DYDX, the native token of the dYdX Chain, has transformed from a simple governance coin into a versatile asset within half a year of its launch. The dYdX Foundation announced in a blog post that DYDX now powers the layer-1 blockchain, enabling decentralized governance and allowing users to earn rewards by staking their tokens.
As a crypto investor, I’ve witnessed an incredible transformation of DYDX, the native token of the dYdX Chain, in just half a year since its launch. What was once a simple governance coin has now blossomed into a versatile and multidimensional asset.
Based on a post on the dYdX Foundation’s blog, dYdX now leads among layer-1 blockchains, offering decentralized decision-making and rewarding token holders who lock up their assets.
A Timeline of DYDX’s Launch
In October 2023, dYdX was introduced along with the dYdX Chain. Prior to this, in August 2021, the dYdX Foundation debuted ethDYDX. ethDYDX functions as a governance token for the Ethereum-based dYdX protocol version 3.
In September 2023, the dYdX community made the decision to designate DYDX as the native token of the dYdX Chain. To facilitate this transition, a smart contract named wethDYDX was developed and deployed. This contract enables token holders to exchange their ethDYDX for the new native token, DYDX.
As a researcher, I’m reporting that over 75% of the existing ethDYDX tokens have been transformed into DYDX and shifted to the dYdX Chain by the time I’m penning this down. Approximately 25% still remains as ethDYDX in circulation, bringing the total supply to around 247 million tokens.
Staking DYDX
As an analyst, I would put it this way: The dYdX Chain’s design includes a staking reward system whereby all the fees generated by the protocol, primarily in USDC from Circle, are distributed among stakers in full.
The dYdX Foundation explained that this mechanism not only encourages securing funds but also offers Stakers numerous convenient applications. They can effortlessly reinvest their USDC staking earnings into cryptocurrencies or other assets, or employ the USDC as collateral for trading on the dYdX Chain through simple clicks.
Approximately 18,900 individuals have their DYDX tokens staked and earning rewards, amounting to a distributed total of $20 million. About 149 million DYDX tokens, equal to 14.9% of the entire supply, are currently locked in as collateral for active validators on the dYdX Chain. The annual return on investment for these staked tokens is approximately 18%.
The Journey So Far
Around the beginning of this month, the dYdX community endorsed a plan to lock up 20 million DYDX for liquid staking with the objective of diminishing potential malicious assaults, reinforcing network security, and dispersing validator functions. The remuneration from this staking process would undergo automatic compounding in USDC form, subsequently be transformed into DYDX, and finally re-staked to procure further returns.
The dYdX Chain has amassed a total trading volume of more than $120 billion to date, while the number of assets locked within it continues to rise. Additionally, community involvement in shaping the network’s future direction is evident through the submission of 55 governance proposals.
As a researcher examining DYDX, I’ve discovered that the total number of tokens in existence is one billion. Out of this amount, there are currently 501 million tokens in circulation. Additionally, the token distribution plan spans over a five-year period.
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2024-04-28 23:14