Summary*

• Pursuant to the Warrants (as amended by the Amendment) and other off-chain contractual agreements, up to 150M Tokens subject to the transfer restriction will be released and freely transferable from 00:00 UTC on December 1, 2023. This represents up to 15% of the total token supply and 30% of the total locked Tokens. 

• Note, any wethDYDX and/or dYdX-Chain DYDX tokens received by locked Token holders in exchange for their locked ethDYDX shall continue to be subject to the same transfer restrictions and release schedule. 

• The remaining 70%+ of locked Tokens (be it ethDYDX, wethDYDX, and/or dYdX Chain DYDX) shall continue to be subject to the same transfer restrictions and release schedule.

• Since the genesis of the dYdX Chain, 438,006,284 ethDYDX tokens have been sent to the wethDYDX Smart Contract and migrated to the dYdX Chain, and 18.67M DYDX have been staked to dYdX Chain validators. 

• In DIP 29 on dYdX v3 (as defined below) and DIP 2 on the dYdX Chain, the dYdX community voted to migrate (1) 52M unvested ethDYDX to the dYdX Chain for Trading Rewards, (2) 173M unvested ethDYDX to the dYdX Chain Community Treasury Vester, and (3) 80M vested ethDYDX to the dYdX Chain Community Treasury. As a result, 305M DYDX (30.5% of total supply) is currently allocated to be distributed on dYdX community initiatives and Trading Rewards. 

• Since the release of ethDYDX, over 190M ethDYDX have been distributed as a result of staking rewards, trading rewards, liquidity provider rewards, or transfers from the dYdX Community Treasury. More information is available in the Epoch 29 Review.

• As a result of several governance proposals to reduce ethDYDX emissions, the allocation of the dYdX Community Treasury has increased by over 200M tokens, from an original allocation of 5% (50,000,000 tokens) to a current allocation of 26.2% (262,550,949 tokens) of the total token supply. 

‍*Capitalized terms are defined below.

Context

The dYdX Foundation is a non-profit Swiss Foundation formed in Zug, Switzerland on June 22, 2021. The dYdX Foundation was created to support and grow the dYdX protocol ecosystem by enabling communities, developers, and decentralized governance.

Allocation of DYDX 

On August 3, 2021, the dYdX Foundation issued DYDX (now ethDYDX), a governance token that allows the dYdX protocol’s community to govern the dYdX Layer 2 protocol on Ethereum (“dYdX v3”) to align incentives between traders, liquidity providers, and partners. The ethDYDX token enables a robust ecosystem around governance, rewards, and staking - each of which is designed to drive future growth and decentralization of the dYdX Layer 2 protocol. A total of 1,000,000,000 ethDYDX were minted, and programmed to become accessible over five (5) years, starting on August 3rd, 2021, at 15:00:00 UTC. Part of the initial allocation was reserved for:

• Past investors of dYdX Trading Inc. (27.7%),
• Founders, employees, advisors, and consultants of dYdX Trading Inc. or dYdX Foundation (15.3%), and
• Future employees and consultants of dYdX Trading Inc. or dYdX Foundation (7.0%).

The remaining portion of the initial allocation was originally reserved for distribution based on:

• The Trading Rewards Formula (25.0%), 
• To past users completing certain trading milestones on the Layer 2 protocol (Retroactive Mining Rewards) (7.5%),
• The Liquidity Provider Rewards Formula(s) (7.5%),
• The Community Treasury (5.0%),
• Users staking USDC to a Liquidity Staking Pool (2.5%), and
• Users staking ethDYDX to a Safety Staking Pool (2.5%).

Since the release of ethDYDX, over 190M ethDYDX have been distributed as a result of staking rewards, trading rewards, liquidity provider rewards, or transfers from the dYdX community treasury. More information is available in the Epoch 29 Review.

Separately, as a result of several governance proposals to reduce ethDYDX emissions, the allocation of the dYdX Community Treasury has increased by over 200M tokens, from an original allocation of 5% (50,000,000 tokens) to a current allocation of 26.2% (262,550,949 tokens) of the total token supply. 

Update on the Initial Unlock Date

On January 31, 2023, dYdX Foundation announced that dYdX Trading Inc., dYdX Foundation, and certain parties to the Warrants to Purchase Tokens (“Warrants”) holding a number of ethDYDX tokens sufficient to amend the Warrants, signed an amendment (the “Amendment”) whereby, among other things, the transfer restriction schedule applicable to ethDYDX Tokens issued in connection with the Warrants (the “Tokens”) was extended, including by postponing the initial release date (the “Initial Unlock Date”) to December 1, 2023 for all investors that are a party to the Warrants.

The Amendment mentioned above did not alter the staggered unlock that occurs after the Initial Unlock Date, and therefore, pursuant to the Amendment, all Locked Tokens will be released from the transfer restriction as follows:

• (i) 30% on December 1, 2023 (the new Initial Unlock Date);
• (ii) 40% in equal monthly installments on the first day of each month from January 1, 2024, to June 1, 2024;
• (iii) 20% in equal monthly installments on the first day of each month from July 1, 2024, to June 1, 2025; and
• (iv) 10% in equal monthly installments on the first day of each month from July 1, 2025, to June 1, 2026.

*All of the above dates shall be interpreted to refer to UTC time zone.

All Warrant investors are subject to the transfer restriction schedule outlined in the Warrants (as amended). 

All founders, current employees, advisors, consultants, and the vast majority of past employees of dYdX Trading Inc. and dYdX Foundation (approximately 99.5%) are also subject to the transfer restriction schedule outlined in the Warrants (as amended). 

The Migration of ethDYDX from Ethereum to the dYdX Chain 

Since the genesis of the dYdX Chain, 438M ethDYDX have been bridged to the dYdX Chain, which represents 44% of the total supply. 

In DIP 29 on dYdX v3 and DIP 2 on the dYdX Chain, the dYdX community voted to migrate (1) 52M unvested ethDYDX to the dYdX Chain for Trading Rewards, (2) 173M unvested ethDYDX to the dYdX Chain Community Treasury Vester, and (3) 80M vested ethDYDX to the dYdX Chain Community Treasury. As a result, 305M DYDX (30.5% of total supply) is currently allocated to be distributed on dYdX community initiatives and Trading Rewards.

Over 17.95M dYdX Chain DYDX have been staked to the network as of November 29, 2023. 

Applicability of the Transfer Restriction to wethDYDX and dYdX Chain DYDX

Any wethDYDX and/or dYdX-Chain DYDX tokens received by any locked token holder in exchange for their locked ethDYDX tokens shall continue to be subject to the same transfer restrictions and release schedule. Locked wethDYDX tokens and locked dYdX-Chain DYDX tokens may also be bridged to another blockchain, used for voting or delegating purposes and/or staked to a validator, if applicable.

Additional information about the DYDX token and the restrictions that apply thereto can be found at the following links:  

• https://dydx.foundation/blog/introducing-dydx-token
• https://docs.dydx.community/dydx-governance/start-here/dydx-allocations 
• https://docs.dydx.community/dydx-governance/start-here/dydx-allocations#what-is-the-lockup-for-usddydx-issued-to-investors-existing-and-future-employees-and-consultants 
• https://dydx.foundation/blog/lock-up-extension
• https://docs.dydx.community/dydx-token-migration/migration-of-dydx-from-ethereum-to-dydx-chain/migration-and-bridge-overview 
• https://dune.com/dydx-foundation/wethdydx-bridge/b765cbb6-cf21-42d2-93b6-037329016c79
• https://etherscan.io/address/0x46b2deae6eff3011008ea27ea36b7c27255ddfa9
• https://www.mintscan.io/dydx