dYdX Community Approves Proposal To Cut Trading Rewards By 44%

Organization behind the decentralized exchange (DEX) dYdX, which specializes in perpetual futures contracts, dYdX Foundation announced that its community voted to reduce trading rewards by 44%, with 81.77% of votes in favor.

The proposal called for lowering the “C” constant from 0.9 to 0.5. This change is aimed at reducing inflation and alleviating selling pressure on the DYDX token by cutting trading rewards. As a result, traders can expect a slight increase of 0.5 basis points in trading fees for 90% of trading volumes.

This adjustment is intended to address current market conditions while ensuring dYdX remains competitive. To help mitigate the impact, traders will benefit from enhanced liquidity provided by MegaVault, which will lead to narrower spreads and more efficient trading. Additionally, the launch of the new Affiliate Program will help lower costs for traders by offering more favorable fees.

Since 2023, the DYDX token has faced challenges due to high inflation and a substantial number of token unlocks. However, dYdX Unlimited, a feature allowing users to instantly list markets with immediate liquidity, presents an opportunity to optimize both the dYdX Chain and the DYDX tokenomics, aiming to support the protocol’s long-term viability and success. This proposal, alongside others, seeks to improve liquidity across dYdX Chain markets, enhance the appeal of the DYDX token, and encourage the holding and staking of DYDX, all with the goal of strengthening the security of the dYdX Chain and promoting sustainable growth within the dYdX ecosystem.

In order to achieve these objectives, the recommendation includes implementing revenue sharing, increasing DYDX token utility, and reducing DYDX emissions, while also addressing the immediate growth needs of the dYdX Chain. These changes are expected to boost dYdX’s competitiveness and help reduce DYDX inflation, ultimately making the DYDX token a more resilient asset, which will benefit the overall security and stability of the network.

What Is dYdX Unlimited?

dYdX operates as a DEX, enabling users to trade perpetual futures contracts for over 35 cryptocurrencies, including popular options like BTC, ETH, and SOL. It runs on the dYdX blockchain, an open-source, application-specific blockchain built on the Cosmos SDK and CometBFT proof-of-stake (PoS) consensus protocol. The dYdX Chain is fully decentralized, including its consensus mechanism, order book, matching engine, and front-end infrastructure.

The dYdX Unlimited upgrade will introduce permissionless market listings, enabling users to list almost any market with immediate liquidity without needing to submit a governance proposal. The upgrade also introduces MegaVault, a master liquidity pool designed to draw liquidity from dYdX users and serve as a market maker for all dYdX Chain markets, including newly created ones. Users will be able to contribute USDC tokens to the MegaVault and participate in the revenue it generates.

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