The dYdX Foundation Pivots to dYdX Chain, Boosting Demand for DYDX Token
On October 26, the dYdX Foundation made a significant shift from operating an Ethereum layer-2 blockchain to supporting the layer-1 dYdX Chain (DYDX). This transition has the potential to generate more demand for the native token DYDX, which is staked by validators to secure the network and used by users to pay for gas fees.
In an announcement sent to Finbold on October 27, the dYdX Foundation emphasized the confirmation of the first block (known as ‘Genesis’) by the validators on the dYdX Chain mainnet. The foundation clarified that its protocol is an open-source software operated by a permissionless network.
“The dYdX Chain software is solely open-source software to be used or implemented by any party in accordance with the applicable license. At no time should the dYdX Chain software be deemed to be a product or service provided or made available in any way by the dYdX Foundation. Interactions with the dYdX Chain software are permissionless and disintermediated, subject to the terms of the applicable licenses and code.”
— The dYdX Foundation
Interestingly, the previous ERC-20 governance token known as DYDX will now be referred to as ethDYDX. This token can be bridged to the dYdX Chain in a one-way bridge to create Wrapped ethDYDX (wethDYDX). The wrapped governance token will retain its utility for activities on the remaining Ethereum layer-2.
The Three Core Utilities of DYDX on dYdX Chain
The new DYDX token, native to the dYdX Chain, will serve three primary purposes:
- Assisting with governance on the dYdX Chain
- Staking by validators to secure the network
- Paying for transaction gas fees for “DYDX-denominated transactions”
In addition to “DYDX-denominated transactions,” the layer-1 blockchain will also support “USDC-denominated transactions” that utilize the stablecoin Circle USD (USDC) for gas fees.
DYDX Price Analysis
Currently, DYDX is trading at $2.40, showing a 5.41% gain in the last 24 hours. Following the launch of the dYdX mainnet, the token reached a high of $2.51 and a low of $2.28.
The increased utility of DYDX on the dYdX Chain is expected to drive renewed demand for the token. Its circulating supply is currently set at 1 billion units, but this may change in the future based on governance decisions outlined in the dYdX Foundation blog.
Hot Take: A Promising Shift for dYdX and DYDX Token
The transition from an Ethereum layer-2 blockchain to the dYdX Chain presents an exciting opportunity for both the dYdX Foundation and DYDX token holders. The pivot enables more efficient operations and enhanced security for the network. With its three core utilities on the dYdX Chain, DYDX is poised to play a crucial role in governance, network security, and transactional activities. As demand for DYDX increases, its value may experience further growth. This shift marks a significant milestone for dYdX and reinforces its commitment to decentralized finance innovation.
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