Review on IBC Withdrawal Rate-Limiting Mechanism

dYdX Chain
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Following the recent AMA session on Discord, I wanted to revisit a concern I previously raised regarding the proposed withdrawal limits on our platform. As many of you know, the current proposal sets withdrawal caps at a maximum of either 1% of Total Value Locked (TVL) or $1 million per hour, and 10% of TVL or $10 million per day. These limits are designed to protect the platform and its users from potential security threats and ensure stability.

However, I believe these limits might be restrictive, particularly for high-volume traders and in times of market volatility. For example, in scenarios where dYdX processes around $1 billion daily, a $10 million daily withdrawal cap represents just 1% of daily turnover, potentially limiting users’ ability to respond to market conditions swiftly.

I had raised this issue during the last Discord AMA, and I understand a recording of the session was to be made available. Unfortunately, I have not been able to locate this video. Could anyone please provide a link to the session, or if a recording is not available, could we discuss the points covered, especially concerning withdrawal limits?

Moreover, I invite all community members to share their thoughts on how we might adjust these limits to better accommodate user needs while maintaining the integrity and security of the platform.

To resolve this concern, I suggest a more customized approach to setting withdrawal limits. Specifically, users should be permitted to withdraw an amount equal to their initial deposit without any constraints, aligning with the norms of centralized exchanges. Any profits earned beyond the initial deposit could continue to be regulated by the existing withdrawal limits to bolster security e.g. If i deposited $10 Million, i must be allowed to withdraw $10 Million, without any kind of restrictions or limits.

This proposed modification would honor the original funds that users have entrusted to the platform, granting them increased autonomy over their assets while still upholding strong protective measures against potential abuse.

Your feedback is invaluable, and I look forward to engaging in a constructive dialogue to refine our approach and ensure it aligns with the needs of our diverse user base.

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That is a good starting point.

If the protocol is attacked, it is likely coming from an account with little to none skin in the game, and thereby the amount to be withdrawn could be also very small to none. (unless the protocol can be fooled on the deposit history as well ofcourse)

Also withdrawal limits relative to the staked DYDX amount could be a route of interest, since it would require that large players also have significant amount of DYDX staked to profit from more extensive withdrawal limits. That would also make the need for staked DYDX bigger, which is good for the chain security as well.