Markets - Allows for market-specific risk isolation, enhancing security and flexibility. Isolated markets are markets that have segregated pools of collateral and their own insurance fund. Each isolated market, then, has its own individual risk properties. This enables the protocol to more safely support a much greater range of market types. Traders will have the ability to confine collateral to a specific position, and manually adjust their collateral for that given position. This enables users to control and understand their collateral management more intuitively. Read more here.

  • Batch order cancellation - Enables users to cancel multiple short term orders (max 100) simultaneously, improving efficiency.

  • Protocol-enshrined LP Vault - The dYdX Chain open-source software v5.0.0 includes phase 1 of LP vaults, which will be available for testing purposes only. The end-state should involve the creation of LP vaults that aim to have zero net exposure on each market, and LP vaults should deterministically adjust their quoting strategies to attempt to get back to neutral positioning (zero open interest). Vault strategies should be fully defined on-chain, and have governance-controllable parameters, which can be used to adjust certain variables of the strategy. Read more here.

  • Oracle price through vote Extension/Slinky integration - Slinky is a key component of Permissionless Markets. Slinky is an enshrined oracle built for the highest-performance DeFi. It leverages chain security to provide guaranteed per-block price updates with millisecond refresh rates. For more info on Slinky and Skip please visit:

    1. Skip - Website
    2. Slinky - Docs

  • Signature Verification Parallelization - Improves processing speed by allowing parallel signature verification.

  • Soft Open Interest Cap - Introduces a soft cap on open interest to manage market risk effectively. This is done by scaling up the Initial Margin Fraction (IMF) after the open interest exceeds a configurable cap.

  • Full Node Streaming - Allows the full node to stream data directly to subscribers via GRPC without needing to go through indexer Websocket.

  • Order Rate Limits - Rate Limits for short term orders and cancels are combined to allow for burst placing of orders. Previously, rate limits were set to be 200 short term place orders over 1 block and 200 short term cancel orders over 1 block. Place and cancel order rates are now combined and moved to a 5-block window.

Next Steps:

dYdX Operations subDAO highly recommends all validators to run the Slinky sidecar before the upgrade!

NOTE: @Validators it is highly recommended that you update Slinky to v0.4.6 or newer!

The dYdX Operations subDAO currently cannot recommend a date for the mainnet upgrade proposal until validators, representing 66% of the voting power, run the Slinky sidecar and share metrics with us, allowing the engineering team to evaluate its correct operation.

We’ll follow up with a timeline recommendation in the comments under this DRC.

Resources:

Your active participation is key to the governance and continuous improvement of the dYdX platform. We look forward to your feedback and to advancing the dYdX Protocol together.

dYdX Operations SubDAO

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The dYdX developer teams have accomplished an incredible amount, making it seem as if the previous significant update just happened. We’ll touch on some main points of the update, based on feedback from our user community.

The ability to separate collateral allocation for each asset was frequently suggested by our users, as it enhances risk control for experienced traders. We’re excited that this feature will soon be available and we’ll immediately use it after the release.

This is also an essential piece of software to us, as speed of data feeds have posed certain limitation to the protocol matching capabilities in times of high volatility. We look forward to see the improvements in our daily trading activity.

On behalf of the PRO Delegators’ operating team, we are already prepared for the upgrade and will patiently wait for further announcements.

Thanks for reading,
Govmos
pro-delegators-sign

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Hello dYdX Community,

The dYdX Ops subDAO would like to announce the official release of the dYdX Chain Protocol v5.0.0. you can view the release notes here: dYdX Chain Protocol v5.0.0 Release Notes.

Additionally, according to the metrics collected by the dYdX Ops subDAO, the necessary 66% of the voting power represented by the validator running the Slinky sidcar has been reached.

With this milestone achieved, we would now like to suggest a timeline for proceeding with the vote proposal:

  • Proposal Submission: June 1st
  • Expected Vote Outcome: June 5th
  • Upgrade Date: June 6th

We have also been noticing potential volatility in the block times lately. Therefore, we recommend considering block height 17560000, which is expected to occur between 5 PM and 6 PM UTC.

We recommend a community member with enough unstaked DYDX to submit an on-chain proposal for the upgrade.

NOTE: Please make sure to include the required info-fields in the proposal.

Thank you for your continued participation and support in the governance and improvement of the dYdX Chain.

dYdX Operations SubDAO

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Happy Update dYdX Team ! :rocket:

Stake capital Team

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:trophy: dYdX Chain v5 live!
:pray: Huge thanks to the devs & validators involved!
:sunglasses: Bright days of building and activity ahead!

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