The founder of dYdX, Antonio Juliano, made an announcement on Twitter on October 28, 2023, about significant transfers of $DYDX tokens that would occur in the coming days. This notice corresponds with plans to move tokens to the dYdX Chain, which will be documented as transfers on both the Ethereum and dYdX Chain, by dYdX Trading Inc. and other holders of locked tokens. It is important to remember that these tokens are not going to be sold; instead, they will stay locked.
In the wake of Juliano’s declaration, the dYdX Foundation released additional information, predicting significant internal shifts of the locked ethDYDX tokens owned by investors and team members in the near future.
Through tweets dated October 28, 2023, the Foundation has described how to bridge these locked tokens from Ethereum to other blockchains, such as the dYdX Chain. Furthermore, it is continuously keeping an eye on the wallet addresses of locked token holders to make sure that legal agreements are being followed.
It is evident from the dYdX Foundation’s statements that holders of locked tokens who disregard the relevant regulations face the possibility of legal action. The release schedule and transfer restrictions that apply to the tokens involved in this migration won’t change.
The successful launch of dYdX’s layer-1 blockchain, signalled by the creation of its genesis block, was later detailed in a media report. The platform’s native DYDX tokens will power this blockchain. The dYdX Chain is set up to pay staker and validator fees in US dollars. This includes petrol fees and trading expenses for transactions that are either USDC or DYDX valued.
The Cosmos software development kit was used to create the proof-of-stake (PoS) blockchain, which is supported by CometBFT as its consensus mechanism. Juliano highlighted that the launch was dependent on companies such as Coinbase and Circle expanding their services on Cosmos prior to the release of the genesis block.
The original DYDX functioned as an ERC-20 token on the dYdX’s initial Ethereum layer-2 protocol prior to the introduction of the native layer-1 chain. Community consensus that recognised DYDX as the L1 token of the dYdX Chain, created a one-way bridge from Ethereum to the dYdX Chain, and granted wrapped Ethereum DYDX (wethDYDX) the same governance utility as ethDYDX in dYdX v3 made the smooth transition to its own layer-1 chain possible.
Due to community votes and governance decisions, the DYDX token’s utility has increased now that the dYdX Chain is operational. These days, it is crucial for staking, which improves network security and facilitates governance choices. The dYdX validators and stakers will receive the accumulated fees through the Cosmos distribution module.