dYdX v4 announcement
2022 Jun 22nd
dYdX V4 will be developed as a standalone blockchain based on the Cosmos SDK.
2021 Aug 3rd
Independent foundation was created to participate in the Protocol governance.
2021 Apr 6th
Layer 2 cross-margined Perpetuals are now live in production for all traders.
dYdX aims to build a powerful and professional exchange for trading crypto assets where users can truly own their trades and, eventually, the exchange itself.
ZK-STARKS are zero knowledge proofs that ensure state correctness.
All of the data needed for proof construction is published on chain.
There is a 9d delay, although this time can be shortened to 2d by the Priority Controller.
Users can force the sequencer to include a trade or a withdrawal transaction by submitting a request through L1. If the sequencer censors or is down for 14d, users can use the exit hatch to withdraw their funds. Users are required to find a counterparty for the trade by out of system means.
Users are able to trustlessly exit by submitting a Merkle proof of funds. Positions will be closed using the average price from the last batch state update.
Each update to the system state must be accompanied by a ZK Proof that ensures that the new state was derived by correctly applying a series of valid user transactions to the previous state. These proofs are then verified on Ethereum by a smart contract. The system state is represented using Merkle roots.
Despite their production use ZK-STARKs proof systems are still relatively new, complex and they rely on the proper implementation of the polynomial constraints used to check validity of the Execution Trace.
Funds can be lost if the proof system is implemented incorrectly.
All the relevant data that is used to recover the balances Merkle Tree is published on-chain as calldata. This includes, in addition to the proven new state, the complete list of differences of the users’ balances from the previous state.
The operator is the only entity that can propose blocks. A live and trustworthy operator is vital to the health of the system. Typically, the Operator is the hot wallet of the StarkEx service submitting state updates for which proofs have been already submitted and verified.
MEV can be extracted if the operator exploits their centralized position and frontruns user transactions.
Force exit allows the users to escape censorship by withdrawing their funds. The system allows users to force the withdrawal of funds by submitting a request directly to the contract on-chain. The request must be served within 14d. If this does not happen, the system will halt regular operation and permit trustless withdrawal of funds. Perpetual positions can also be force closed before withdrawing, however this requires the user to find the counterparty for the trade themselves.
Users can be censored if the operator refuses to include their transactions. However, there exists a mechanism to independently exit the system.
Funds can be lost if the user is unable to find the counterparty for the force trade.
The user initiates the withdrawal by submitting a regular transaction on this chain. When the block containing that transaction is proven the funds become available for withdrawal on L1. Finally the user submits an L1 transaction to claim the funds. This transaction does not require a merkle proof.
If the user experiences censorship from the operator with regular exit they can submit their withdrawal requests directly on L1. The system is then obliged to service this request. Once the force operation is submitted and if the request is serviced, the operation follows the flow of a regular exit.
If enough time passes and the forced exit is still ignored the user can put the system into a frozen state, disallowing further state updates. In that case everybody can withdraw by submitting a merkle proof of their funds with their L1 transaction.
Allowed to update state of the rollup. When Operator is down the state cannot be updated.
Controlled by dYdX Governance. The Merkle-pauser executor can freeze the Merkle root, which is updated periodically with each user cumulative reward balance, in case the proposed root is incorrect or malicious. It can also veto forced trade requests by any of the stark proxy contracts.Currently there is no delay before the upgrade, so the users will not have time to migrate.
Main contract of dYdX exchange. Updates dYdX state and verifies its integrity using STARK Verifier. Allows users to deposit and withdraw tokens via normal and emergency modes. This contract stores the following tokens: USDC.
Can be upgraded by: Rollup Admin
Upgrade delay: 9d or 2d if overridden by Priority Controller
Contract serving as an adapter for STARK Verifier. It holds the address of the STARK Verifier and CAIRO program hash needed for verification.
STARK Verifier. In contrast to other StarkWare systems which use common SHARP Prover, dYdX uses separate Prover/Verifier.
Contract storing CAIRO Program Output, in case of dYdX, it stores state diffs of dYdX Exchange.
Part of STARK Verifier.
Part of STARK Verifier.
Part of STARK Verifier.
Contract responsible for validating force withdrawal requests.
Contract storing dYdX Governance logic.
Contract storing logic for votes counting in dYdX Governance.
Token used by the dYdX Governance for voting.
The current deployment carries some associated risks:
Funds can be stolen if a contract receives a malicious code upgrade. There is a 9d delay on code upgrades.The delay can be decreased by the Priority Controller to 2d.