What Is Dymension (DYM)?
Dymension (DYM) is a Layer 1 blockchain within the Cosmos ecosystem that enhances the scalability and interoperability of decentralized applications through its modular architecture, known as RollApps. The Dymension network utilizes the Cosmos SDK and Inter-Blockchain Communication (IBC) protocol for seamless blockchain communication and asset transfer. The DYM token is central to the Dymension ecosystem, facilitating transaction fees, governance, staking, and more.
Key components include the Dymension Hub, which manages the network’s operations, the RollApp Development Kit (RDK) for creating application-specific blockchains, Elastic Block Production for efficient block creation, and an embedded Automated Market Maker (AMM) for efficient asset routing and price discovery. The network’s modular blockchains and Internet of RollApps approach support a wide range of applications from DeFi to gaming.
Who Created Dymension?
Dymension was founded by Yishay Harel, who serves as the CEO of the project. Harel's journey into the cryptocurrency space began in 2016, with past experience at the crypto exchange Kraken. The vision for Dymension emerged in late 2021, when Yishay Harel and his team recognized and developed a keen interest in the transformative potential of rollups.
How Does Dymension Work?
The Dymension Hub
The Dymension Hub serves as the central platform that ensures the security, interoperability, and scalability of the entire Dymension ecosystem. Acting as the backbone of the Dymension network, the Hub allows RollApps to operate efficiently without needing their own validators. Centralizing security and consensus reduces complexity and operational costs, making blockchain deployment more accessible to developers. The Dymension Hub integrates various layers for handling consensus, data availability, and liquidity, which collectively ensure the ecosystem’s robustness and efficiency
RollApp Development Kit (RDK)
RollApps are modular blockchains built on top of the Dymension Hub, which are deployed using the RDK. The RDK provides a standardized template for rapid development, enabling developers to customize their RollApps based on specific business requirements by choosing from a variety of modules to build their application.
Each RollApp operates as a modular blockchain, optimized for specific applications such as DeFi, gaming, or enterprise solutions. Through an interconnected ecosystem of application-specific blockchains known as the “Internet of RollApps” within the Dymension network, developers can create scalable and secure decentralized applications.
Inter-Blockchain Communication (IBC)
Inter-Blockchain Communication (IBC) facilitates secure communication between different blockchains within the Cosmos ecosystem. RollApps use IBC to connect with each other and other IBC-enabled chains, enabling seamless exchange of information and assets across various networks. IBC connections within Dymension ensure that RollApps can communicate securely with other blockchains. Standardizing communication protocols facilitates interoperability, allowing for the seamless exchange of information and assets. Eliminating centralized or risky multi-sig bridges enhances security and efficiency.
Dymint Consensus Mechanism
Dymint, Dymension’s version of the Tendermint consensus mechanism, handles block production for RollApps. Utilizing Elastic Block Production (EBP), blocks are produced on-demand, reducing operational costs and improving capital efficiency. Producing blocks only when transactions occur optimizes resource usage and reduces unnecessary operations EBP ensures that resources are utilized efficiently, providing a scalable solution for high-throughput applications.
Delegated Proof-of-Stake (DPoS)
Dymension employs a Delegated Proof-of-Stake (DPoS) consensus mechanism to secure its Layer 1 blockchain. DYM token holders delegate transaction verification to validators, ensuring network security and supporting the development of secure RollApps. Decentralized security and the use of external data availability layers like Celestia and Avail ensure scalability and data integrity for the ecosystem The DPoS model enhances security by distributing verification responsibilities among multiple validators, reducing the risk of single points of failure.
Embedded Automated Market Maker (AMM)
Dymension's Embedded Automated Market Maker (AMM) is a native liquidity layer integrated within the Dymension network, designed to facilitate efficient asset routing, swapping, and price discovery.
Operating within the RollApp ecosystem, the AMM allows for the automatic and algorithmic exchange of tokens without the need for a centralized order book. Utilizing smart contracts, the AMM maintains liquidity pools where users can trade assets directly against the pool, ensuring continuous liquidity. The fee structure for these swaps includes LP swap fees and protocol swap fees, where the latter contributes to reducing the supply of DYM tokens through a burning mechanism.
By embedding the AMM into the network, Dymension enhances the economic efficiency and scalability of its modular blockchains, supporting a wider range of decentralized applications (dApps) and financial services within the ecosystem. The AMM's integration ensures that all RollApps can access liquidity seamlessly, facilitating smoother and more cost-effective transactions.
Why Trade DYM?
Transaction Fees and Burning
One of the primary uses of $DYM is to pay for transaction fees within the Dymension ecosystem. These fees are generated from the demand for blockspace and are distributed among validators and stakers. Additionally, part of the transaction fees, specifically those related to validating bridge fees and protocol swap fees, are converted into $DYM and systematically burned. The burning process reduces the circulating supply of $DYM, potentially increasing its value over time.
Governance
$DYM holders can participate in the governance of the Dymension network by voting on various protocol upgrades, parameter adjustments, and other decisions. Through a decentralized governance model, the community has a say in the direction and development of the network, promoting transparency and inclusivity.
Staking
To participate in the consensus process and secure the Dymension network, it is essential to stake $DYM. The network is secured by the validators, who are responsible for verifying transactions and maintaining the blockchain. In return, they receive rewards in the form of additional $DYM tokens.
Providing Liquidity
Users can provide liquidity by staking DYM tokens in liquidity pools managed by the Automated Market Maker (AMM). These pools enable the easy swapping of assets and ensure accurate price discovery. By providing liquidity, users earn fees from these swaps, which encourages them to contribute their tokens to the pools, ensuring there is always enough liquidity for transactions.
RollApp Bonds
Sequencers, who order and propose state updates for RollApps, must stake DYM tokens as bonds to ensure they act in the network's best interest. The size of these bonds is determined by the Total Value Bridged (TVB) to the RollApp. In multi-sequencer RollApps, the amount of bond a sequencer posts influences their allocated block production time. The bonding mechanism helps secure the RollApps and reduces the circulating supply of DYM, contributing to network stability.
Sponsorships
An onchain DAO (Decentralized Autonomous Organization) distributes DYM tokens to stimulate network growth. Users who stake their DYM with validators get voting rights, which they can use to support RollApps or liquidity pools. The protocol then streams $DYM according to the total cumulative sponsorship weights by users, incentivizing them to support projects they find valuable.
DYM Tokenomics
The initial distribution of $DYM tokens is designed to ensure a balanced and sustainable ecosystem:
Public Allocation: 8% through Genesis Rolldrop and incentivized testnet.
Ecosystem and R&D: 20% allocated to the Dymension Foundation for ecosystem growth and research and development.
Incentives Manager (Onchain DAO): 33% for RollApp Credit Streams, Rolldrop Seasons, and AMM incentives.
Community Pool (Onchain DAO): 5% for the long-term treasury.
Backers: 14% for partners who provided funding and support.
Core Contributing Team: 20% for early contributors.
How to Trade DYM on Flipster?
Sign up for an account on the Flipster website or by downloading the Flipster app (Android or Apple).
Click the [Trade] tab.
Search for DYM and click on it.
Select the leverage (up to 100x).
Select either a Trigger Order or Market Order.
Input the amount of crypto you wish to trade, or select a percentage of your available funds to use.
Once you have confirmed the details, click the [Long] or [Short] button to open a position.
Disclaimer: This material is for information purposes only and does not constitute financial advice. Flipster makes no recommendations or guarantees in respect of any digital asset, product, or service. Trading digital assets and digital asset derivatives comes with significant risk of loss due to its high price volatility, and is not suitable for all investors.