DYDX Version 4: all we know so far - Updated July 2023

Greetings, dYdX Community :hedgehog:!

Why keep resources in a private notes, when they can come handy to others?
Here’s my index on making sense of what has been happening with v4:

  • The journey started with the blogpost, announcing the vision for a fully decentralised DYDX, which includes decentralising the matching engine, order book and fee distribution.

  • Next came announcing that v4 will be an app chain based on Cosmos SDK and will utilise Tendermint PoS consensus.

  • Less than a month later, Antonio joined an AMA to shed light on the v4 product features, governance, Android app, and plans for dYdX Trading.

  • The v4 Roadmap was split in 5 milestones

    1. Dev testnet
    2. Internal testnet
    3. Private (permissioned) testnet
    4. Public testnet
    5. Mainnet
  • Reaching Milestone 2 meant that all basic functionalities for running an exchange had been implemented: Trading Fees, Liquidations, Oracle Price Updates, Static Funding Rates, Token Transfers, Indexing and API Service, along with the necessary tooling to operate the nodes.

  • Milestone 3 was scheduled to deliver Advanced Order Types, Dynamic Funding Rates, Key-Permissioning & Access Management, and last but not least Web Trading Interface. And so it did.
    The blogpost also shed some light on the plans to open source, and give a high level overview on the components of v4: Full Nodes, Validators, Indexers, Frontends (iOS, Android, Web)

  • More detailed overview on the architecture of v4 was published few months later.
    This is also when we got insight on what the order lifecycle will look like.

  • Several deep-dives followed:

    • Indexer - describing the symphony of services that constitute the Indexer bundle
    • Front-end - with additional details on how to deploy the web version with IPFS, web3.storage and Cloudflare.
    • Governance - disclosing that dYdX v4 is being developed to utilise Cosmos’ x/gov and giving clarity on which aspects of governance will be on-chain and which off-chain upon reaching Milestone 5.
  • We got to Milestone 4 - the launch of dYdX v4 Public Testnet with all key exchange features implemented, along with a faucet.
    A cornerstone - the users can experience v4 Public Testnet for the first time:

  • The v4 Testnet documentation is also public, with highlights on:

  • What’s pending:

Finally, some additional readings on v4

  • The MEV strategy - the vision is to aligns a validator’s incentives with a user’s incentives so that dYdX users are protected from harmful MEV
  • More on Decentralisation and why it matters - helpful read for understanding the benefits and trader-offs of decentralised systems

I intend to update this post as v4 progresses and grows, so feel encouraged to provide feedback, ideas and additional resources in the comments :rocket:


@dimitar, I look forward to your regular updates.
We bookmarked the article :bookmark:.
Thank you very much.