Charles d'Haussy (dYdX Foundation): "Only Cosmos gave us total control over our project".

You chose to migrate your project from the Ethereum ecosystem to Cosmos, what were the reasons for this?

Two years ago, we considered the best way to continue decentralising the way dYdX operated. We concluded that we couldn't achieve this goal without leaving our initial environment (a layer 2 developed by Starkware on Ethereum).

After an in-depth study of the different solutions, ranging from Solana to the various layer 2s, we determined that the Cosmos SDK (Software Development Kit) was the best option to enable us to achieve this goal. It was one of the most mature solutions on the market and allowed us to control every technical aspect of our blockchain without depending on a third party.

And this wasn't possible with other ecosystems?

No, at least not completely. In our new operation, the staking of our DYDX token ensures the security of our blockchain, as in a traditional proof-of-stake system, with validators being paid in USDC, Circle's stablecoin.

The other major objective was to succeed in decentralising our order book which, in the old version of dYdX, was hosted on an AWS server. It was also essential to be able to develop our application on this technical basis. Only the Cosmos SDK allowed us to control everything.

Today, our new system also allows us to create more interesting incentives for our users. Since the launch of our blockchain, we have distributed nearly 32 million USDC to validators for a cumulative trading volume of 166 billion dollars.

The ecosystem Cosmos is struggling to get off the ground, as is the price of the ATOM token, which is currently trading at around $6, the same level it had in 2019. Does this affect dYdX?

Of course, the price of ATOM may be a long-term issue, but the security of dYdX does not depend on Cosmos because the dYdX chain is sovereign. All blockchains built with the Cosmos SDK are independent and sovereign. In terms of image, there's obviously something better, but it's not holding back our growth.

I think it's also important to point out that ATOM is no longer a "VC token" because of its longevity, like the Cosmos ecosystem. It therefore no longer receives the same attention from the media or Twitter. Yet it is the only such well-established technological solution that allows you to have your own appchain without starting from scratch.

Why did you absolutely want to decentralise your order book?

When you trade on centralised exchange platforms such as Binance or Coinbase, the order book is hosted in a centralised database. As a result, transparency about how it works is very limited, just like in traditional finance.

The value proposition of dYdX is based on the transparency of this order book. Users can check how market players place and take positions, or how the order book works. This transparency makes it possible to deploy more effective trading strategies and, above all, to check that no player is getting a free ride. This is a strong demand from the market, but also from regulators.

Don't you run the risk of suffering from a lack of interoperability by having your own blockchain?

In our case, not at all. dYdX is a special case, in particular because we specialise in derivatives, which makes us less dependent in terms of interoperability and token management than for lending protocols. The tokens traded are all synthetic. In reality, we only manage two 'real' tokens: the USDC and the DYDX. Launching our own blockchain therefore made sense for all the reasons given above.

Launching an appchain is far from making sense for the majority of protocols. On the other hand, it will be interesting to see whether large companies like Nike, Amazon or Apple will be tempted to do so in the future. An appchain makes sense for a player that already has critical mass with a large user base.

It's also important to understand that, increasingly, certain players will have the means to become a kind of "super-app" via which users will have access to a range of essential services, such as social networks or financial services. This is notably the case with WeChat in China or what Telegram is trying to do with its TON blockchain.

Every region of the world will have its "super-apps" via which the new Internet will be consumed, notably decentralised finance (DeFi). The new dYdX formula means that we can be present in as many of these 'super-apps' ecosystems as possible.

With regard to derivatives, aren't you afraid of growing competition from centralised exchange platforms seeking to acquire licences, particularly in Europe?

At the moment, many of them are struggling to obtain this type of licence, particularly in Europe. But beyond that, we believe that the future of trading lies on-chain.

There is already a shift towards spot trading from centralised exchange platforms to decentralised players like Uniswap, which allows a significantly larger number of pairs to be traded, not least because anyone can launch their trading pair freely. dYdX does the same thing, with more than 800 pairs available for a daily trading volume of between $1 billion and $1.5 billion.

With regard to companies, are you seeing growing interest from institutional players?

At the moment, our institutional users are mainly crypto-native companies. Traditional players still prefer to trade via centralised entities.

Is it realistic to one day see assets from the traditional financial world available on dYdX?

It is up to the decentralised autonomous organisation (DAO) to decide whether or not to integrate new assets. To date, there are many regulatory issues surrounding the listing of traditional assets on dYdX, particularly with regard to financial securities legislation. Personally, I don't think the value proposition is real, because trading in this type of derivative asset works very well in the traditional system. We really want to focus on natively on-chain assets.