dYdX has launched its Layer 2 perpetual swap platform, according to an announcement from the project today.
Layer 2 Service Is Now Live
dYdX launched its closed alpha in February and reported widespread adoption: “We had 110,000 users sign up for the waitlist, and users traded $90,000,000 in volume across over 25,000 trades,” dYdx wrote in its most recent announcement,
Now, the Layer 2 perpetual contracts swap has exited its closed alpha testing stage and is live on StarkEx. As a Layer 2 service, dYdX touts low fees and instantaneous trades.
dYdX also enables users of conventional browser wallets such as MetaMask to start trading without depositing tokens to a bridge beforehand, and without connecting to an alternate network.
The dYdX trading platform settles and margins all perpetual contracts using USDC. Deposits must also be USDC. However, users will soon be able to deposit other assets thanks to integration with the 0x API. Deposits and withdrawals are subject to Ethereum gas fees.
dYdX is powered by StarkEx, a Layer 2 scaling solution built by StarkWare Industries to help Ethereum dApps such as cryptocurrency exchanges and gaming platforms improve their user experiences (UX) with only minimal changes to their code.
StarkEx utilizes ZK-Rollups, which bundles hundreds of transfers in each transaction. It also uses zero-knowledge proofs to reduce the usage of costly Ethereum resources such as mining power.
The Need for Layer 2 Solutions
Ethereum’s Layer 1 decentralized exchanges struggle with prohibitively high gas fees. This has stunted the growth of decentralized exchanges and made them impractical for small trades.
Ethereum 2.0, which is gradually being rolled out, will reduce fees for Layer 1 exchanges and apps. However, Layer 2 solutions will make DEXes more affordable for users in the meantime by offloading some of the transaction load that Ethereum currently experiences.
Disclaimer: At the time of writing, this author held Bitcoin, Ethereum, Litecoin, Tezos, ADA, and AAVE.
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Author: Nicholas Brown