dYdX Transfers $60 Million Worth of Tokens to Stride for Staking
dYdX, the decentralized derivatives exchange, has moved 20 million DYDX tokens, approximately $60 million at current prices, into staking with the Stride platform.
Image Credit: CoinDesk
Community Approval and Implementation
The dYdX community has approved a proposal to stake 20 million DYDX tokens with Stride. This initiative aims to enhance network security and diversify the project's asset portfolio.
The staking was confirmed by dYdX, which has allocated these tokens to the top 26 validators on Stride.
dYdX Community staked 20M DYDX from the community treasury to 26 validators via Stride (from a total active set of 60), increasing the $DYDX bonded rate to 13.7% https://t.co/l3xNiClOG4
— David Gogel (古大卫) | dYdX (🦔,🦔) | we’re hiring (@dgogel) April 7, 2024
Significantly reduces the top 10 validator concentration to ~60% and enhances… pic.twitter.com/JHNEBnhfX3
Staking Benefits and Mechanics
Staking rewards will be generated in USDC and then automatically used to purchase more DYDX tokens for the project's treasury. Antonio Juliano, the founder of dYdX, explained that the interest generated will be continually reinvested in DYDX, bolstering the project's treasury.
In a vote with 81% participation, the proposal passed with 91% approval. However, some dissenters expressed concerns that this decision might reduce the annual percentage yield (APY) for DYDX, making the token less attractive to new investors.
The dYdX community has voted to stake part of the treasury
— Antonio (@AntonioMJuliano) April 7, 2024
The yield from fees generated will be continuously used via Stride to buy DYDX which will be returned back to the treasury
Stride's Response
Stride welcomed the proposal and offered a reduced fee of 7.5%, down from the usual 10%.
The @dYdX proposal to liquid stake 20M DYDX with Stride has passed ✅
— Stride (@stride_zone) April 7, 2024
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 👍
Legal and Market Movements
Recently, dYdX also announced plans to establish a new legal entity in the Cayman Islands, a move seen as a defensive measure against increasing regulatory pressures on DeFi in the United States.
The price of the DYDX token has seen significant growth, rising from $2.5 to $4.5 before adjusting to around $3 at the time of writing.
1D Chart of DYDX/USDT on Binance at 10:15 AM on 08/04/2024
Conclusion
This strategic move by dYdX to stake a substantial amount of its tokens with Stride reflects the platform's commitment to enhancing security and maintaining investor interest. While some community members have reservations, the overall positive response and reduced fees from Stride suggest a promising outlook for the initiative.
