The dYdX Chain is live. Consequently, holders of the dYdX Chain’s native protocol token, DYDX, may now delegate (i.e., stake) their DYDX to dYdX Chain validators in order to secure the network.
The dYdX Foundation is a holder of DYDX tokens. As such, the dYdX Foundation may consider delegating all or part of its DYDX tokens to dYdX Chain validators. This page summarizes the key principles that will govern the Foundation’s stake delegation decisions in the dYdX Chain and is intended to provide transparency regarding the Foundation’s staking behavior in the dYdX Chain.
Stake Delegation Principles
If the dYdX Foundation decides to delegate all or part of its DYDX tokens to dYdX Chain validators, it will seek to do so based on the following guiding principles:
Independence. The dYdX Foundation will delegate to validators that, to the best of the Foundation’s knowledge, are independent from each other and from the Foundation itself. Any delegations made to a group of validators that are considered dependent among themselves or that can be deemed to be acting in a coordinated fashion will be considered as a single validator for the purposes of the decentralization principle set out below. The Foundation will not issue any kind of instructions to the validators, in particular regarding their role within the consensus mechanism of the dYdX Chain or dYdX Chain governance processes.
Decentralization. The Foundation will strive to distribute its delegated stake across a number of independent validators. While there is no strict minimum or maximum limit in terms of the number of independent validators to which the Foundation may stake, the objective is to delegate to no less than 4 or 5 independent validators.
Proportionality. Any delegations made by the Foundation to dYdX Chain validators will be made pro-rata to the stakes of such validators at the time the delegation is made. The ambition of this principle is that any delegations by the Foundation to dYdX Chain validators shall have as minimal an effect as possible on such validators’ positioning in the dYdX Chain, including with regard to their position in the active validator set.
Minority Delegation. The Foundation’s delegated stake weight in the dYdX Chain shall be lower than 10% of the total active stake weight of the network.
No Governance Participation. If the Foundation delegates its DYDX to dYdX Chain validators, the Foundation will not actively participate in dYdX Chain governance and, therefore, will not vote in any governance proposals. Validators that receive a stake delegation from the Foundation will inherit full control and discretion over the governance power associated with any delegated DYDX tokens.
Meritocracy. The Foundation will have full and absolute discretion in deciding which dYdX Chain validators it wishes to delegate to. However, as part of the validator selection process, the Foundation will take into account the merits of each validator, including, among other possible variables: infrastructure reliability (e.g. uptime), professionalism, transparency, governance participation metrics, MEV behavior, and others.
No Self Delegation. The dYdX Foundation will not run a dYdX Chain validator nor any other key infrastructure component in the dYdX Chain. As a consequence, the dYdX Foundation will in no event be delegating DYDX tokens to a validator operated by or on behalf of the Foundation.
Periodic Reviews & Rebalancings. The Foundation will periodically review and reevaluate its stake delegations and, if applicable and as appropriate to comply with these principles and any other rules or regulations applicable to the Foundation, rebalance its delegations. Reevaluations of Foundation’s stake delegations shall occur at least quarterly.
The above principles have been drafted in the interest of transparency and are merely practical, non-binding references to be observed by the dYdX Foundation when analyzing whether to delegate all or part of its DYDX tokens to dYdX Chain validators. The dYdX Foundation shall maintain full and absolute discretion in connection with any stake delegation and other decisions to be made by it, and, for the avoidance of doubt, shall at all times prioritize strict compliance with all applicable laws and regulations over compliance with the above principles.
Nothing in this page 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 Foundation may alter or update any information in this page in the future and assumes no obligation to publicly disclose any such change. This page is solely based on the information available to the dYdX Foundation at the time it was created and should only be read and taken into consideration at the time it was created 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.
About the dYdX Foundation
Legitimacy and 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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