In a significant move, the decentralized derivatives exchange dYdX community has agreed to stake 20 million dYdX Chain tokens, valued at approximately $60 million, with Cosmos staking provider Stride. The primary objective behind this decision is to bolster the economic security of the network and foster stake diversity within the community.
Under this arrangement, the staked tokens will accrue USDC rewards, which will be automatically reinvested into additional dYdX tokens. This mechanism aims to create a self-sustaining cycle for stakers. According to dYdX founder Antonio Juliano, the fees generated from the yield will be continuously utilized via Stride to purchase DYDX tokens, subsequently returning them to the treasury.
The dYdX community has voted to stake part of the treasury
The yield from fees generated will be continuously used via Stride to buy DYDX which will be returned back to the treasury
— Antonio | dYdX (@AntonioMJuliano) April 7, 2024
The proposal garnered significant support, with 91% backing in a vote that saw 81% participation. However, some dissenters expressed concerns about potential reductions in dYdX’s Annual Percentage Yield (APY), which could potentially diminish the token’s appeal to prospective investors.
“Delegating the community’s treasury through a liquid staking provider leads to a reduction in the Annual Percentage Rate (APR) for currently staking users. This arrangement favors only the liquid staking provider and certain validators selected to receive stakes from the LSP, raising significant concerns:
1. The decrease in APR may diminish the attractiveness of dYdX tokens, making it more difficult to attract new stakers.
2. It could create a sense of inequality among validators,” expressed Crypto Learning Club in the discussion of the proposal.
On the provider side, Stride welcomed the proposal and even offered a discounted fee rate of 7.5%, down from its standard 10%. In a statement on X, the firm emphasized that this initiative would not only enhance the economic security of the dYdX chain but also contribute to improving stake decentralization, ultimately benefitting the entire ecosystem.
The @dYdX proposal to liquid stake 20M DYDX with Stride has passed ✅
An overwhelming 91.7% voted yes, with less than 1% voting no. Voter turn-out was an impressive 81.6%.
This prop will boost the economic security of dYdX chain, while improving stake decentralization 👍
— Stride (@stride_zone) April 7, 2024
