The decentralized margin exchange dYdX is working closely with StarkWare, a blockchain tech company that develops zero-knowledge products.

If successful, the results will provide traders with an efficient layer 2 that could significantly reduce trading fees and increase leverage possibilities. With the new solution, trades would be instant, comparable to centralized counterparts like Binance and Coinbase.

Other benefits from the partnership include the ease of creating new margin trading pairs, instant trade settlement, more effective price oracles, and the ability to use multiple perpetual contracts with a single account.

According to dYdX, the plan is to implement the new solution by the end of 2020.

Layer 2 solutions for ETH-based systems use the Ethereum blockchain for verification of off-chain transactions, significantly reducing the costs and gas fees. zkSTARKs, more commonly known as zero-knowledge proofs, are cryptographic proofs that enable users to conduct transactions while maintaining the privacy of the transactors.

StarkWare has been working with the technology since its inception in 2018, working hard to solve both scalability and privacy. dYdX launched in 2017 and set a standard for decentralized margin trading and crypto derivatives.

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