dYdX, a popular decentralized exchange, recently announced a partnership with Axelar, a cross-chain bridge, in a move that will allow dYdX users to seamlessly interact with a range of other blockchains and dApps.
What is a cross-chain bridge?
A cross-chain bridge is a tool that allows users to transfer assets between different blockchains. This makes it possible to use tokens and other digital assets on a variety of different platforms, regardless of the underlying blockchain technology.
This integration is part of dYdX’s broader transition to its fourth protocol version, which will place a strong emphasis on cross-chain functionality. The goal is to make it easy for users to transfer assets into and out of dYdX v4 with a single click, regardless of which blockchain they are currently using.
What is Squid?
Squid is a solution designed to connect different blockchains together and facilitate cross-chain communication. It is built on top of the Axelar network.
“High flexibility, speed, and ease of interoperability are essential requirements for the success of the app chain approach. The dYdX chain needs to attract users from L2s, Ethereum, other app chains, and centralized exchanges to serve as many users as possible,” the announcement stated.
dYdX’s developers expect to complete the initial development of v4 by October and plan to launch the mainnet by the end of 2023. Once the transition to v4 is complete, the centralized order book and matching engine used by dYdX will be phased out, and the platform will instead rely on a more decentralized automated market making (AMM) model.
What is an AMM?
An automated market maker (AMM) is a decentralized protocol that uses smart contracts to facilitate trading between users. Unlike traditional exchanges, which rely on a central authority to match buyers and sellers, AMMs use mathematical formulas to determine the price of assets based on supply and demand.
**Additional Context:**
* In August, dYdX unlocked 6.52 million DYDX tokens, worth approximately $13.82 million.
* In April, the exchange withdrew from Canada in response to regulatory pressure.
**References:**
* [dYdX Announces Integration with Axelar](
https://cointelegraph.com/news/dydx-announces-integration-with-axelar-to-become-more-interoperable
)
**Source:**
This article was written by BITboosters and is licensed under the Creative Commons Attribution 4.0 International License.
(https://creativecommons.org/licenses/by/4.0/)