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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
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.
About dYdX and Terms
Here at dYdX, our mission is to democratize access to financial opportunity. We believe that v4 software will represent notable progress in service of that mission. The events in the global economy that have transpired over the last year have only reinforced the need for open, transparent, and permissionless financial products. We’re excited for v4 software to better meet those needs.
If building the future of a decentralized exchange and open finance is something you’re interested in, check out what it’s like to work at dYdX and our open roles!
To ask additional questions, join the discussion on Discord, participate in the dYdX community, or follow us on Twitter. We’re excited to continue building the dYdX Chain and will continue to release updates over the coming months.