On November 1, 2021 at 18:00 UTC (Close Only Date), spot and margin trading on the dYdX Layer 1 (Solo) will enter Close Only Mode. Additionally, new borrows will be disabled on the protocol.
All users are strongly encouraged to close any open positions and withdraw from all lending pools prior to the Close Only Date.
Why is dYdX Trading Inc. shutting down the Solo protocol?
The dYdX Trading Inc. team is solely focused on continuing to build out the perpetual protocol. Additionally, over 99% of volumes on all dYdX products are occurring on the perpetual protocol. Unfortunately, the Solo protocol still requires a good deal of ongoing bandwidth to ensure dYdX users have a quality experience. As such, operating the Solo protocol is not something dYdX Trading Inc. has bandwidth to continue any longer.
Since the Solo protocol was built over two years ago, dYdX's product and protocol quality have dramatically improved. Continuing to offer a subpar product dilutes the dYdX brand and distracts from the main focus of dYdX: derivatives trading.
Is the dYdX perpetual protocol on Layer 2 affected in any way?
No.
What happens on the Close Only Date?
On the Close Only Date, the dYdX Layer 1 orderbook will be deprecated. This means that no new orders will be able to be submitted, and trades will cease to occur.
To close an already open position after the Close Only Date, a user will have to pay back the user’s debt owed to the Solo Protocol.
What will happen to the lend/borrow pools?
Close only mode means no new borrows will be permitted on the smart contract. Users with assets supplied in the pools will still be able to withdraw via the UI. Based on the smart contract functionality, any users who leave assets in the pools may earn a decreasing amount of interest over time. All users are strongly encouraged to withdraw from the pools prior to the Close Only Date.
How will liquidations continue to occur?
Liquidations on the Solo Protocol are open to anyone who runs a liquidator bot. Thus, liquidations will continue on the Solo Protocol. After the Close Only Date, existing borrows may be closed out at the oracle price by any address. Over the course of 28 days after the Close Only Date, the fee incentive to liquidate a position will scale linearly from 0% to 5%.
About dYdX
dYdX is the developer of a leading decentralized exchange on a mission to build open, secure, and powerful financial products. dYdX runs on audited smart contracts on Ethereum, which eliminates the need to trust a central exchange while trading. We combine the security and transparency of a decentralized exchange, with the speed and usability of a centralized exchange.