Since the launch of the dYdX Chain in October 2023, the DYDX token has quietly undergone a profound transformation - from a governance-only asset into a core coordination mechanism for infrastructure security, protocol financing, and decentralized decision-making.
Today, DYDX is no longer just a symbol of governance participation. It is an active component of how the protocol operates at scale.
From Governance Token to Layer 1 Utility
DYDX was originally launched on Ethereum as ethDYDX, governing the Layer 2 version of the protocol (dYdX v3). In 2023, following a community-wide governance vote, DYDX was adopted as the native token of the new dYdX Chain - an independent Layer 1 network built using the Cosmos SDK and secured through proof-of-stake consensus.
This migration unlocked new dimensions of utility - transforming DYDX from a voting token into an operational asset, with responsibilities tied directly to the functioning of the protocol.
Securing the Network Through Staking
At the heart of the dYdX Chain is its validator set - operators responsible for producing blocks, maintaining the in-memory orderbook, and processing transactions. DYDX token holders can stake (delegate) tokens to validators, playing an active role in securing the network.
Unlike traditional inflationary models, staking rewards on the dYdX Chain are derived entirely from protocol activity. Trading and gas fees are distributed back to validators and delegators in USDC, creating a value loop grounded in usage rather than emissions.
As of mid-2025:
- Over 300 million DYDX is staked
- More than 17,700 addresses actively participate in staking
- Cumulative USDC protocol rewards have exceeded $52 million
This architecture rewards long-term participation while avoiding the dilution risks of inflation-based staking reward systems.
Enabling Decentralised Governance
DYDX also continues to serve its original function: decentralized governance. Token holders can propose and vote on protocol changes, delegate their voting power, and help steer decisions ranging from market listings to network parameters.
Every vote is executed on-chain. There are no intermediaries or off-chain enforcers - just code, governed via community consensus.
This model has already enabled major protocol-level shifts, including the adoption of the dYdX Buyback Program, the launch of Surge incentive seasons, and more.
Capital Allocation Through SubDAOs
Another dimension of DYDX utility is capital deployment.
Token holders can vote to fund and empower SubDAOs - community-mandated operational groups that execute strategic initiatives on behalf of the DAO. This includes:
- Treasury SubDAO: buybacks, staking programs, and financial sustainability
- Grants SubDAO: ecosystem funding, tooling, and developer support
- Operations SubDAO: analytics, dashboards, infrastructure operations
This structure ensures that capital flows are aligned with governance outcomes and ecosystem priorities.
A Token That Coordinates an Entire Ecosystem
What distinguishes DYDX today is the degree to which its utility is embedded within the protocol’s economic and technical design. DYDX secures the chain, it governs its evolution, and mobilises capital to fund its future.
As the dYdX ecosystem continues to evolve - with spot trading, EVM compatibility, and broader institutional participation on the horizon - the role of the DYDX token is set to deepen even further. DYDX is not a governance token with utility features layered on top. It is infrastructure itself.
Learn more: https://www.dydx.foundation/blog/dydx-the-layer-1-token-that-powers-the-dydx-chain
About the dYdX Foundation
Legitimacy and Disclaimer
Crypto-assets can be highly volatile and trading crypto-assets involves risk of loss, particularly when using leverage. Investment into crypto-assets may not be regulated and may not be adequate for retail investors. Do your own research and due diligence before engaging in any activity involving crypto-assets.
dYdX is a decentralised, disintermediated and permissionless protocol, and is not available in the U.S. or to U.S. persons as well as in other restricted jurisdictions. The dYdX Foundation does not operate or participate in the operation of any component of the dYdX Chain's infrastructure.
The dYdX Foundation’s purpose is to support the current implementation and any future implementations of the dYdX protocol and to foster community-driven growth in the dYdX ecosystem.
The dYdX Chain software (including dYdX Unlimited) is open-source software to be used or implemented by any party in accordance with the applicable license. At no time should the dYdX Chain and/or its software or related components (including dYdX Unlimited) be deemed to be a product or service provided or made available in any way by the dYdX Foundation. Interactions with the dYdX Chain software (including dYdX Unlimited) or any implementation thereof are permissionless and disintermediated, subject to the terms of the applicable licenses and code. Users who interact with the dYdX Chain software, i ncluding dYdX Unlimited (or any implementations thereof) will not be interacting with the dYdX Foundation in any way whatsoever. The dYdX Foundation does not make any representations, warranties or covenants in connection with the dYdX Chain software (or any implementations and/or components thereof, including dYdX Unlimited), including (without limitation) with regard to their technical properties or performance, as well as their actual or potential usefulness or suitability for any particular purpose, and users agree to rely on the dYdX Chain software (or any implementations and/or components thereof, including dYdX Unlimited) “AS IS, WHERE IS”.
Nothing in this post should be used or considered as legal, financial, tax, or any other advice, nor as an instruction or invitation to act by anyone. Users should conduct their own research and due diligence before making any decisions. The dYdX Foundation may alter or update any information in this post in the future at its sole discretion and assumes no obligation to publicly disclose any such change. This post is solely based on the information available to the dYdX Foundation at the time it was published and should only be read and taken into consideration at the time it was published and on the basis of the circumstances that surrounded it. The dYdX Foundation makes no guarantees of future performance and is under no obligation to undertake any of the activities contemplated herein.
Depositing into the MegaVault carries risks. Do your own research and make sure to understand the risks before depositing funds. MegaVault returns are not guaranteed and may fluctuate over time depending on multiple factors. MegaVault returns may be negative and you may lose your entire investment.The dYdX Foundation does not operate or has control over the MegaVault and has not been involved in the development, deployment and operation of any component of the dYdX Unlimited software (including the MegaVault).
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