Introducing dYdX Chain v5.0

Introduction

Today we are excited to announce the release of the v5.0 software update for dYdX Chain. V5.0 brings some of our most impressive and monumental upgrades since Chain launch including:

Isolated Markets & Isolated Margin
Protocol-enshrined LP Vault
Slinky Sidecar and Raydium Integrations
Batch Order Cancellation
Signature Verification Parallelization
Soft Open Interest Cap
Full Node Streaming

Let’s dive into the details for each new update.

Isolated Markets

Isolated Markets is arguably the most exciting change coming in the new v5.0 upgrade. Previously, the dYdX Chain only permitted markets that were cross margined at a protocol level–meaning that every market shared the same collateral pool and insurance fund. This design has been integral to the overall risk properties of the software but as a result the universe of available markets on any deployment of dYdX has been constricted.

With Isolated Markets, each market has its own collateral pool and insurance fund, which protects the solvency and functionality of the protocol as a whole from volatility in any one market. In the past, many markets have not been recommended as compatible with optimal performance of dYdX Chain because of their potential to destabilize the protocol. With the introduction of isolated markets, 800+ new markets will be available to list via governance vote in the new markets widget.

We’re incredibly excited about this update as it unlocks a massive amount of new markets for traders. See the full details of this new update on our github.

Isolated Margin

Isolated margin allows for traders to trade any market as an isolated position. Previously, from a trader’s perspective, all positions were cross-margined against one another. With isolated margin, traders have the ability to confine collateral to a specific position and manually adjust the collateral for that given position. We believe this will allow users to more intuitively understand and adjust their collateral management.

LP Vaults

With potential new markets comes the question of liquidity. LP (Liquidity Provider) Vaults allow for users to provide automated liquidity strategies on protocols using dYdX Chain software. LP vaults enable anyone to provide automated liquidity on the protocol simply by depositing USDC into a liquidity vault. The USDC in the LP vault will be used to automatically provision liquidity on both sides of the orderbook. LPing into vaults is permissionless and non-custodial with the goal of increasing liquidity on all markets.

In this release, LP vaults will be established on the protocol layer but will not be available yet for traders via the frontend. We anticipate full usage of LP vaults to be available for traders in the coming weeks. You can find more information about LP vaults here and see the github repo here.

Slinky Sidecar & Raydium Integrations

In this release, dYdX Chain will integrate with Skip Protocol’s Slinky Sidecar and Raydium. The integration with Raydium will unlock oracle prices on all Raydium assets (Solana). The Slinky integration will improve stability and speed of oracle price updates by removing oracle price updates from the consensus process and by bringing block-by-block oracle updates with lower latency prices than before.

These two integrations are part of an ongoing process to enable deployer communities to bring more markets efficiently to dYdX Chain and make dYdX the #1 place for DeFi trading.

See the Github for the Slinky and Raydium releases.

Other Updates

Some other updates in v5.0 include:

Batch Order cancellations which allows for users to cancel up to 100 short term orders at a time.
General performance improvements, including parallelizing signature verification.
Soft open interest cap which scales up the Initial Margin Fraction (IMF) after Open Interest (OI) exceeds a configurable cap
Full node streaming which allows the full node to stream data directly to subscribers via GRPC

We’re incredibly excited about all these new features as they unlock a universe of tokens and usability not seen before on any other platform.

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.