v4 Governance Deep Dive
As we approach the release of open-source software for v4 Mainnet (“dYdX Chain”), we want to provide a peek into what the dYdX team is building.This post discusses certain governance related design decisions for dYdX v4.
Given that v4 is still under development, please note that each of the topics discussed below is subject to change.
How does on-chain governance work?
dYdX Chain open source software will utilize the standard x/gov module within the Cosmos SDK. For an in depth breakdown of how the x/gov module works, head to the Cosmos SDK official documentation.
The dYdX Chain open source software will include certain required parameters of the governance module. The software will enable token holders to adjust any of the x/gov parameters via the governance voting processes.
What will governance control on-chain?
If deployed, the dYdX Chain software will allow governance (i.e., dYdX Chain layer 1 token holders, voting via the governance process) to alter the standard parameters across a variety of modules within the Cosmos SDK. The dYdX Chain software will utilize the standard Cosmos SDK modules listed in the official documentation, with the exception of Authz, Evidence, Feegrant, Mint, NFT, Circuit, and Genutil modules.
In addition to the modules included in the Cosmos SDK, dYdX is building a variety of modules that power trading functionality. Many of these modules have parameters that are adjustable by governance. dYdX Trading will not suggest or lead on-chain governance on dYdX Chain. All v4 modules will include initial parameters as part of the open source software.
A non-exhaustive list of parameters that governance will be able to adjust includes:
- Add new markets
- Adjust parameters of a live market
- Remove any market
- Edit the list of 3rd party price sources that the exchange uses
- Fee schedule
- Trading rewards mechanics
- x/distribution module parameters affecting trading and gas fees
- x/staking module parameters
- Funding rate formula
- Control of the insurance fund
Are there other, off-chain, aspects of governance?
There may be forums to discuss governance proposals and off-chain processes for submitting governance proposals that are enforced via social consensus. dYdX Trading will not suggest or lead any aspects of off-chain governance processes.
Legitimacy and Disclaimer
Crypto-assets can be highly volatile and trading crypto-assets involves risk of loss, particularly when using leverage. Investment into crypto-assets may not be regulated and may not be adequate for retail investors. Do your own research and due diligence before engaging in any activity involving crypto-assets.
dYdX is a decentralised, disintermediated and permissionless protocol, and is not available in the U.S. or to U.S. persons as well as in other restricted jurisdictions. The dYdX Foundation does not operate or participate in the operation of any component of the dYdX Chain’s infrastructure.
The dYdX Foundation’s purpose is to support the current implementation and any future implementations of the dYdX protocol and to foster community-driven growth in the dYdX ecosystem.
The dYdX Chain software is open-source software to be used or implemented by any party in accordance with the applicable license. At no time should the dYdX Chain and/or its software or related components 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 or any implementation thereof are permissionless and disintermediated, subject to the terms of the applicable licenses and code. Users who interact with the dYdX Chain software (or any implementations thereof) will not be interacting with the dYdX Foundation in any way whatsoever. The dYdX Foundation does not make any representations, warranties or covenants in connection with the dYdX Chain software (or any implementations and/or components thereof), including (without limitation) with regard to their technical properties or performance, as well as their actual or potential usefulness or suitability for any particular purpose, and users agree to rely on the dYdX Chain software (or any implementations and/or components thereof) “AS IS, WHERE IS”.
Nothing in this post should be used or considered as legal, financial, tax, or any other advice, nor as an instruction or invitation to act by anyone. Users should conduct their own research and due diligence before making any decisions. The dYdX Foundation may alter or update any information in this post in the future at its sole discretion and assumes no obligation to publicly disclose any such change. This post is solely based on the information available to the dYdX Foundation at the time it was published and should only be read and taken into consideration at the time it was published and on the basis of the circumstances that surrounded it. The dYdX Foundation makes no guarantees of future performance and is under no obligation to undertake any of the activities contemplated herein.
