A major DEX exchange is leaving the Ethereum network. The altcoin project will gain a number of advantages by doing this. Here is the separation decision, which closely concerns Ethereum…
Leading altcoin loses dYdX platform to Cosmos
Last week, crypto derivatives exchange dYdX announced that it would be leaving the Ethereum ecosystem. The popular DEX platform will launch its own Blockchain in the Cosmos ecosystem in the coming periods. According to the founder of DYdX, the new Blockchain will enable the platform to provide the best possible experience to its users. The new Blockchain will also replace dYdX’s existing platform built on StarkWare, which uses ZK-aggregation technology to allow fast and inexpensive transactions.
While layer 2 networks like StarkWare are rapidly expanding Ethereum’s capabilities, updates to the core Ethereum protocol are lagging. Thus, competition from other smart contract ecosystems is increasing day by day. DYdX’s decision to leave Ethereum is seen by some as proof that the original smart contract network is not moving fast enough to meet the demands of a maturing crypto ecosystem.
dYdX takes this decision due to delayed updates
Ethereum layer 2s like StarkWare were supposed to come to the rescue for platforms like dYdX. Generally, layer 2s process transactions on a separate Blockchain. Thus, it expands the capacity of Blockchain networks like Ethereum. These side chains run additional operations. It also aggregates and returns the tier 1 chains where they were officially recorded in the ledger.
DYdX explained why it originally switched to the platform in a 2020 blog post:
Ethereum processes about 15 transactions per second (TPS). And that’s not enough to support the hypergrowth of DeFi, NFTs and more. While Ethereum 2.0 will theoretically increase network speeds to 100,000 TPS, base layer scaling is still a while away. Meanwhile, Layer 2 scaling solutions – in the form of Rollups – offload execution, freeing up Ethereum’s core layer, resulting in lower gas costs and increased throughput without increasing network load.
Altcoin project’s decision reveals differences between networks
Finally, the decision of the DYdX movement underlines the difference between Cosmos and Ethereum, ecosystems that reveal different visions for the future of crypto. Ethereum is positioning itself as a kind of global computer. Anyone can create programs that run on this computer. Also, the security of the entire system extends to each of these applications.
By switching to Cosmos, dYdX forges its way into a world where dominance is rewarded above all else, rather than guarantees of security. On the other hand, most Cosmos chains have dozens of nodes that keep things secure. As you can see from the cryptokoin.com analysis, Cosmos tends to have vibrant management communities. However, the problems sometimes went beyond chain upgrades and Cosmos validators responsible for security.
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