Migration to the new Layer 2 module would force users to close their positions in Layer 1.
DYdX would use the zkSTARKS a variant of the ZK-rollups.
dYdX is a DeFi focused on the exchange of crypto assets. In it, users can trade spot, margin or inclusive trading with perpetual contracts Bitcoin and cryptocurrencies. It recently launched its new Ethereum layer 2 platform, which would make use of ZK-rollups, allowing users to trade perpetual contracts with very low commissions and no waiting times.
The use of this Ethereum layer 2 scalability improvement will only be implemented, for now, in the perpetual contract trading module. However, although the application allows the use of layer 1 wallets for interaction with it, with the new enhancement, the Users will be able to continue using the same wallets, without any modifications.
The announcement regarding the launch of the new module was made public on April 6 via the dYdX blog. In this, the launch of the new platform for trading perpetual contracts with the zkSTARKS rollups was announced, which would arrive thanks to the StarkEx scalability engine from the StarkWare company.
This new perpetual contract trading module would basically be the replacement of the previous one, which works within the main Ethereum network (layer 1). Within the announcement of the launch, users are recommended to close their positions within the old module, since, if they do not do so, they will be automatically liquidated on April 20 of this year.
For its part, the change in the platform is merely operational internally. The interface would receive only a few minor tweaks, but would retain the way it is used.
When entering the old module of perpetual contracts, users will see an alert in which they are announced that the business has moved to a “new home”. Source: dYdX.
Why Use Layer 2 Solutions (Rollups)
Within the announcement, the motivations that led dYdX to migrate to a more user-friendly platform are explained, the main cause being, the inability of the main Ethereum network to cope with the high demand that it has suffered in recent times.
Currently Ethereum processes, on average, a total of 15 transactions per second (TPS) which is not enough, given that new DApps are born that need more network bandwidth (more TPS). With the implementation of the ZK-rollups, a window opens that could increase this limit beyond 20,000 TPS, a goal proposed by the ZKsync 2.0 rollups, the same ones used by the ZK-rollups, as reported by CriptoNoticias at the time.
DYdX perpetual contracts module enhancements
With the use of the ZK-rollups in dYdX within the perpetual contracts trading module, a series of changes were implemented in order to improve the user experience.
From the launch, users will be able to see some improvements thanks to the reduction in waiting times and low commission costs, such as: placing smaller orders which, also, thanks to the new optimization, they will not be delayed by the network and will be placed in the order book immediately.
In the same way, users will be able to cross margin between the different perpetual contracts available on the platform, as well as enjoy much lower commissions in any of the operations they carry out within dYdX. They will also benefit from increased leverage sizes and low order settlement penalties.