Crypto exchange dYdX has announced the launch of a public testnet for its V4 iteration, taking a significant step towards achieving full decentralization. As a decentralized exchange (DEX) built on Ethereum and StarkEx networks, dYdX eliminates the need for custody of users’ funds. However, its previous versions featured a centralized order book and matching engine, distinguishing it from fully automated market-maker DEXs like Uniswap.
In Version 4, dYdX aims to eliminate the centralized components by implementing an on-chain order book and matching engine. By running parts of the application on a separate dYdX network with its own validators, the new version will store the order book on-chain, ensuring greater decentralization without relying on automated market-making algorithms.
The recently launched testnet allows users to request testnet funds and explore the functionalities of the app, such as virtual trades and profit/loss tracking. While bridging from one network to another is not yet available during the testnet phase, it will be introduced over the course of the public testnet.
Following the completion of the testnet phase, the dYdX team plans to implement the final milestone of the roadmap. This milestone will integrate stablecoins into dYdX and also add support for Cosmos Inter-Blockchain Communication (IBC), allowing Cosmos users to access the application. The release of V4 is expected once this last milestone is achieved.
It is worth mentioning that dYdX faced regulatory challenges in Canada and subsequently decided to wind down its services in the country. In September 2022, the exchange attracted attention when it offered a $25 bonus to new users who could prove they were not bots, but the promotion was later abandoned due to privacy concerns.
dYdX’s progress towards a fully decentralized exchange with its V4 version highlights the ongoing evolution and exploration of blockchain technology and decentralized finance (DeFi). By removing centralized components and relying on on-chain solutions, dYdX aims to provide users with increased control and security over their assets while expanding its reach to new networks like Cosmos.