Update on the Potential Migration of DYDX from Ethereum to the dYdX Chain

Update as of September 12, 2023.

This blog post is an update to “Exploring the Future of DYDX: A Take on the Potential Migration of DYDX from Ethereum to the dYdX Chain” (“Exploring the Future of DYDX”) published by the dYdX Foundation.

In Exploring the Future of DYDX, the dYdX Foundation explained that it had commissioned the development of (1) an Ethereum smart contract (the “wethDYDX Smart Contract”) that, if deployed, would enable a permissionless and autonomous one-way bridge for the DYDX token to be migrated from Ethereum to the dYdX Chain and (2) the source code of a user interface (the “User Interface Code”) to interact with the wethDYDX Smart Contract that would be open-sourced such that others may use it to implement a user interface (also sometimes referred to as a “front-end”).

The dYdX Foundation is sharing the following updates with respect to Exploring the Future of DYDX:

• The wethDYDX Smart Contract commissioned by the dYdX Foundation is complete.
• In connection with a potential migration of DYDX from Ethereum to the dYdX Chain, the dYdX Foundation commissioned the development of two additional Ethereum smart contracts:
• ///a GovernanceStrategyV2 smart contract (the “GovernanceStrategyV2 Smart Contract”) that, if deployed and if the dYdX community decided through dYdX governance, could enable the wrapped version of the Ethereum-based DYDX token (“wethDYDX”) to have the same governance and utility functions as Ethereum-based DYDX (hereinafter “ethDYDX”) in dYdX v3.///
• ///a TreasuryBridge smart contract (the “TreasuryBridge Smart Contract”) that, if deployed and if the dYdX community decided through dYdX governance, could (i) burn newly vested ethDYDX from the community treasury vester and the rewards treasury vester and (ii) enable ethDYDX vested in the community treasury and rewards treasury to be migrated to the dYdX Chain.///
• The wethDYDX Smart Contract, the GovernanceStrategyV2 Smart Contract, and the TreasuryBridge Smart Contract (collectively, the “Migration Smart Contracts”) have been audited by Peckshield and are being released under an open-source license (AGPL V3).
• Note, ethDYDX holders should only consider sending ethDYDX to the wethDYDX Smart Contract if and when the corresponding governance proposal is executed on-chain. Otherwise, a user sending its ethDYDX to the wethDYDX Smart Contract before such governance proposal is adopted and implemented would receive wethDYDX before the governance or utility functions of that token in dYdX v3 are known or confirmed. Users should also refrain from interacting with the wethDYDX Smart Contract without proper knowledge of how to derive private keys on the dYdX Chain (if and when deployed on mainnet).
• The dYdX Foundation published an overview of the Migration Smart Contracts in the dYdX governance documents.

It is important to note that the ethDYDX token and dYdX v3 Governance are entirely controlled by the dYdX community and it is ultimately up to the dYdX community alone to discuss and decide, through dYdX governance, (1) whether DYDX should be the L1 protocol token of the dYdX Chain or not, (2) whether wethDYDX should have the same governance and utility functions as ethDYDX on dYdX v3, and (3) if the dYdX community decides that DYDX should be the L1 protocol token of the dYdX Chain, then how to organize and carry out any required token migration and/or any other necessary actions, as well as any other matters that affect or relate to the ethDYDX token or dYdX v3 Governance.

Disclaimer

dYdX Foundation’s purpose is to support the current and future implementations of the dYdX protocol and to foster community-driven growth in the dYdX ecosystem.

The wethDYDX Smart Contract, the GovernanceStrategyV2 Smart Contract, the TreasuryBridge Smart Contract and the User Interface Code referred to in this blog post (collectively, the “Relevant Software”) are solely open-sourced software to be used or implemented by any party in accordance with the applicable open-source licence (including, potentially, by the dYdX ecosystem). At no time should the Relevant Software be deemed to be a product or service provided or made available by the dYdX Foundation.  

To interact with the wethDYDX Smart Contract, users may opt for the user interface of their choice (if any are provided by a third party, as set forth below) or connect directly to the wethDYDX Smart Contract. The dYdX Foundation will not host or maintain a user interface or front-end related to a potential migration of ethDYDX tokens to the dYdX Chain. Interactions with the Relevant Software are  permissionless and disintermediated, subject to the terms of the licence and code.  Users who interact with the Relevant Software will not be interacting with the dYdX Foundation in any way whatsoever.  The dYdX Foundation has no control of any kind over the use that people make of the Relevant Software, including, without limitation, with regard to: (i) potential deployments of the Relevant Software, (ii) potential adaptations, forks or modified versions of the Relevant Software, and their deployment, or (iii) users’ interactions with the Relevant Software.   The dYdX Foundation does not make any representations, warranties or covenants in connection with the Relevant Software, including (without limitation) with regard to the technical properties and performance of the Relevant Software, as well as its actual or potential usefulness or suitability for any particular purpose.  The dYdX Foundation will not operate any part of the Relevant Software (or any versions or adaptations thereof) nor will it be responsible for their continued availability.  

Due to the open-source nature of the User Interface Code, it is possible that there will be multiple third parties that leverage such open-source code to provide front-end solutions in connection with a potential migration of the ethDYDX token from Ethereum to the dYdX Chain (“Bridging Solutions”).  The dYdX Foundation will not audit and therefore will not be in a position to make, and does not make, any representations, warranties or disclosures with regard to any potential Bridging Solutions.  Any Bridging Solutions will have no connection to and are not endorsed in any way by the dYdX Foundation. Readers are responsible for conducting their own research and due diligence on the Relevant Software and on any Bridging Solutions that may exist, now and/or in the future.

Readers should remain vigilant and only rely on information coming from legitimate sources, as an increase in potential scams and phishing attacks via social media, messaging apps and websites is likely to happen.

This blog post contains one of many multiple approaches that can be considered in connection with the subject matter hereof. Nothing in this blog post should be used or considered as legal, financial, tax, or any other advice, nor as an instruction or invitation to act by anyone. The dYdX Foundation makes no recommendation as to how to vote on any proposal in dYdX governance related to a potential migration or otherwise, whether to migrate any assets to the proposed new dYdX Chain, or to take any action whatsoever. The dYdX community is sovereign to make decisions freely and at its sole discretion, in accordance with the governance rules, principles, and mechanisms adopted by the dYdX DAO. dYdX community discussion and interaction on the contents of this post are encouraged. The dYdX Foundation does not directly participate in governance decisions to be made by the dYdX community, including, without limitation, by making and/or voting on governance proposals. The dYdX Foundation may alter or update any information in this post in the future 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 is made and should only be read and taken into consideration at the time it is made and on the basis of the circumstances that surround it. The dYdX Foundation makes no guarantees of future performance and is under no obligation to undertake any of the activities contemplated herein, including but not limited to the direct or indirect open-sourcing of any commissioned code.