We’re excited to put up for consideration, the next version of the dYdX Protocol: version 4.0. This upgrade introduces significant advancements including Order Book Features, Risk and Safety Improvements, and Cosmos-related Enhancements.
Introduction:
Hello dYdX Community,
We’re bringing to your attention the dYdX Protocol Upgrade v4.0, aiming to enhance platform functionality and security, pending a governance vote.
Specification:
Detailed information on the Protocol v4.0 features can be found in the draft release notes.
Key updates include:
Reduce-Only Orders - added support for Fill-Or-Kill (FOK) and Immediate-Or-Cancel (IOC) orders with a Reduce-Only option.
Conditional Order Improvements - enhancements in telemetry and triggering mechanisms for conditional orders.
IBC Withdrawal Rate Limiting - introducing rate limiting for asset withdrawals using a Continuous Token Bucket algorithm, with default limits for Noble USDC.
Subaccount Withdrawal Gating - blocking transfers and withdrawals for 50 blocks under certain conditions, enhancing network safety.
Community Enabled Slashing - a governance feature that allows community proposals to slash validators for misconduct. This would enable the MEV Slashing Committee to create a governance proposal to slash validators engaged in malicious MEV as proposed on DIP 3 “Launch Social Mitigation Strategy for MEV”.
Adding the x/authz Module - incorporating the x/authz module from cosmos-sdk into the protocol to enable granting privileges.
Cosmos SDK v0.50 - upgrades to Cosmos SDK v0.50.3, enabling new features such as optimistic execution and vote extensions.
Next Steps:
Feedback is welcome on this DRC. We recommend a community member with enough DYDX to submit an on-chain proposal for the upgrade, aiming for a block height sometime on the Monday following the dYdX Protocol v4 software release.
Resources:
For a comprehensive overview of the dYdX Protocol v4.0 upgrade, visit the GitHub release page.
This update is packed with multiple improvements ranging from security features, governance features and pure utility improvements to the product. We are also particularly excited to see the introduction of the authz module. It opens enormous capabilities but it also comes with a great load of risks for users. One particularly scary consequence is that phishing scams could trick users into signing SendAuthorization or even GenericAuthorization.
Regarding this context, we advise the @Foundation to jointly create a program destined to inform users about the impending dangers authz transaction can carry if inappropriately used. We have already invited wallet providers to create a special UI framework for these types of transactions in order to prevent users’ from signing them without proper context. In the meantime extreme caution is recommended.
Despite these additional security considerations, we fully support this v4.0 upgrade.
It is great to see the dYdX chain remain under heavy development after launching. Intruducing more professional and industry standard features are key to providing users with a CEX like experience.
The x/authz module is a welcome enhancement. Besides the staking applications that many validators would be excited for, the ability to delegate authority to a hot wallet for validator operations tasks greatly improves a validators ability to keep their operator keys offline in secure storage.
Kingnodes will be happy to submit the upgrade proposal and have the required dydx available. We would prefer to see more validator feedback on the upgrade and gain consensus regarding validator rediness for the upgrade.
Following the recent successful Testnet upgrade to dYdX Protocol 4.0, let’s discuss the action plan for rolling out the version in dydx-mainnet-1.
Here are some key points:
The latest dYdX Protocol 4.0 build (pre-release) can be found here.
Remote Signers: @Validators , for those of you who rely on Horcrux and tmkms, updating to the latest versions is required for operating the new binaries. They are currently in pre-release: Horcrux-v3.3 and tmkms-v0.14
We suggest the following plan:
Monitor for the official release of the updated remote signers (ETA: TBD).
A community member steps in to propose the dydx-mainnet-1 upgrade, optimally early in the week to allow ample time for community voting.
Aim for an upgrade execution the following Monday post-vote, contingent on the readiness of the remote signers.
Note: while unlikely to change, the above version of dYdX Protocol 4.0 is still a pre-release and may be subject to changes before an official release.
We’ll continue to keep you informed about updates on point 1 above and any further steps.
As other dependencies, are expected to follow shortly, we suggest those considering initiating the upgrade vote to aim for next Monday (given that all elements are in place soon enough to allow the community sufficient time to review).
We’re also awaiting the official release tag for dYdX Chain Protocol 4.0, currently in pre-release.
The dYdX Chain Protocol v4.0 has now been released.
Should the community decide to proceed with the dydx-mainnet-1 upgrade, we suggest targeting Monday, April 1st, for the launch of the upgrade proposal.
