This is the 8th edition of dYdX Epoch Review, presenting updates from the dYdX community and ecosystem. To stay up to date in real-time, join us on Discord, Twitter, and the Forums.

Epoch 7 Highlights

• Total volume on the dYdX protocol was approximately $67B, with Average Daily Volume decreasing to $2.3B. Ending Open Interest increased to $956M and Total Value Locked decreased to $899M.
• 7.3K unique wallets earned 5.8M $DYDX through trading, liquidity provider, and staking rewards. 46.7K unique wallets have previously earned $DYDX rewards from retroactive, trading, and liquidity mining rewards. ~21K unique wallets currently hold $DYDX and and ~2.6K unique wallets currently hold $stkDYDX.
• 37 addresses were eligible for LP rewards with the majority earned by 1 market maker. Competition in the pool is still strong. Market makers meeting the 0.25% threshold in Epoch 7 are now eligible to earn rewards in Epoch 8. 40 addresses (27 existing and 13 new) did more than =>0.25% of maker volume in Epoch 7, and thus are eligible to participate in the LP rewards program in Epoch 8.
• $357M $USDC from 718 users was staked to the Liquidity Staking Pool. At the start of Epoch 8, $231M $USDC is actively staked and earning rewards. 5 market makers have borrowed $USDC from the staking pool.
• 28M $DYDX from 2,586 users was staked to the Safety Module.
• 9.56% of the total $DYDX supply (excluding unearned Retroactive Rewards transferred to the Treasury and the $DYDX vested in the Community Treasury) is considered liquid at the end of Epoch 7.
• The forum discussions and proposals continue to cover various important topics. Most notably, the community is currently voting to implement the Guernsey purpose trust structure (the “Purpose Trust”) contemplated in the “Legal Framework for Non-U.S. Decentralized Autonomous Organizations” post created by the dYdX Foundation.
• In Epoch 5, Reverie officially launched the dYdX Grants Program (“DGP”) with 752,000 $DYDX transferred from the Community Treasury to the Grants Committee multi-sig. So far, the DGP has released six rounds of grant approvals with a total of approximately $1.6M in pledged funding. In Epoch 7, over $800,000 in pledged funding was pledged over four rounds.
• On February 11, dYdX Foundation posted an open call for Endorsed Delegates. So far, four Endorsed Delegates have onboarded. If you’re interested in delegating the voting power and proposing power of your $DYDX or you want to become an Endorsed Delegate please follow the instructions here.
• dYdX Trading Inc. announced the Hedgies, a 4,200-piece collection of NFTs. 2,443 Hedgies were included in the Initial Distribution. Over the next two years, the remaining Hedgies will be distributed by dYdX Trading Inc. as rewards for top-performing traders in Trading Leagues. On February 14th, dYdX Trading Inc. released a custom explorer for the Hedgies where you can view the entire collection and search via traits, ID, or background.
• On March 9, dYdX Trading Inc. announced the start of the dYdX Beta Program for iOS. With a native mobile app, dYdX is approaching par with product offerings from leading centralized exchanges. Traders can trade and monitor their positions on the go, with a blazing-fast and intuitive user experience.
• dYdX Trading Inc. announced Trading Leagues, a first of its kind product that enhances the trading experience and rewards traders with weekly prizes. There are 5 leagues: Bronze, Silver, Gold, Platinum, and Diamond. All traders will start in the Bronze League and work their way up each week, based on performance.
• dYdX Trading Inc. announced that the fee schedule was reduced up to 66% for a minimum of 3 months.
• Epoch 7 ended on March 15 at 15:00 UTC. Epoch 7 rewards will be claimable here on March 22, at ~19:51 UTC (7 days after the end of the epoch plus a ~5 hour delay). Once tokens have been claimed, they can be transferred, staked to the Safety module, or delegated to dYdX governance.

Performance Indicators

for Epoch 7 (February 15, 2022 15:00 UTC - March 15, 2022 15:00 UTC)

* No addresses were identified as wash trading during Epoch 7.

~21K unique addresses currently hold $DYDX and ~2.6K unique addresses currently hold $stkDYDX.

~46.7K unique addresses have previously claimed $DYDX rewards from retroactive, trading, and liquidity mining rewards.

Trading Rewards

3,835,616 $DYDX were earned over the course of Epoch 7 and will be distributed to 5,347 traders. Trading rewards were distributed proportionally based on a formula rewarding both fees paid, $stkDYDX, and average open interest.

Competition in this epoch remained flat, as evidenced by slightly lower fees paid and the sum of all trader scores. However, the traders eligible for rewards and the number of active traders increased slightly.

A breakdown of the adjusted trading activity and Trading Rewards distribution can be found below:

Source: Foundation Metrics Page

dYdX Trading Inc. did not identify any Ethereum addresses that conducted clear wash trading during Epoch 7. Learn more about Wash Trading here.

As an input to the Trading Rewards calculation, users’ fees paid, $stkDYDX balance, and average open interest were reset to 0 at the start of Epoch 8.

Learn more about the trading rewards program in our documentation, or our blog post.

Liquidity Provider Rewards

1,150,685 $DYDX were earned over the course of Epoch 7 and will be distributed to 37 market makers based on a formula rewarding a combination of uptime, two-sided depth, bid-ask spreads, $stkDYDX, and the number of markets supported.

In Epoch 7, there were 37 addresses in total eligible for LP rewards. The following chart displays the rewards distribution by market maker over the course of the epoch:

Source: Liquidity Provider Rewards Dashboard

In Epoch 6, the dYdX community voted strongly in favor of reducing the LP rewards volume threshold for market makers from 1% to 0.25%.

The Foundation Metrics Page has maker volume charts to see which addresses did >=0.25% of maker volume in a given epoch:

40 addresses (27 existing and 13 new) did more than =>0.25% of maker volume in Epoch 7, and thus are eligible to participate in the LP rewards program in Epoch 8.

As an input to the Liquidity Provider Rewards calculation, market maker’s uptime, two-sided depth, bid-ask spreads, $stkDYDX, and the number of markets supported are reset to 0 at the start of Epoch 8. New market makers providing >=0.25% of maker volume in Epoch 8 will be eligible to join the pool in Epoch 9.

Learn more about the trading rewards program in our our documentation, or our blog post.

Liquidity Staking Pool

$357M $USDC was staked to the pool over the course of Epoch 7 from 718 users. 383,562 $DYDX were earned over the course of Epoch 7 and distributed pro-rata every second to stakers. A large staker continued to stake $200M $USDC (over 50% of the pool) earning the majority of rewards even though this user requested to withdraw an additional $100M $USDC.

$USDC staked by address at the end of the epoch is as follows:

Source: Etherscan

39 users requested to withdraw before the Blackout Period in Epoch 7. These inactive $USDC funds can now be withdrawn and are no longer earning $DYDX rewards. Users must request to withdraw their funds before the Epoch 8 Blackout Window (last 2 weeks of the epoch) to withdraw their funds starting in Epoch 9.

dYdX Foundation has been working to provide the tooling to facilitate market maker borrowing from the Liquidity Staking Pool. 5 market makers borrowed $USDC from the staking pool. With the reduction of the LP rewards volume threshold to 0.25% in Epoch 6, we are looking forward to more Market Makers completing the steps outlined in the borrowing framework and increasing liquidity on the dYdX platform.

Source: Dune

Learn more about the trading rewards program in our our documentation, or our blog post.

Safety Staking Pool

28M $DYDX was staked to the pool over the course of Epoch 7 from 2,586 users. 383,562 $DYDX were earned over the course of the epoch and distributed pro-rata every second to stakers. The top 5 stakers account for almost 34% of $stkDYDX.

$DYDX staked by address at the end of the epoch is as follows:

At the beginning of Epoch 4, there was strong community backlash against large investors staking their locked tokens in the Safety Module. In the event of a shortfall, $DYDX staked to the Safety Module could be slashed. As a result, investors would be in default of their obligations and would be required to purchase an equivalent amount of $DYDX. While investors are technically permitted to stake their locked tokens, the dYdX Foundation requested for investors to not stake their locked $DYDX and to withdraw any $DYDX currently staked. Several large investors unstaked their $DYDX. Investors are required to comply with the transfer restrictions enforced through contractual agreements with the dYdX Foundation. The dYdX Foundation will continue to monitor investor wallet addresses and work with larger investors to ensure competitive returns from the Safety Staking Pool.

115 users requested to withdraw before the Blackout Period in Epoch 7. These inactive $DYDX funds can now be withdrawn and are no longer earning $DYDX rewards. Users must request to withdraw their funds before the Epoch 8 Blackout Window (last 2 weeks of the epoch) to withdraw their funds starting in Epoch 9.

Learn more about the safety staking pool in our documentation, or our blog post.

Community Treasury

Approximately 766,703 $YDX vested in the Community Treasury over the course of Epoch 7. The Community Treasury now holds 30,072,427 vested $DYDX tokens.

In Epoch 5, Reverie officially launched the dYdX Grants Program (“DGP”) with 752,000 $DYDX transferred from the Community Treasury to the Grants Committee multi-sig. Over 6 rounds, the DGP has approved over 40 grants with a total of more than $1.6M in pledged funding. We are excited about the level of community engagement and the diversity of applications.

We hope to see continued participation in governance and active distribution of vested $DYDX on an ongoing basis through contributor grants, community initiatives, liquidity mining, and other programs.

Learn more about the community treasury in our documentation.

What's next?

Epoch 7 has ended

Welcome to Epoch 8! Epoch 8 started automatically on March 15, 2022 at 15:00 UTC and will end on April 12, 2022 at 15:00 UTC.

Epoch 7 ended on March 15 at 15:00 UTC. Epoch 7 rewards will be claimable here on March 22, at ~19:51 UTC (7 days after the end of the epoch plus a ~5 hour delay). Once tokens have been claimed, they can be transferred, staked to the Safety module, or delegated to dYdX governance.

Circulating supply

9.56% of the total $DYDX supply (excluding unearned Retroactive Rewards transferred to the Treasury and the $DYDX vested in the Community Treasury) is considered liquid at the end of Epoch 7. These earned $DYDX tokens can be claimed in perpetuity.

Claim your $DYDX rewards

The Merkle root was proposed on-chain on March 15 at 19:51 UTC and the 7-day waiting period has begun. Epoch 7 rewards will be claimable here on March 22, at ~19:51 UTC (7 days after the end of the epoch plus a ~5 hour delay). Once tokens have been claimed, they can be transferred, staked to the Safety module, or delegated to dYdX governance.

The Merkle tree data, which is a list of (address, reward) pairs, is available here.

Under the hood, the Merkle Distributor smart contract will distribute $DYDX token rewards according to a Merkle tree of balances. The tree will be updated at the end of each epoch with each user's cumulative reward balance. An update is performed by setting the proposed Merkle root to the latest value returned by the oracle contract. The proposed Merkle root can be made active after a waiting period has elapsed. During the waiting period, dYdX Governance can freeze the Merkle root, in case the proposed root is incorrect or malicious. Root updates can be unpaused by a ShortTimelockExecutor.

Governance Forums

DIP (off-chain) - DRC: Implement a Guernsey Purpose Trust for the DGP - IN PROGRESS

On March 15, Reverie posted a DRC for the DGP to implement the Guernsey purpose trust structure (the “Purpose Trust”) contemplated in the “Legal Framework for Non-U.S. Decentralized Autonomous Organizations” post created by the dYdX Foundation. By implementing the Purpose Trust, each member of the Grants Committee would be a trustee (collectively, the “Trustees”) of the Purpose Trust.

The Purpose Trust comes into existence the moment assets, $DYDX tokens, are transferred to it and the Trustees and the Enforcer execute the Purpose Trust Instrument (the “Trust Agreement”). The Purpose Trust is a type of trust that has no beneficiaries and has only one obligation for the Trustees: fulfill the purpose of the Purpose Trust. As Trustees, the Grants Committee must fulfill the purpose in the Purpose Trust that would be consistent with the purposes stated in the DIP. To make sure that Trustees carry out the purpose of the Purpose Trust, Guernsey law requires that the Purpose Trust have an “enforcer” to hold the trustees accountable legally and make information requests. As contemplated by the Trust Agreement, Reverie will be the enforcer of the Purpose Trust (the “Enforcer”).

The implementation of the Purpose Trust would provide the following benefits:

• No government approval is required for the formation of the Purpose Trust, $DYDX holders retain more control. They may add or remove Trustees, terminate the trust, and add or remove a purpose from the Trust Agreement,
• Limited liability for DAO actors and $DYDX holders,
• Trustees can act on behalf of the trust on-chain and off-chain,
• The Purpose Trust does not pay income tax and has no filing or reporting obligations, and
• Allows converting $DYDX to stablecoins without tax liabilities to enable $USDC based grants.

The Snapshot vote to implement the Purpose Trust concludes on March 21, 2022. Note, an on-chain vote is not required to implement the Purpose Trust.

DGP Update

In Epoch 5, Reverie officially launched the DGP with 752,000 $DYDX transferred from the Community Treasury to the Grants Committee multi-sig. The Grants Committee, consisting of 8 committee members committed to dYdX community growth, will manage the multi-sig to fund RFPs. So far, the DGP has released six rounds of grant approvals with a total of approximately $1.6M in pledged funding. In Epoch 7, over $800,000 in pledged funding was released over four rounds.

Approved grants include:

• Treasury Management Dashboard - a dashboard to provide graphics around the dYdX Treasury with useful stats and info.
• Tradingview Integration - Application integrating any Tradingview strategy to execute directly on dYdX Trading.
• Treasury Asset Diversification - A research deep dive on diversifying the dYdX Community Treasury to include a basket of tokens. The grant will also include a DIP once the research is completed.
• Rabbithole dYdX Quest - A dYdX specific quest on Rabbithole that will reward users for depositing $USDC, trading to earn $DYDX rewards, and staking $DYDX in the Safety Module.
• Liquidation Alert Tool - A self-hosted liquidation alerting tool to alert traders of any asset price nearing their margin liquidation levels on a dYdX position. Shout out to Max Holloway for completing the MVP of the liquidation alerting tool available here.

Are you interested in applying for an RFP or have an idea for an RFP? Reach out and read more about the DGP here.

Delegation

On February 11, dYdX Foundation posted an open call for Endorsed Delegates. As we move towards V4, Endorsed Delegates are needed to help ensure community-led growth, development, and the self-sustainability of the dYdX protocol.

If you hold $DYDX and/or $stkDYDX but have no time to review proposals, gas is too expensive to vote, or you don't have enough information about potential delegates, consider delegating the proposing power and/or voting power of your DYDX and/or stkDYDX to one of the Endorsed Delegates: Blockchain at UCLA, Blockchain at Michigan, Mx, and WOO DAO.

If you’re interested in delegating the voting power and proposing power of your $DYDX and/or $stkDYDX or you want to become an Endorsed Delegate please follow the instructions here.

Hedgies allocation

dYdX Foundation purchased 205 Hedgies to promote the growth of the dYdX protocol and governance. On February 14, dYdX Foundation posted a list of potential actions that may result in dYdX community members being rewarded with Hedgies.

Want to get your hands on one of the dYdX Foundation’s 205 perpetual-loving quill balls? Easy. Get active in Governance!

Ambassador Program

dYdX Foundation received a $40,000 grant to fund recruitment initiatives for an Ambassador Program. Ambassadors will be organized in different Burrows (working groups) across the DAO: analytics, governance, media, risk analysis, and user onboarding. Recruitees will be compensated for a 1 month trial period before being accepted into the program.

Follow our announcements on Discord for more information about the Ambassador Program.

Liquidity Staking Borrowing Pool

In Epoch 6, the dYdX community strongly supported implementing the borrowing framework created by the dYdX Foundation to onboard LPs to enable them to borrow $USDC staked to the Liquidity Staking Pool for market-making purposes. To borrow $USDC from the Liquidity Staking Pool LPs must (1) qualify for LP rewards in the previous epoch, (2) create a public profile on the dYdX community forum, and (3) agree to abide by the revolving credit agreement. $DYDX holders can vote to change the following parameters: (1) adding new LP borrowers, (2) removing existing LP borrowers, and (3) changing the allocations of borrowed $USDC to approved borrowers.

In Epoch 7, several borrowers posted profiles. The dYdX community started to debate the level of disclosure in borrowers’ profiles and the allocation of borrowed $USDC to approved borrowers. For example, Darval posted a comment about limiting each borrowers allocation of $USDC from the liquidity pool based on the proportion of $DYDX that the respective market maker has staked.

Other active governance discussion threads

In response to dramatic increases in volume at the end of the epoch, Nibbio started a thread and suggested changing the rewards formula to incentivize users to trade actively every day of the epoch. Instead of calculating the score on the total fees paid over the epoch, Nibbio suggested that the score should be calculated as 28median(daily fees paid) or 28 24 * median(hourly fees paid).

On January 10th at 17:00 UTC, a community member created a Snapshot poll to adjust the LP rewards formula by adding more weight to the spread. The change to the LP rewards formula was intended to encourage LPs to put orders as close to mid-price as possible and to increase the distribution of LP rewards. Although more individual addresses voted in favor of the proposal (153 v. 37), the majority of $DYDX (5.9M $DYDX/$stkDYDX and 67% of votes) voted in favor of keeping the formula the same. The dYdX Foundation is reviewing the formula to ensure an equitable distribution of LP rewards.

The Snapshot poll to adjust the LP rewards formula by adding more weight to the spread highlighted several issues with using Snapshot polls to change the LP rewards formula and off-chain variables more broadly. The dYdX Foundation created a thread and included several minimum requirements for Snapshot polls that are binding and result in changes to off-chain variables:

• Voting Choice – Binary voting options,
• Voting Delay – 6570 blocks,
• Voting Period – 4 days,
• Minimum Quorum – 1M (0.1% of total supply),
• Minimum Vote Differential – 67% of votes, and
• Execution Grace Period – 1 Epoch.

dYdX Trading Updates

iOS Beta

On March 9, dYdX Trading Inc. announced the start of the dYdX Beta Program for iOS. This is one of the first apps to be natively released by a DeFi protocol, and the dYdX Trading Inc. team was hard at work for many months. With a native mobile app, dYdX is approaching par with product offerings from leading centralized exchanges. Traders can trade and monitor their positions on the go, with a blazing-fast and intuitive user experience.

In total, there are 10,000 invites available and users can join one of two different waitlists.

• For the Priority Waitlist, users need to hold greater than or equal to 10 $DYDX and/or $stkDYDX and/or at least one Hedgie. Traders meeting the conditions above, will be added to the waitlist once they complete more than $1,000 in trade volumes after March 9, 2022 16:00 UTC.
• For the Referral Waitlist, users need to participate via social campaigns through Facebook, Twitter, LinkedIn, Reddit, and more. Sign up, verify your email, and share your link to earn points. Earn 1 point for signing up, 1 point for social media shares, and 3 points for each successful referral. The more points you accrue, the higher your rank on the waitlist.

Hedgies

On January 26th, dYdX Trading Inc. announced the Hedgies, a 4,200-piece collection of NFTs. 2,443 Hedgies were included in the Initial Distribution. Over the next two years, the remaining Hedgies will be distributed by dYdX Trading Inc. as rewards for top-performing traders in Trading Leagues. In terms of utility, holding a Hedgie results in a one-tier increase in $DYDX fee tier discount on the dYdX protocol. Explore the Hedgies on hedgies.wtf or OpenSea and follow the Hedgies on Twitter, @HedgiesOfficial.

On February 14th, dYdX Trading Inc. released a custom explorer for the Hedgies where you can view the entire collection and search via traits, ID, or background.

Trading Leagues

On January 25th, dYdX Trading Inc. announced Trading Leagues, a first of its kind product that enhances the trading experience and rewards traders with weekly prizes. Trading Leagues is a new type of competition structure that rewards elevated performance on a consistent basis. There are 5 leagues: Bronze, Silver, Gold, Platinum, and Diamond. All traders will start in the Bronze League and work their way up each week, based on performance. In addition to bragging rights, traders can compete head-to-head for top spots, Hedgies, and even cash ($USDC) prizes.

Fee Reduction

On January 18th, dYdX Trading Inc. announced that the fee schedule was reduced up to 66% for a minimum of 3 months. $DYDX holdings discounts are still applicable for further discounts as well (with a 2 bps taker fee floor). The fee changes were implemented to keep in line with the market fee schedules of both centralized and decentralized crypto exchanges. dYdX's trading fees are now extremely competitive with major exchanges in the industry.

Read more about how dYdX’s trading fee schedule compares to other leading exchanges here.

New features

• ENJ-USD Perpetual Markets are live for trading. Go long or short on $ENJ with up to 10× leverage. dYdX now supports 29 Perpetual markets, with more coming soon. Read more about it here.
• dYdX Trading Inc. announced the start of the dYdX Beta Program for iOS. To hit your eligibility requirements for the Priority Waitlist, trade now! For the Referral Waitlist, users need to participate via social campaigns through Facebook, Twitter, LinkedIn, Reddit, and more. Sign up, verify your email, and share your link to earn points. Earn 1 point for signing up, 1 point for social media shares, and 3 points for each successful referral. To sign up for the Referral Waitlist and share your link, head here.
• On January 25, Season 1 of Trading Leagues officially started with 4,543 traders entering the Bronze League. Enter now to win part of the weekly cash prizes. Read more about it here.
• dYdX Trading Inc. added a dashboard to the rewards data page for traders to see the rewards boost they receive for staking $DYDX. Read more about it here.
• dYdX is now live on Staking Rewards! Read more about it here.

Social

• dYdX Trading Inc. is now @dYdX on Twitter. Follow @dYdX for all the latest news, updates, and thoughts from dYdX!
• The DGP and the dYdX Foundation teams co-hosted an AMA featuring top contributors to the DGP, Max Holloway and Chaos Labs. Listen to the AMA here.
• The DGP and the dYdX Foundation teams will be co-hosting an AMA on March 24 and April 7. Look out for updates here and join in here.
• dYdX Foundation started a new series of dYdX community calls called Hedgie Hangouts. If you love all things Hedgies, join us for our weekly hangouts here.
• The dYdX Grants Program (DGP) is accepting applications! The DGP represents one of the largest grants programs in DeFi to fund community initiatives. You can read more about it here or submit an application here.
• Antonio, founder and CEO of dYdX Trading Inc., wrote and shared a brief history of dYdX. Read more about it here.
• dYdX Foundation welcomes 4 new Community Managers (contractors) to level up our community efforts! Read more about it here.
• dYdX partnered with EPNS to launch decentralized push notifications. Read more about it here.
• dYdX Foundation is hiring! Join us as a Country Lead, a Governance Associate, a Marketing Associate, a Business Operations & Finance Associate, or a Community Manager.
• dYdX Governance is now live on Boardroom. Get insights into governance, operations, and DAO activities. Read more about it here.
• dYdX governance documentation is now available in simplified Chinese, Japanese, Russian, and Korean. Read more about it here.
• On February 17, dYdX Trading Inc. and dYdX Foundation co-hosted a discussion on trading, rewards, and governance with Kronos Research and WOO Network. Read more about it here.