dYdX, the decentralized perpetual exchange on Ethereum, has revealed plans to migrate its DYDX token from Ethereum to its upcoming layer 1 blockchain, dubbed the 'dYdX Chain.' This information was disclosed in a blog post by the dYdX Foundation, the developer entity behind the protocol.
The DYDX token, currently deployed on Ethereum as an ERC-20 token, plays a crucial role in the decentralized perpetual protocol. It facilitates various ecosystem activities, including governance, staking, and rewards.
The dYdX Chain is a layer 1 proof-of-stake blockchain that is nearing its mainnet release. Once deployed, the chain will require a native asset for validators to stake. The Foundation proposed a potential migration plan for the DYDX token that involves three steps:
- Developing an Ethereum Smart Contract to receive ERC-20 DYDX tokens from users and lock them permanently.
- Sending wrapped tokens, known as 'wethDYDX,' to users in a 1:1 ratio on Ethereum.
- Distributing DYDX on the dYdX Chain based on the tokens locked in the Ethereum smart contract.
However, the community has yet to decide whether the DYDX token should be used as the native token on the dYdX Chain. The final decision will likely depend on dYdX governance.
