To enhance the security of its decentralized cryptocurrency exchange (DEX), dYdX, the community has agreed on a plan to set aside 20 million DYDX tokens as a safeguard.
This decision comes amidst a surge in trading activity experienced by the platform.
dYdX Proposes Enhanced Security Measures
In simpler terms, dYdX’s proposal highlighted the importance of enhancing the security features on their platform due to the growing number of deposits and transactions.
dYdX announced that around $140 million worth of assets are securely held in its dYdX Chain, and over 114 million DYDX tokens are being held as collateral with an estimated market value of about $456 million at a token price of $4.
The proposition noted that despite the ongoing staking process, the pace at which DYDX was being staked to validators had levelled off. Moreover, dYdX disclosed that over $140 million worth of USDC is presently stored in dYdX v4, with around $100 million having been added during the previous week.
Additionally, the team believed that this expansion would persist due to the rising prominence of dYdX v4 and the surge in market volatility leading to heightened trading activity.
With larger deposits comes a greater temptation for harmful actions. It’s best if financial security also expands in tandem to counterbalance these unwanted motivations.
One method to safeguard a network against potential control by malicious actors through 51% attacks is by holding native tokens and staking them. By doing so, you contribute to the network’s security, making it harder for adversaries to gain significant control due to the distributed nature of hashing power among stakeholders.
Based on dYdX’s explanation, their network design enables situations where one-third of the voting authority could theoretically disrupt on-chain actions. Moreover, should adversaries acquire two-thirds of the voting control, they might misuse the community’s and users’ resources.
Through holding DYDX tokens, members of the dYdX community work towards distributing voting control and enhancing the platform’s defense against potential security risks.
Token Staking Proposal Approved
On April 6th, a plan to release tokens worth more than $61 million from dYdX’s community fund received an impressive 91.7% affirmative vote. This approval paves the way for using Stride 6’s liquid staking technology to optimally secure the treasury’s assets.
The dYdX community has voted to stake part of the treasury
Fees earned will be consistently reinvested through Stride to acquire more DYDX, which will then be added back to the treasury.
— Antonio | dYdX (@AntonioMJuliano) April 7, 2024
In this setup, the community keeps ownership of the funds but hands over the decision-making authority for investing in productive assets to Stride. Rewards from staking, which accumulate in USDC, are derived from trading fees on the dYdX platform and are automatically invested by Stride over a prolonged period.
For using this service, the community will be charged a 7.5% fee. Meanwhile, Stride has made an arrangement to lower their fee for staked positions, leading to a significant increase in USDC funds in the community’s treasury.
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2024-04-08 23:16