To address token inflation and ensure a sustainable funding mechanism for future plans, the dYdX community passed a governance vote to reduce transaction rewards by 45%. The proposal aims to reduce transaction rewards from 2,876,712 DYDX to 1,582,192 DYDX. The remaining 1,294,520 DYDX will be accumulated in the Rewards Treasury, which can be used/directed by the dYdX community through governance votes (short time lock).
Voting took place on February 15, 2023, with overwhelming support from the community. Of the 776 voters, 91.6% supported the proposal, with a total of 27,534,218 DYDX in favor. The move is part of the V4 Vanguard Post and is intended to match the new distribution and emission schedule outlined in the V4 Vanguard.
The reasoning behind this move is the disproportionate distribution of DYDX trading rewards compared to liquidity provider rewards and rewards/community treasury. This change is intended to address token inflation and ensure a sustainable funding mechanism for future initiatives.
Excess DYDX will now accumulate in the Rewards Vault, which can be accessed by the community through governance votes. The retained DYDX will have a significant impact on the DAO’s ability to fund the V4 initiative in a sustained and controlled manner.
While some community members did not support the cut, the majority of the community supported the proposal. After the governance vote passed, the value of the decentralized exchange token DYDX rose by nearly 30%. Since the beginning of the year, the token has seen an impressive growth rate of more than 120%, especially after the project decided to delay the token unlocking schedule until December.
DYDX/USDT chart. Source: TradingView
At the time of writing, DYDX was trading around $2.40, up 12.3% in 24 hours. This initiative by the dYdX community is a step towards ensuring sustainable and manageable growth of the platform, and it will be interesting to see how it affects future developments and initiatives of the platform.
- Even if USDC loses its peg, DYDX will remain active and positions will not be liquidated
- Community divided over dYdX’s proposal to update Defi funding scheme
according to Kyptos