DRC: Migration solution for ERC-20 DYDX holders

Proposals
103

[DRC Proposal] Simple Burn‑and‑Airdrop Migration for ERC‑20 DYDX Holders

Summary: The shutdown of the wethDYDX Bridge has left many ERC‑20 DYDX holders stranded, with no liquidity and no migration path. Rebuilding or extending the bridge is costly and politically contentious. Instead, we propose a simple, low‑cost, community‑driven burn‑and‑airdrop mechanism that restores fairness without technical complexity.

:puzzle_piece: How It Works

  1. Burn Phase

    • Users send ERC‑20 DYDX to a designated burn address on Ethereum (e.g., 0x000...dead).

    • This ensures tokens are permanently removed from circulation.

  2. Claim Form

    • Users fill out a simple online form with:

      • Their Ethereum address (used for the burn).

      • Their Cosmos (dYdX Chain) address to receive new tokens.

  3. Verification

    • A lightweight script or indexer checks Ethereum transactions to confirm the burn.

    • The Ethereum address is matched with the Cosmos address submitted in the form.

  4. Airdrop Distribution

    • Validators or a community‑approved operator send equivalent DYDX on the dYdX Chain (1:1 ratio).

    • Distribution can be done in batches (e.g., weekly) to reduce operational load.

:white_check_mark: Benefits

  • Low cost: No need to rebuild or maintain a bridge.

  • Simple for users: Just send tokens and fill out a form.

  • Transparent: All burns are visible on Ethereum; all airdrops are visible on Cosmos.

  • Fair: 1:1 migration preserves value for legacy holders.

  • Community‑driven: Can be implemented with minimal Foundation involvement, respecting governance principles.

:warning: Considerations

  • Address validation: The form must check Cosmos addresses (Bech32 format) to avoid mistakes.

  • User responsibility: If a wrong Cosmos address is entered, tokens may be lost. Clear warnings are needed.

  • Governance approval: Minting on dYdX Chain requires validator and community approval.@dYdXFoundation