Introduction to dYmension
With the deployment of RollApps nearing (the proposal has passed already) dYmension is poised to become one of the hottest projects in Cosmos and Web3 during this bull run. Read everything you need to know 👇
What is dYmension?
In simple terms, dYmension is an Appchain—a chain designed for a specific purpose. Its primary function is to facilitate the easy creation of "RollApps" by developers (more on that below) and to ensure their optimal performance. dYmension has been built using the Cosmos SDK and Tendermint, similar to Celestia and Osmosis. This means that it can leverage IBC, enabling it to be an exceptionally interoperable chain. IBC serves as a "language" that enables different chains to communicate without the need for risky third-party bridges.
What are L2s and RollApps?
A Layer 2 (L2) chain is a secondary framework or protocol built on top of an existing blockchain (L1) to improve its scalability, speed, or functionality. Think of Layer 1 as the main highway and Layer 2 as additional lanes or roads that help manage traffic more efficiently without expanding the main highway. RollApps are a fusion of "appchains" and L2s. In essence, RollApps are customized L2s to perform specific tasks while also being secure thanks to their parent chain. They typically exhibit lower latency and computational costs compared to regular appchains because they leverage rollup technology and externalize their settlement and data availability layers.
How does this work?
Most of the popular blockchains we've known so far, such as Ethereum and Solana, consist of three main components:
👉 Settlement Layer
This layer ensures the integrity and immutability of the ledger, playing a critical role in the overall network security of the blockchain. 👉 Data Availability Layer
This layer ensures that data related to transactions, blocks, and smart contracts is accessible and verifiable by participants. 👉 Application Layer
This layer handles the execution of smart contracts and other application-specific functions. The dYmension hub is intended to function as the shared settlement layer for all RollApps. Comprising validator nodes, it is responsible for processing and verifying transaction blocks submitted by RollApps.
But how will RollApps submit transactions to the dYmension Hub? Through Sequencers. These specialized nodes compile transaction blocks and communicate with dYmension Hub validators to process blocks and achieve consen
But how will RollApps submit transactions to the dYmension Hub? Through Sequencers. These specialized nodes compile transaction blocks and communicate with dYmension Hub validators to process blocks and achieve consensus.
👉 Network Fees
Individual RollApps may introduce fees in their own custom tokens, but the underlying gas fees charged by the dYmension Hub are denominated in $DYM. 👉 Staking
Both Sequencers on RollApps and validators operating within the Dymension Hub stake DYM tokens to secure the right to conduct their activities. Staked $DYM enhances the security of the dYmension Hub, making it a more reliable settlement layer. 👉 Block Rewards
Validators receive rewards in $DYM for their block-processing activities, incentivizing them to maintain network integrity and efficiency. 👉 Token Burns
$DYM burn events play a significant role in managing token supply and enhancing scarcity. For instance, fees generated from activities like the Validating Bridge Fee (applied when users withdraw funds from a RollApp via the built-in AMM) and the Protocol Swap Fee (charged by the AMM for token swaps, routing, and oracle provision services) are converted into DYM tokens and subsequently burned. This process helps reduce the emission rate of DYM, potentially increasing its value over time.
Also, feel free to DM me on twitter or telegram for any questions (or even for a small talk). I am always open and welcoming!
This layer ensures the integrity and immutability of the ledger, playing a critical role in the overall network security of the blockchain. 👉 Data Availability Layer
This layer ensures that data related to transactions, blocks, and smart contracts is accessible and verifiable by participants. 👉 Application Layer
This layer handles the execution of smart contracts and other application-specific functions. The dYmension hub is intended to function as the shared settlement layer for all RollApps. Comprising validator nodes, it is responsible for processing and verifying transaction blocks submitted by RollApps.
dYmension vs Ethereum
Ethereum has transitioned from being a Layer 1 smart contract platform to primarily serving as a settlement layer. Many big projects and chains, such as Arbitrum and Optimism, operate as Layer 2 solutions on the Ethereum blockchain. However, the dYmension Hub, functioning as a shared settlement layer, presents a direct alternative. What sets dYmension apart from Ethereum and why would someone choose to deploy a RollApp on dYmension instead of using an Ethereum Layer 2 solution? There are two primary reasons: 👉 Easier Deployment: dYmension is not merely a passive Layer 1 awaiting adoption by chains. Instead, it offers a comprehensive set of tools (Dymension RDK) empowering users to effortlessly build and customize RollApps according to their preferences. 👉 RollApps Specific Focus: Unlike Ethereum, which evolved into its current state gradually, dYmension was purpose-built for RollApps from the outset. Its sole focus is on facilitating the creation and operation of RollApps. Additionally, being part of the Cosmos ecosystem, dYmension leverages Inter-Blockchain Communication (IBC) for trustless communication with its RollApps. This represents a significant advancement over Ethereum's reliance on risky bridges for interoperability.
$DYM token
$DYM plays a crucial role within the dYmension Hub ecosystem, contributing to its utility and value accrual through various mechanisms:👉 Network Fees
Individual RollApps may introduce fees in their own custom tokens, but the underlying gas fees charged by the dYmension Hub are denominated in $DYM. 👉 Staking
Both Sequencers on RollApps and validators operating within the Dymension Hub stake DYM tokens to secure the right to conduct their activities. Staked $DYM enhances the security of the dYmension Hub, making it a more reliable settlement layer. 👉 Block Rewards
Validators receive rewards in $DYM for their block-processing activities, incentivizing them to maintain network integrity and efficiency. 👉 Token Burns
$DYM burn events play a significant role in managing token supply and enhancing scarcity. For instance, fees generated from activities like the Validating Bridge Fee (applied when users withdraw funds from a RollApp via the built-in AMM) and the Protocol Swap Fee (charged by the AMM for token swaps, routing, and oracle provision services) are converted into DYM tokens and subsequently burned. This process helps reduce the emission rate of DYM, potentially increasing its value over time.
Thanks for reading!
If you liked this blog, make sure to follow me on twitter/X, as this where all my threads are uploaded first!Also, feel free to DM me on twitter or telegram for any questions (or even for a small talk). I am always open and welcoming!