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dYdX Layer 2


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Process Quality Review (0.7)

dYdX Layer 2

Final score:91%
Date:11 Aug 2021
Audit Process:version 0.7
PQR Score:91%


Protocol Website:https://dydx.exchange/

Scoring Appendix

The final review score is indicated as a percentage. The percentage is calculated as Achieved Points due to MAX Possible Points. For each element the answer can be either Yes/No or a percentage. For a detailed breakdown of the individual weights of each question, please consult this document.

The blockchain used by this protocol

Very simply, the audit looks for the following declarations from the developer's site. With these declarations, it is reasonable to trust the smart contracts.

  • Here is my smart contract on the blockchain
  • You can see it matches a software repository used to develop the code
  • Here is the documentation that explains what my smart contract does
  • Here are the tests I ran to verify my smart contract
  • Here are the audit(s) performed to review my code by third party experts

This report is for informational purposes only and does not constitute investment advice of any kind, nor does it constitute an offer to provide investment advisory or other services. Nothing in this report shall be considered a solicitation or offer to buy or sell any security, token, future, option or other financial instrument or to offer or provide any investment advice or service to any person in any jurisdiction. Nothing contained in this report constitutes investment advice or offers any opinion with respect to the suitability of any security, and the views expressed in this report should not be taken as advice to buy, sell or hold any security. The information in this report should not be relied upon for the purpose of investing. In preparing the information contained in this report, we have not taken into account the investment needs, objectives and financial circumstances of any particular investor. This information has no regard to the specific investment objectives, financial situation and particular needs of any specific recipient of this information and investments discussed may not be suitable for all investors.

Any views expressed in this report by us were prepared based upon the information available to us at the time such views were written. The views expressed within this report are limited to DeFiSafety and the author and do not reflect those of any additional or third party and are strictly based upon DeFiSafety, its authors, interpretations and evaluation of relevant data. Changed or additional information could cause such views to change. All information is subject to possible correction. Information may quickly become unreliable for various reasons, including changes in market conditions or economic circumstances.

This completed report is copyright (c) DeFiSafety 2023. Permission is given to copy in whole, retaining this copyright label.

Code And Team


This section looks at the code deployed on the Mainnet that gets reviewed and its corresponding software repository. The document explaining these questions is here.

1. Are the executing code addresses readily available? (%)

Answer: 100%

Percentage Score Guidance:
Clearly labelled and on website, docs or repo, quick to find
Clearly labelled and on website, docs or repo but takes a bit of looking
Addresses in mainnet.json, in discord or sub graph, etc
Address found but labeling not clear or easy to find
Executing addresses could not be found

2. Is the code actively being used? (%)

Answer: 100%

Activity is well over 10 transactions a day on contract SoloMargin.sol, as indicated in the Appendix.

Percentage Score Guidance:
More than 10 transactions a day
More than 10 transactions a week
More than 10 transactions a month
Less than 10 transactions a month
No activity

3. Is there a public software repository? (Y/N)

Answer: Yes

Is there a public software repository with the code at a minimum, but also normally test and scripts. Even if the repository was created just to hold the files and has just 1 transaction, it gets a "Yes". For teams with private repositories, this answer is "No"

Score Guidance:
There is a public software repository with the code at a minimum, but also normally test and scripts. Even if the repository was created just to hold the files and has just 1 transaction.
For teams with private repositories.

4. Is there a development history visible? (%)

Answer: 100%

With 500 commits and 2 branches, this is a robust software repository.

This metric checks if the software repository demonstrates a strong steady history. This is normally demonstrated by commits, branches and releases in a software repository. A healthy history demonstrates a history of more than a month (at a minimum).

Percentage Score Guidance:
Any one of 100+ commits, 10+branches
Any one of 70+ commits, 7+branches
Any one of 50+ commits, 5+branches
Any one of 30+ commits, 3+branches
Less than 2 branches or less than 30 commits

5. Is the team public (not anonymous)? (Y/N)

Answer: Yes

For a "Yes" in this question, the real names of some team members must be public on the website or other documentation (LinkedIn, etc). If the team is anonymous, then this question is a "No".



This section looks at the software documentation. The document explaining these questions is here.

7. Are the basic software functions documented? (Y/N)

Answer: Yes

All of the basic software functions are documented at https://docs.dydx.exchange/#general (Layer 2) and https://legacy-docs.dydx.exchange/#introduction (Layer 1).

8. Does the software function documentation fully (100%) cover the deployed contracts? (%)

Answer: 100%

All contracts and functions are documented in the dYdX documentation. They rigorously document their API, Solo Protocol, and Perpetual Protocol in their Layer 1 documentation, and also detailed API and Perpetual Contract information in their Layer 2 documentation.​

Percentage Score Guidance:
All contracts and functions documented
Only the major functions documented
79 - 1%
Estimate of the level of software documentation
No software documentation

9. Are there sufficiently detailed comments for all functions within the deployed contract code (%)

Answer: 54%

Code examples are in the Appendix. As per the SLOC, there is 54% commenting to code (CtC).

The Comments to Code (CtC) ratio is the primary metric for this score.

Percentage Score Guidance:
CtC > 100 Useful comments consistently on all code
90 - 70%
CtC > 70 Useful comment on most code
60 - 20%
CtC > 20 Some useful commenting
CtC < 20 No useful commenting

10. Is it possible to trace from software documentation to the implementation in code (%)

Answer: 100%

There is clear and explicit traceability all throughout the dYdX documentation due to the fact that they give side-by-side examples on how the described code is implemented into code. Examples of this can be seen all throughout the layer 2 and layer 1 documentation.

Percentage Score Guidance:
Clear explicit traceability between code and documentation at a requirement level for all code
Clear association between code and documents via non explicit traceability
Documentation lists all the functions and describes their functions
No connection between documentation and code



11. Full test suite (Covers all the deployed code) (%)

Answer: 100%

Code examples are in the Appendix. As per the SLOC, there is 331% testing to code (TtC).

This score is guided by the Test to Code ratio (TtC). Generally a good test to code ratio is over 100%. However the reviewers best judgement is the final deciding factor.

Percentage Score Guidance:
TtC > 120% Both unit and system test visible
TtC > 80% Both unit and system test visible
TtC < 80% Some tests visible
No tests obvious

12. Code coverage (Covers all the deployed lines of code, or explains misses) (%)

Answer: 100%

The dYdX solo, perpetual, and protocol repositories all have 100% code coverage from codecov. These are the core and updated contracts.

Percentage Score Guidance:
Documented full coverage
99 - 51%
Value of test coverage from documented results
No indication of code coverage but clearly there is a reasonably complete set of tests
Some tests evident but not complete
No test for coverage seen

13. Scripts and instructions to run the tests? (Y/N)

Answer: Yes

14. Report of the results (%)

Answer: 70%

The dYdX coveralls code coverage reports can be found at https://coveralls.io/github/dydxprotocol.

Percentage Score Guidance:
Detailed test report as described below
GitHub code coverage report visible
No test report evident

15. Formal Verification test done (%)

Answer: 0%

There is no evidence of a dYdX Formal Verification test in any of their documentation or in further web research.

16. Stress Testing environment (%)

Answer: 100%

All of the dYdX "42" contract addresses in the deployed.json are Kovan testnet addresses that are still regularly being used.



This section looks at the 3rd party software audits done. It is explained in this document.

17. Did 3rd Party audits take place? (%)

Answer: 100%
  • dYdX were first audited pre-launch by Zeppelin Solutions and Bramah Systems.  - They were also audited by PeckShield for their layer 2 launch.  - All reports can be found here and here

Percentage Score Guidance:
Multiple Audits performed before deployment and results public and implemented or not required
Single audit performed before deployment and results public and implemented or not required
Audit(s) performed after deployment and no changes required. Audit report is public
Audit(s) performed after deployment and changes needed but not implemented
No audit performed
Audit Performed after deployment, existence is public, report is not public and no improvements deployed OR smart contract address not found, (where question 1 is 0%)
Deduct 25% if code is in a private repo and no note from auditors that audit is applicable to deployed code.

18. Is the bug bounty acceptable high? (%)

Answer: 50%

The dYdX Bug Bounty program offers up to 50k for the most critical of bug finds.

Percentage Score Guidance:
Bounty is 10% TVL or at least $1M AND active program (see below)
Bounty is 5% TVL or at least 500k AND active program
Bounty is 5% TVL or at least 500k
Bounty is 100k or over AND active program
Bounty is 100k or over
Bounty is 50k or over AND active program
Bounty is 50k or over
Bug bounty program bounty is less than 50k
No bug bounty program offered
An active program means that a third party (such as Immunefi) is actively driving hackers to the site. An inactive program would be static mentions on the docs.

Access Controls


This section covers the documentation of special access controls for a DeFi protocol. The admin access controls are the contracts that allow updating contracts or coefficients in the protocol. Since these contracts can allow the protocol admins to "change the rules", complete disclosure of capabilities is vital for user's transparency. It is explained in this document.

19. Can a user clearly and quickly find the status of the access controls (%)

Answer: 100%

There is a clearly-labelled "Governance" section on the dYdX website. Once there, you have buttons that either take you to the forums or the documentation.

Percentage Score Guidance:
Clearly labelled and on website, docs or repo, quick to find
Clearly labelled and on website, docs or repo but takes a bit of looking
Access control docs in multiple places and not well labelled
Access control docs in multiple places and not labelled
Admin Control information could not be found

20. Is the information clear and complete (%)

Answer: 90%

Percentage Score Guidance:
All the contracts are immutable -- 100% OR
a) All contracts are clearly labelled as upgradeable (or not) -- 30% AND
b) The type of ownership is clearly indicated (OnlyOwner / MultiSig / Defined Roles) -- 30% AND
c) The capabilities for change in the contracts are described -- 30%

21. Is the information in non-technical terms that pertain to the investments (%)

Answer: 90%

All governance and access control information relates to investment safety and is described in user-friendly language. In addition, there is also a "Technical Overview" section for developers.

Percentage Score Guidance:
All the contracts are immutable
Description relates to investments safety and updates in clear, complete non-software language
Description all in software specific language
No admin control information could be found

22. Is there Pause Control documentation including records of tests (%)

Answer: 40%

dYdX mention a similar function to Pause Control with their Merkle-pauser executor: "The Merkle-pauser executor can execute proposals that freeze the Merkle root, which is updated periodically with each user's cumulative reward balance, allowing new rewards to be distributed to users over time, in case the proposed root is incorrect or malicious." This can be found here​

Percentage Score Guidance:
All the contracts are immutable or no pause control needed and this is explained OR Pause control(s) are clearly documented and there is records of at least one test within 3 months
Pause control(s) explained clearly but no evidence of regular tests
Pause controls mentioned with no detail on capability or tests
Pause control not documented or explained


 The author of this review is Rex of DeFi Safety.

Email: rex@defisafety.com
Twitter: @defisafety

I started with Ethereum just before the DAO and that was a wonderful education.  It showed the importance of code quality. The second Parity hack also showed the importance of good process.  Here my aviation background offers some value. Aerospace knows how to make reliable code using quality processes.
I was coaxed to go to EthDenver 2018 and there I started SecuEth.org with Bryant and Roman. We created guidelines on good processes for blockchain code development. We got EthFoundation funding to assist in their development Process Quality Reviews are an extension of the SecurEth guidelines that will further increase the quality processes in Solidity and Vyper development. DeFiSafety is my full time gig and we are working on funding vehicles for a permanent staff.

2 * @title Admin
3 * @author dYdX
4 *
5 * Public functions that allow the privileged owner address to manage Solo
6 */
7contract Admin is
8    State,
9    Ownable,
10    ReentrancyGuard
12    // ============ Token Functions ============
1314    /**
15     * Withdraw an ERC20 token for which there is an associated market. Only excess tokens can be
16     * withdrawn. The number of excess tokens is calculated by taking the current number of tokens
17     * held in Solo, adding the number of tokens owed to Solo by borrowers, and subtracting the
18     * number of tokens owed to suppliers by Solo.
19     */
20    function ownerWithdrawExcessTokens(
21        uint256 marketId,
22        address recipient
23    )
24        public
25        onlyOwner
26        nonReentrant
27        returns (uint256)
28    {
29        return AdminImpl.ownerWithdrawExcessTokens(
30            g_state,
31            marketId,
32            recipient
33        );
34    }
3536    /**
37     * Withdraw an ERC20 token for which there is no associated market.
38     */
39    function ownerWithdrawUnsupportedTokens(
40        address token,
41        address recipient
42    )
43        public
44        onlyOwner
45        nonReentrant
46        returns (uint256)
47    {
48        return AdminImpl.ownerWithdrawUnsupportedTokens(
49            g_state,
50            token,
51            recipient
52        );
53    }
5455    // ============ Market Functions ============
5657    /**
58     * Add a new market to Solo. Must be for a previously-unsupported ERC20 token.
59     */
60    function ownerAddMarket(
61        address token,
62        IPriceOracle priceOracle,
63        IInterestSetter interestSetter,
64        Decimal.D256 memory marginPremium,
65        Decimal.D256 memory spreadPremium
66    )
67        public
68        onlyOwner
69        nonReentrant
70    {
71        AdminImpl.ownerAddMarket(
72            g_state,
73            token,
74            priceOracle,
75            interestSetter,
76            marginPremium,
77            spreadPremium
78        );
79    }
8081    /**
82     * Set (or unset) the status of a market to "closing". The borrowedValue of a market cannot
83     * increase while its status is "closing".
84     */
85    function ownerSetIsClosing(
86        uint256 marketId,
87        bool isClosing
88    )
89        public
90        onlyOwner
91        nonReentrant
92    {
93        AdminImpl.ownerSetIsClosing(
94            g_state,
95            marketId,
96            isClosing
97        );
98    }
99100    /**
101     * Set the price oracle for a market.
102     */
103    function ownerSetPriceOracle(
104        uint256 marketId,
105        IPriceOracle priceOracle
106    )
107        public
108        onlyOwner
109        nonReentrant
110    {
111        AdminImpl.ownerSetPriceOracle(
112            g_state,
113            marketId,
114            priceOracle
115        );
116    }
117118    /**
119     * Set the interest-setter for a market.
120     */
121    function ownerSetInterestSetter(
122        uint256 marketId,
123        IInterestSetter interestSetter
124    )
125        public
126        onlyOwner
127        nonReentrant
128    {
129        AdminImpl.ownerSetInterestSetter(
130            g_state,
131            marketId,
132            interestSetter
133        );
134    }
135136    /*
137     * Set a premium on the minimum margin-ratio for a market. This makes it so that any positions
138     * that include this market require a higher collateralization to avoid being liquidated.
139     */
140    function ownerSetMarginPremium(
141        uint256 marketId,
142        Decimal.D256 memory marginPremium
143    )
144        public
145        onlyOwner
146        nonReentrant
147    {
148        AdminImpl.ownerSetMarginPremium(
149            g_state,
150            marketId,
151            marginPremium
152        );
153    }
154155    /*
156     * Set a premium on the liquidation spread for a market. This makes it so that any liquidations
157     * that include this market have a higher spread than the global default.
158     */
159    function ownerSetSpreadPremium(
160        uint256 marketId,
161        Decimal.D256 memory spreadPremium
162    )
163        public
164        onlyOwner
165        nonReentrant
166    {
167        AdminImpl.ownerSetSpreadPremium(
168            g_state,
169            marketId,
170            spreadPremium
171        );
172    }

Solidity Contracts


Comments to Code: 1415 / 2633 =  54 %

JavaScript Tests


Tests to Code: 8723 / 2633 = 331 %