Dymension: The Next Celestia? (Plus Airdrop)

Airdrop frenzy has once again taken over the crypto industry after the data availability layer, Celestia distributed 60 million tokens, now valued at over $1 billion, to various user groups. Now, several other projects are following their lead, signaling the resurgence of a potential bull market. One of these projects is Dymension, a blockchain built to power the “Internet of RollApps” that’s already slated to be a multi-billion dollar project according to early trading metrics. This article will explore Dymension and its purpose, why the problem it’s solving is important, and the airdrop criteria and the potential for future DYM-based airdrops.

Rollups and Layer 2 solutions have become the primary scaling solution for blockchains since the release of Arbitrum and Optimism a couple of years ago. They primarily exist in the Etheruem ecosystem, and settle their transactions to the main chain while taking the costly transaction execution and moving it to an off-chain environment. Recently, there has been a trend of greater modularization for rollups, primarily centered around the concept of posting transaction data to a cheaper location than Ethereum’s storage designed for transaction execution. Celestia, the first large data availability solution to be released, offers rollups a significantly cheaper place to store their data while still guaranteeing it can be accessed by anyone who wants to verify that L2s are executing transactions correctly.

With this growth in rollups, several issues are emerging that hinder user and developer experience. One of the biggest is the lack of interoperability between rollups - going between two rollups likely requires the use of a trusted bridge - a potential point of exploitation. Dymension hopes to solve this problem by creating an ecosystem of RollApps - standardized rollups that use the Inter-Blockchain Communication protocol to ensure safe and trustless bridging. 

Instead of using Ethereum for settlement, RollApps use the Dymension Hub, a Cosmos SDK-based blockchain acting as a liquidity layer. IBC is a communication protocol native to Cosmos, so this choice makes sense. This could be considered a potential downside of Dymension, as Ethereum is still clearly the strongest settlement layer, and Dymension must directly compete with it for security, liquidity, and market share. At the same time, it creates a stronger value proposition for the DYM token if successful, as it will become an ETH-like asset that’s required by all RollApps to settle their data. Dymension also allows RollApps to use numerous other data availability layers, including Celestia, Near, and Avail. This design decision is beneficial for RollApps’ composability, and allows each to choose the DA layer that best suits their needs, whether that be cost or security. It will be interesting to see the choices of different RollApps, and if an exploit of one DA layer threatens the entire ecosystem with bridged assets. Additionally, RollApps have control over their execution environment, and can choose the virtual machine of their choice, giving them extreme flexibility and the feeling of quick blockchain deployment without the hassle. 

Dymension recently announced an airdrop for Cosmos, Osmosis, and Celestia stakers, as well as frequent users of Ethereum L2s. The airdrop was most generous to TIA stakers, who got 200 DYM for staking a minimum of 1 TIA. On the Aevo decentralized perpetuals exchange, DYM is trading at a pre-launch price of a little under $4, making the airdrops worth nearly four figures. With an initial total supply of 1 billion tokens, Dymension could instantly become a top 25 project if the airdrop selloff doesn’t tank the price.

Going forward, it’s likely that RollApps deploying on Dymension will airdrop tokens to DYM stakers. This would naturally follow from the way that Cosmos SDK-based chains airdrop to ATOM holders, and how L2s using Celestia as a DA layer airdrop to TIA stakers. Ultimately, these airdrops reward those providing economic security to the network via staking, and the potential for future airdrops creates an admittedly bubble-like flywheel that drives speculation for these assets.

Dymension’s token generation event is slated to take place in the coming weeks, after which the network will be live, and some of the 500+ RollApps on testnet will launch their products. Whether or not Dymension is a success remains to be seen. However, their massive airdrop campaign, along with the promise of solving a critical problem for L2s, is certainly an enticing value proposition.

By Lincoln Murr

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