The decentralized perpetual exchange on Ethereum, dYdX announced a plan of migrating DYDX token from Ethereum to its to-be-launched layer 1 blockchain.
dYdX Foundation, the developer entity behind the protocol, posted a blogpost describing a potential migration plan of DYDX token. It describes transiting the token from Ethereum to ‘dYdX chain’, if decided by dYdX governance.
The DYDX token is native token to the decentralized perpetual protocol that is utilized in its ecosystem activities such as governance, staking and rewards. It is currently deployed on Ethereum as an ERC-20 token.
The blog remarks that the dYdX Chain, a layer 1 proof-of-stake blockchain, is approaching its way to be released on mainnet. After the deployment, it will require a native asset to staking for validators.
While proposing the token migration plan, dYdX Foundation breaks down the process into three steps.
1. Development of an Ethereum Smart Contract to receive ERC-20 DYDX tokens from users and lock it permanently.
2. Sending wrapped tokens ‘wethDYDX’ to users in 1:1 ratio on Ethereum.
3. Distributing DYDX on dYdX Chain based on locked tokens in Ethereum smart contract.
However, it’s not yet decided by the community whether DYDX token should be used as the native token on dYdX Chain.