--- title: "Empowering DeFi: Overview of dYdX's Layer 2 Blockchain" description:  dYdX Chain is a Layer 2 blockchain designed for decentralized trading, borrowing, and lending, built on the Ethereum network. image: https://blog.validationcloud.io/hubfs/Empowering%20DeFi_%20Overview%20of%20dYdXs%20Layer%202%20Blockchain.png --- [Skip to content](https://blog.validationcloud.io/dydx#main-content) Validation Cloud Open main navigation Close main navigation - [Connect to Web3](https://www.validationcloud.io/) [Connect to Web3](https://www.validationcloud.io/) May 13, 2024 2:10:42 PM # Empowering DeFi: Overview of dYdX's Layer 2 Blockchain ![Picture of Validation Cloud Team](https://blog.validationcloud.io/hubfs/validationcloud-icon-black.svg) [Validation Cloud Team](https://blog.validationcloud.io/author/validation-cloud-team) Share: [linkedin-in icon](http://www.linkedin.com/shareArticle?mini=true&url=https://blog.validationcloud.io/dydx) [Twitter icon](https://twitter.com/intent/tweet?url=https://blog.validationcloud.io/dydx) [envelope icon](mailto:?body=https://blog.validationcloud.io/dydx) ##### [**![Empowering DeFi_ Overview of dYdXs Layer 2 Blockchain](https://blog.validationcloud.io/hs-fs/hubfs/Empowering%20DeFi_%20Overview%20of%20dYdXs%20Layer%202%20Blockchain.png?width=732&height=450&name=Empowering%20DeFi_%20Overview%20of%20dYdXs%20Layer%202%20Blockchain.png)**](https://www.validationcloud.io/staking) ##### **What is dYdX Chain and how does it work?** [dYdX](https://dydx.exchange/?) is on a mission to democratize access to financial opportunity.[dYdX Chain](https://dydx.exchange/blog/dydx-chain-official-release) is a Layer 2 blockchain designed for decentralized trading, borrowing, and lending, built on the Ethereum network. The platform leverages [StarkWare’s StarkEx](https://starkware.co/starkex/) scalability engine, which utilizes zero-knowledge rollups (ZK-rollups) to achieve high transaction throughput while maintaining the security features of Ethereum’s main chain. This [layer 2](https://www.ledger.com/academy/what-is-dydx-exchange#:~:text=As%20part%20of%20its%20commitment,v4%20protocol%20are%20fully%20decentralized.) enables users to perform crypto trades at significantly lower costs and with reduced latency compared to traditional on-chain transactions on Ethereum. By batching and periodically settling transactions on the Ethereum network, dYdX ensures the security of every trade while also minimizing gas fees. Furthermore, dYdX utilizes a decentralized array of smart contracts to manage trades, collateral, liquidations, and governance, facilitating a trustless operating environment for its users. ##### **Features of the dYdX Chain** - **Governance and Token Utility:** The [v4](https://dydx.exchange/blog/dydx-chain-v4-0-release)update introduces new governance features that empower token holders with more control over the protocol's evolution. The token is used for staking to validators as well as ongoing governance, giving holders a direct stake in the operational and future development decisions of the chain. - **Improved Order Types and Trading Features:** dYdX supports reduce-only orders, which are crucial for traders looking to manage risk in their trading strategies. These orders ensure that positions are only reduced, not increased, providing an essential tool for risk management. - **Enhanced Security Measures:** With subaccount withdrawal gating and governance-enabled slashing mechanisms, dYdX enhances security and ensures robust compliance with trading regulations. These features help prevent unauthorized access and penalize malicious activities within the network. - **IBC Withdrawal Rate Limiting:** This feature introduces withdrawal rate limits that can be crucial during high volatility or network stress, ensuring the stability and security of assets within the dYdX ecosystem. ##### **Validation Cloud X dYdX** Validation Cloud is proud to be a validator on dYdX. Stake dYdX via Validation Cloud’s staking platform at [validationcloud.io/staking](http://validationcloud.io/staking) for a seamless and secure staking experience. [![Stake dYdX](https://hubspot-no-cache-eu1-prod.s3.amazonaws.com/cta/default/143804103/interactive-102833111519.png)](https://blog.validationcloud.io/hs/cta/wi/redirect?encryptedPayload=AVxigLLaoy%2BfYRx3hqinc5XpLfKyE7lccn%2FHPuft0B1iEZFvvlffsuNlametdFXcJ13VpBEsQIVJqjJjTnflk%2BOz153sVkYqQVInkLWYyAhvtVb37U4luMTlvo%2BHw0CZaiTKbeArULgD%2FnPnNy%2BZ4ejrLjbFp50xLw%2FzISB2oxahcjTKt86RZxCWjPCf&webInteractiveContentId=102833111519&portalId=143804103)   [![](https://lh7-us.googleusercontent.com/IDbDGRGJSsYklrIAC1G8V9-kAN64UIsVc8tN8gD8OHmXcmIeGh5O3qKsEFzxkGK0tdV2RPvaJXWITHBdigxtfokl5kLlpXDpsH4CGDDBDSPnOQK8UEWbP-bdlpuzloeuPP1ym8An_yiP-a9H91eh8lc)](https://www.validationcloud.io/staking) ##### **About Validation Cloud** Validation Cloud is a Web3 data streaming and infrastructure company that connects organizations into Web3 through a fast, scalable, and intelligent platform. Headquartered in Zug, Switzerland, Validation Cloud offers highly performant and customizable products in staking, node, and data-as-a-service. Learn more at [Validationcloud.io](https://www.validationcloud.io/) | [LinkedIn](https://www.linkedin.com/company/validationcloud/) | [X](https://twitter.com/ValidationCloud)    [dYdX](https://blog.validationcloud.io/tag/dydx) ## Related posts [![](https://blog.validationcloud.io/hs-fs/hubfs/High%20Stakes_Charles%20dHaussy_Socials.jpg?height=200&name=High%20Stakes_Charles%20dHaussy_Socials.jpg)](https://blog.validationcloud.io/high-stakes-dydx) [Appchains](https://blog.validationcloud.io/tag/appchains), [AI](https://blog.validationcloud.io/tag/ai), [dYdX](https://blog.validationcloud.io/tag/dydx), [High Stakes Podcast](https://blog.validationcloud.io/tag/high-stakes-podcast), [DeFi](https://blog.validationcloud.io/tag/defi) ## [dYdX: Perpetuals, Appchains, and AI with Charles d'Haussy](https://blog.validationcloud.io/high-stakes-dydx) ![Picture of Validation Cloud Team](https://blog.validationcloud.io/hubfs/validationcloud-icon-black.svg) [Validation Cloud Team](https://blog.validationcloud.io/author/validation-cloud-team) Feb 19, 2025 10:48:08 AM Alex sits down with Charles d’Haussy, CEO of the dYdX Foundation, to discuss appchains, the power... [Read more](https://blog.validationcloud.io/high-stakes-dydx) [![](https://blog.validationcloud.io/hs-fs/hubfs/Autonity_Testnet.png?height=200&name=Autonity_Testnet.png)](https://blog.validationcloud.io/autonity) [Validator](https://blog.validationcloud.io/tag/validator), [Autonity](https://blog.validationcloud.io/tag/autonity) ## [Autonity: Overview of the Blockchain for Decentralized Derivatives Clearing](https://blog.validationcloud.io/autonity) ![Picture of Validation Cloud Team](https://blog.validationcloud.io/hubfs/validationcloud-icon-black.svg) [Validation Cloud Team](https://blog.validationcloud.io/author/validation-cloud-team) Apr 26, 2024 1:25:02 PM Autonity is an EVM-based Layer 1 blockchain protocol specifically designed for peer-to-peer... [Read more](https://blog.validationcloud.io/autonity) [![](https://blog.validationcloud.io/hs-fs/hubfs/Berachain_Updated_April%202024.png?height=200&name=Berachain_Updated_April%202024.png)](https://blog.validationcloud.io/berachain-the-evm-compatible-l1-blockchain-revolutionizing-defi-with-proof-of-liquidity) [Berachain](https://blog.validationcloud.io/tag/berachain) ## [Berachain: The EVM-Compatible L1 Blockchain Revolutionizing DeFi with Proof of Liquidity](https://blog.validationcloud.io/berachain-the-evm-compatible-l1-blockchain-revolutionizing-defi-with-proof-of-liquidity) ![Picture of Validation Cloud Team](https://blog.validationcloud.io/hubfs/validationcloud-icon-black.svg) [Validation Cloud Team](https://blog.validationcloud.io/author/validation-cloud-team) Feb 16, 2024 11:12:37 AM What is Berachain? 🐻 ⛓️ Berachain is a new DeFi-focused Layer 1 blockchain designed to better... [Read more](https://blog.validationcloud.io/berachain-the-evm-compatible-l1-blockchain-revolutionizing-defi-with-proof-of-liquidity) --- # Validation Cloud Copyright © 2024, Validation Cloud ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "author" : { "@type" : "Person", "name" : "Validation Cloud Team", "url" : "https://blog.validationcloud.io/author/validation-cloud-team" }, "dateModified" : "2024-05-14T16:16:23.637Z", "datePublished" : "2024-05-13T18:10:42.000Z", "headline" : "Empowering DeFi: Overview of dYdX's Layer 2 Blockchain", "image" : [ "https://blog.validationcloud.io/hubfs/Empowering%20DeFi_%20Overview%20of%20dYdXs%20Layer%202%20Blockchain.png" ], "mainEntityOfPage" : { "@id" : "https://blog.validationcloud.io/dydx", "@type" : "WebPage" }, "publisher" : { "@type" : "Organization", "logo" : { "@type" : "ImageObject", "url" : "https://blog.validationcloud.io/hubfs/validationcloud-logo-black-1.svg" } } } ```