DYdX V3's TVL Is $100M As Shutdown Begins — But Users Can Still Withdraw

DYdX, the fifth-largest decentralized perpetuals exchange, has begun sunsetting its v3 iteration.

On Oct. 28, dYdX’s v3 wind down began, with oracle price updates, trading, and funding features halted on the platform. Open trades were settled into USDC based on asset prices as of 8:05 am EST.

The platform’s smart contracts will then register the exchange as frozen on Oct. 30, preventing the protocol from updating exchange account balances.

However, users will still be able to withdraw their USDC account balances after Oct. 30, owing to the platform’s infrastructure achieving Stage 1 decentralization — meaning a Layer 2 network has implemented a validity proof system allowing users to withdraw assets from the chain without relying on trusted third parties.

“The upcoming shutdown of dYdX v3, once >1B$ rollup, is IMO one of the most significant events in the Ethereum rollup space,” said Bartek Kiepuszewski, co-founder of L2beat. “Operators will simply stop working and users will have to remove their funds.”

Kiepuszewski praised dYdX for implementing a proof system, allowing users to withdraw their funds from v3’s smart contract after the exchange ceases operations.

“This ability — to remove your funds when operators shut down — is [something] you should expect from any rollup,” Kiepuszewski continued. “[A] lack of proof system means that you are fully reliant on operators for the ability to withdraw their funds… If a rollup is Stage 1, you should be able to withdraw.”

According to L2beat, only Arbitrum One, OP Mainnet, ZKsync Lite, and dYdX v3 have reached Stage 1 decentralization, while DeGate v1 and Fuel v1 are at Stage 2 decentralization. Base launched Stage 1 decentralization on testnet in July, while Arbitrum announced plans to pursue Stage 2 decentralization in June.

DYdX v3 users will not incur any trading, liquidation, or other fees during the wind-down. DYdX will host historical trading data from v3 for at least one year after shutting down.

DYdX v3 is a Layer 2 appchain built in partnership with StarkWare that leverages its StarkEx infrastructure.

DYdX hosted more than $1 trillion in cumulative trade volume, and its total value locked (TVL) peaked at more than $1 billion in November 2021, according to L2beat.

DYdX V3 sunsetting will not impact the project's flagship dYdX v4 exchange, which will continue operating as usual.