Decentralized exchange dYdX partners with StarkWare to integrate Layer-2 scaling technology

The non-custodial exchange dYdX, which is backed by the likes of Andreessen Horowitz, is partnering with StarkWare to integrate the firm's Layer-2 scaling technology into its perpetual contract offerings.

"Our engineering teams are collaborating on a Layer 2 scaling solution for Perpetual Contracts, based on StarkWare’s StarkEx scalability engine and dYdX’s Perpetual smart contracts. Our Perpetual Contracts will be powered by StarkEx by the end of this year," the team said.

As for how the tech will impact the platform itself, the team went on to explain:

"Trades are submitted on-chain in ZK-Rollups, reducing the amount of gas required per-trade. We are able to pass on those savings to traders in the form of reduced trading fees across the board...Since there are smaller fees per-trade, we are able to offer smaller trade sizes, allowing traders to try out dYdX by starting with a smaller amount of capital."

To date, at least one decentralized exchange — DeversiFi — has made use of StarkWare's scaling tech. But the integration with dYdX brings a major DEX into the fold, potentially opening the door for other decentralized marketplaces to follow.

As shown in the chart below, trading volumes on dYdX have been trending upwards since April, the same month that it launched bitcoin perpetual swaps. In July, dYdX saw its busiest month yet with $255 million in trading volume. 

Source: Dune Analytics

Reporting by Yogita Khatri