Retroactive mining rewards for past users of dYdX protocols
Liquidity mining rewards for traders & liquidity providers on dYdX's Layer 2 Perpetuals
A liquidity staking pool where $USDC stakers can earn rewards for providing liquidity
A safety staking pool where $DYDX stakers can earn rewards for securing the system
Trading fee discounts based on $DYDX holdings
$DYDX is not available in the United States or other prohibited jurisdictions. If you are located in, incorporated or otherwise established in, or a resident of the United States of America, you are not permitted to receive a distribution of, or transact in $DYDX. Trading fee discounts are subject to change at the discretion of dYdX Trading, Inc.
Community & Growth
dYdX is the market leader in developing trustless & open protocols for advanced crypto-financial products. Over the last three years, dYdX has supported over $11 billion in volume across perpetuals, margin, and spot trading with over 64,000 unique traders, and originated over $250 billion in borrowing & flash transactions from dYdX liquidity pools.
In February of 2021, dYdX and StarkWare launched a Layer 2 protocol for cross-margined perpetuals, based on Starkware's StarkEx scalability engine and dYdX's Perpetuals smart contracts, enabling significant improvements to non-custodial trading at scale. Traders can trade with zero gas costs, and in turn, lower trading fees and reduced minimum trade sizes.
The launch of the dYdX Layer 2 protocol came with a new focus on global growth, outside of the United States. Since launch, the Layer 2 protocol has achieved product-market fit for non-custodial advanced financial services:
Over $3.5 billion in volume from over 18,000 unique addresses (by deposit)
Launched 22 markets, from sectors such as DeFi, emerging Layer 1 blockchains, and more
With the launch of the dYdX Foundation, the dYdX Layer 2 protocol is now well-positioned for community-led growth & development towards the goal of becoming one of the largest community-controlled cryptoasset exchanges.
Introducing the token
With an industry-leading product and a strong trajectory of organic growth, the dYdX Layer 2 protocol is ready for the next phase of its evolution — handing over control to the community through the launch of $DYDX.
$DYDX is a governance token that allows the dYdX Protocol's community to truly control & govern the dYdX Layer 2 protocol. By enabling shared control, $DYDX aligns incentives between traders, liquidity providers, and partners of the Layer 2 protocol. $DYDX enables a robust ecosystem around governance, rewards, and staking – each designed to drive future growth & decentralization of the dYdX Layer 2 protocol. Launching alongside $DYDX are two staking pools designed to promote liquidity and safety on the dYdX Layer 2 protocol. Rewards programs for trading and liquidity provision on the dYdX Layer 2 protocol, and for past usage of all dYdX protocols will help drive growth and adoption of the dYdX Layer 2 protocol.
A total of 1,000,000,000 $DYDX have been minted, and will become accessible over five (5) years, starting on August 3rd, 2021 at 15:00:00 UTC. The initial five-year allocation of the total supply of $DYDX is as follows:
$$50.00%$$ or $$500,000,000$$ to the community as follows:
///$$25.00%$$ or $$250,000,000$$ to users who trade on the Layer 2 Perpetuals Protocol, based on a combination of fees paid and open interest///
///$$7.50%$$ or $$75,000,000$$ to past users who complete certain trading milestones on the Layer 2 protocol///
///$$7.50%$$ or $$75,000,000$$ to liquidity providers based on a formula rewarding a combination of uptime, two-sided depth, bid-ask spreads, and the number of markets supported///
///$$5.00%$$ or $$50,000,000$$ to a community treasury///
///$$2.50%$$ or $$25,000,000$$ to users staking $USDC to a liquidity staking pool///
///$$2.50%$$ or $$25,000,000$$ to users staking $DYDX to a safety staking pool///
$$27.73%$$ or $$277,295,070$$ to past investors of dYdX Trading
$$15.27%$$ or $$152,704,930$$ to founders, employees, advisors, and consultants of dYdX Trading or the Foundation
$$7.00%$$ or $$70,000,000$$ to future employees and consultants of dYdX Trading or the Foundation
A maximum perpetual inflation rate of $$2.00%$$ per year will increase the supply of $DYDX beginning after five years, ensuring the community continues to have the resources to continue contributing to the Protocol.
Although the community allocation has been established as presented above, $DYDX holders have full control over how the community allocation is used going forwards.
Initial 5 Years
10 Years Inflation
Rewards & Staking Pools
The $DYDX governance token can be earned in one of two ways: rewards from using the Protocol, or through staking $USDC or $DYDX to pools.
All rewards & staking contracts operate on 28-day cycles, referred to as epochs.
During each epoch, all $DYDX earned from retroactive, trading, or liquidity mining rewards will only become transferrable at the end of the epoch. During each epoch, all $DYDX earned from safety or liquidity staking pools can be withdrawn at any time.
On September 8, 2021, eight (8) days after the end of Epoch 0, the initial transfer restrictions will be lifted and approximately $$8.11%$$ of the $DYDX supply will become liquid. The following chart shows the total liquid supply over time.
The success of the dYdX Layer 2 protocol is the result of thousands of community members who have been trading on the dYdX Layer 2 protocol and its predecessors over the past three years.
$DYDX has been allocated to historical users of all dYdX protocols based on a snapshot ending July 26, 2021, at 00:00:00 UTC. There are five allocation tiers that depend on the usage across all dYdX protocols. In line with restrictions on the availability of $DYDX and the dYdX Layer 2 protocol in the United States, retroactive mining is not available to users located in, or incorporated or otherwise established in, or a resident of, the United States or any other prohibited jurisdiction. Any accounts that were clearly associated with bot activity speculating on a future airdrop are also excluded from retroactive rewards.
To claim $DYDX, historical users must meet the following milestones on the Layer 2 protocol within the first 28-day epoch, referred to as Epoch 0.
Any historical volume on the dYdX Layer 2 protocol counts towards a user's claim milestone. Any unearned $DYDX at the end of Epoch 0 will be forfeited and automatically distributed to the community treasury.
More details regarding the retroactive mining rewards can be found here.
Amounts of $DYDX will be distributed to traders based on a formula that rewards a combination of fees paid and open interest on the dYdX Layer 2 protocol. The DYDX will be distributed on a 28-day epoch basis over five years and are not subject to any vesting or lockups. $$3,835,616$$ $DYDX will be distributed per epoch. More details regarding the formula for trading rewards can be found here.
Liquidity Provider Rewards
To incentivize market liquidity, $DYDX will be distributed to liquidity providers based on a formula that rewards participation in markets, two-sided depth, bid-ask spread, and uptime on the dYdX Layer 2 protocol. Any Ethereum address can earn these rewards, subject to a minimum maker volume threshold of 5% of maker volume in the preceding epoch. The $DYDX will be distributed on a 28-day epoch basis over five years and are not subject to any vesting or lockups. $$1,150,685$$ $DYDX will be distributed per epoch. More details regarding the formula for calculations can be found here.
The Liquidity Staking Pool is now live, and is accessible here. This pool will run until August 3, 2026 at 15:00 UTC.
The Safety Staking Pool will automatically go live on the Protocol at the end of the first epoch, and will be accessible here. This pool will run until September 8, 2026 at 15:00 UTC.
To further liquidity network effects and incentivize professional market makers, $DYDX will be distributed to users who stake $USDC to the Liquidity Staking Pool. Known and community-approved market makers will use the staked $USDC to make markets on the dYdX Layer 2 protocol, furthering liquidity available across the markets. The market makers will not be able to withdraw the $USDC from the Protocol, requiring them to use it only in the Protocol. However, a portion of staked $USDC could be lost if a market maker were to lose funds and be unable to replenish the liquidity staking pool.
Stakers will receive $DYDX, distributed continuously according to each staker’s portion of the total $USDC in the pool. Stakers must request to unstake funds at least 14 days before the end of the epoch in order to be able to withdraw funds after the end of that epoch. If stakers do not request to withdraw, their staked $USDC is rolled over into the next epoch. More details can be found here.
The initial approved market makers include Wintermute, Amber Group, Kronos, Sixtant, and DAT Trading who have been actively market-making on the Layer 2 protocol since launch.
User safety & protection have been of key focus since the launch of the Layer 2 protocol. For this reason, $DYDX will be distributed to users who stake $DYDX to the safety pool to create an additional safety net for users of the Layer 2 protocol. Stakers’ decision to lock $DYDX into the Safety Pool could result in a shortfall event, which may result in the potential slashing of staked funds at the discretion of $DYDX governance. Stakers will receive $DYDX continuously proportional to their portion of the total $DYDX in the pool.
Stakers must request to unstake funds at least 14 days before the end of the epoch in order to be able to withdraw funds after the end of that epoch. If stakers do not request to withdraw, their staked $DYDX is rolled over into the next epoch. The Safety pool will go live upon the $DYDX becoming transferrable on September 8th, 2021 at 15:00 UTC. More details can be found here.
The community treasury will retain $DYDX to use as holders decide, whether it be for grants, new liquidity mining pools, or any other program. $DYDX will vest to the community treasury on a continuous basis over the course of five years. A governance vote will be required to spend any $DYDX from the community treasury. More details can be found here.
If governance decides to enact perpetual inflation, after 5 years any newly minted $DYDX will vest to the community treasury.
A community-managed treasury opens up a world of possibilities. We hope to see various experiments and initiatives, including ecosystem grants, which can foster the dYdX Layer 2 protocol’s ecosystem growth.
Stockholders, directors, officers, employees, and consultants of dYdX Trading and the dYdX Foundation will be issued $DYDX. All $DYDX distributed to them initially will be subject to contractual agreements off-chain requiring a lockup in which $$30%$$ of that $DYDX will unlock in 18 months, $$40%$$ will unlock equally from month 19 through month 24, $$20%$$ will unlock equally from month 25 through month 36, and $$10%$$ will unlock equally from month 37 through month 48. All employees and consultants also will be subject to various vesting schedules that could result in them losing their rights to $DYDX. No employee’s or consultant’s receipt of $DYDX is, or will in the future be, based on providing services related to the dYdX Layer 2 protocol or other services that may benefit the dYdX Layer 2 protocol. Instead, employees and consultants may receive $DYDX for services that benefit only dYdX Trading, the dYdX Foundation or another party.
Regardless of any lockup on $DYDX, investors and prior employees or consultants of dYdX Trading or the dYdX Foundation may use $DYDX to make proposals, delegate votes, or vote on proposals related to the Layer 2 protocol. Current employees and consultants of dYdX Trading or the dYdX Foundation will initially not make any proposals or participate in any votes but may do so in the future. Current employees and consultants of dYdX Trading or the Foundation may delegate votes without attempting to influence voting outcomes.
Although finding ways to coordinate a large group of $DYDX holders is difficult, the $DYDX community should learn from coordination efforts in other communities to further the development and growth of the Layer 2 protocol. While the dYdX Foundation will provide tools to assist with that coordination, the community should not expect it to have a key role in that process.
$DYDX grants holders the right to propose and vote on changes to the Layer 2 protocol. $DYDX governance is based on the AAVE governance contracts, and supports voting based on token holdings.
Proposals must pass a given threshold and percent of yes votes based on the type of proposal. $DYDX tokens can be used to make or vote on governance proposals, or be delegated to other Ethereum addresses.
In the meantime, $DYDX holders will have immediate and irreversible control over:
Allocating community treasury funds
New token listings on the Layer 2 protocol
Risk parameters for the Layer 2 protocol
Capital allocations to market makers in liquidity staking pool
Adding new market makers to the liquidity staking pool
Determining safety staking pool payouts in the event of a loss
Changing any of the rewards and pools existing at launch
Governance contracts themselves
There are four types of proposals with different parameters that affect the length and execution of a proposal. An executor must validate each type of proposal:
The Short timelock executor can execute proposals that generally change Rewards and Incentive contracts or the Community Treasury that require quick intervention.
The Long timelock executor can execute proposals that change parts of the Protocol that affect governance consensus.
The Merkle-pauser executor can execute proposals that freeze the Merkle root, which is updated periodically with each user's cumulative reward balance, allowing new rewards to be distributed to users over time, in case the proposed root is incorrect or malicious.
The Starkware executor can execute proposals that generally change parts of the Protocol that currently require intervention from Starkware.
The initial governance parameters are as follows:
All $DYDX holders are responsible for ensuring that governance decisions are made in compliance with applicable laws and regulations. The community is encouraged to consult knowledgeable legal and regulatory professionals before implementing any specific proposal.
Trading Fee Discounts
Holders of $DYDX receive a trading fee discount based on the size of their current holdings.
≥ 100 3.00%
≥ 1,000 5.00%
≥ 5,000 10.00%
≥ 10,000 15.00%
≥ 100,000 20.00%
≥ 200,000 25.00%
≥ 500,000 30.00%
≥ 1,000,000 40.00%
≥ 2,500,000 45.00%
≥ 5,000,000 50.00%
Taker fees after all discounts and benefits cannot be lower than 0.05%. dYdX Trading Inc. reserves the right to modify the trading fees discounts at any time. More details can be found here.
Open-source & audited
All smart contract source code for the governance contracts and staking pools can be found here. The source code for the governance frontend hosted at dydx.community can be found here.
All major new smart contracts have been audited by Peckshield. No significant or high priority security issues were found. The core governance & token contracts are forked from the $AAVE governance contracts which were audited by CertiK, Certora, and Peckshield and have been battle tested live on mainnet for months.
Historical users of dYdX can view their past activity and tier for Retroactive Mining in the Rewards section of the Portfolio.
To earn $DYDX, traders are encouraged to use the Protocol here to meet their criteria threshold. You can also stake $USDC to the liquidity staking pool to start earning rewards here. Once available, stake $DYDX to the safety staking pool here.
Set up an account on Commonwealth to start shaping and participating in Protocol governance on the forums. Governance tokens can be delegated and voted with using the governance portal here.
Legitimacy & Disclaimer
dYdX Foundation’s purpose is to support and grow the dYdX protocol ecosystem by enabling communities, developers, and decentralized governance.
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. The dYdX community is sovereign to make decisions freely from time to time, in accordance with the governance rules, principles, and mechanisms adopted by the dYdX DAO. Community discussion and interaction on the contents of this post are encouraged. The dYdX Foundation does not directly participate in governance decisions to be made by the dYdX community, including, without limitation, by making and/or voting on governance proposals. The dYdX Foundation may change, update or complement its analysis or opinions expressed in this post in the future and assumes no obligation to publicly disclose any such change or update. This post is solely based on the information available to the dYdX Foundation at the time it is made and should only be read and taken into consideration at the time it is made and on the basis of the circumstances that surround it.
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