The dYdX Foundation and the Path to Decentralization
The dYdX Foundation, a non-profit organization dedicated to supporting the dYdX protocol in the decentralized finance (DeFi) space, has achieved a significant milestone with the launch of the v4 public testnet. This development puts dYdX ahead of schedule for the upcoming release of the v4 mainnet, which is expected to mark a complete decentralization for dYdX.
As reported by Cointelegraph, the recent testnet launch on July 5th represents the fourth out of five milestones outlined by the dYdX Foundation in its roadmap towards decentralization.
dYdX’s Current State and the Promise of v4
In its current live version, dYdX is classified as partially centralized. While it does not hold custody of user assets, it still relies on a centralized order book and matching system. The forthcoming v4 release aims to address this concern and achieve full decentralization.
Presently, dYdX facilitates over $1 billion in daily fund transfers, making it the world’s largest decentralized exchange for perpetuals – bonds without maturity dates.
Centralized Exchanges and DeFi: Complementary Approaches
During an interview with Cointelegraph at the Ethereum Community Conference in Paris, Charles d’Haussy, the CEO of the dYdX Foundation, discussed the shift towards complete decentralization and its implications for centralized providers of perpetuals.
d’Haussy emphasized that centralized exchanges are not direct competitors to the dYdX protocol, stating, “I think they do their job well. They have been supporting the market early on. We should not forget that perpetuals were invented by BitMex, which is a centralized entity.”
According to the CEO, the industry is currently undergoing a transitional phase towards “decentralized disruption.” However, he highlighted that this does not imply a competition between centralized organizations and DeFi. Instead, he sees an opportunity for coexistence and collaboration that could benefit the broader crypto community.
The Gateway Role of Centralized Exchanges
d’Haussy predicts that, in the near future, centralized exchanges will serve as gateways to decentralized exchanges. He envisions a scenario where centralized entities with Know Your Customer (KYC) procedures and customer risk profiles offer spot trading in-house. Additionally, they could provide customers with a superior experience compared to DeFi, offering simpler integration and connectivity from the centralized exchange to DeFi.
The CEO drew a parallel with traditional financial banking institutions that provide multiple services to their customers. He explained, “If you think about this in your bank today, the core business of your bank is your deposit. And your bank sells you insurance, your bank sells you mortgages, your bank sells you different things.”
d’Haussy believes that adopting a similar approach in the crypto space could be beneficial for the ecosystem, as it empowers individuals to choose the crypto services that suit them best. He stated, “People want to consume things in different ways. And if it’s easier for you or if you feel more comfortable with one entity helping you manage your crypto experience, and this entity provides you access to DeFi, I think that’s great.”
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