As the network activity increases, the dYdX community approves a share of 20M tokens

Decentralized crypto exchange (DEX) has approved 20 million DYDX tokens to strengthen the security of the DYDX community as it experiences an increase in activity.

The proposal was approved on April 6 with a 91.7% vote in favor, allowing more than $61 million worth of the community's treasury to be covered by the liquid staking protocol STRIDE at current prices. According to DIDX, the move is in response to growing commercial activity on the protocol.

“DYDX has increased the amount paid to verifiers and deposits to the exchange are growing rapidly. Over $140M USDC has been captured by dYdX v4, of which $100M was delivered last week.

Staking is the process of locking a cryptocurrency to support blockchain network operations, such as processing transactions or validating new blocks. Participants, or “stakeholders,” stake tokens in the network. For their services and risks – such as potential token value fluctuations – stakeholders receive rewards, usually in the form of additional tokens.

By depositing the generation tokens, the DEX seeks to protect the network from a control attack that can be equated to a 51% attack. This type of attack occurs when a malicious entity gains control of a large amount of blockchain hashing power, allowing the network to be manipulated. Decentralized voting power prevents such attacks from occurring.

dYdX notes that the network architecture allows for a single attacker, with only one-third of the vote, to pause operations on-chain. In addition, holding two-thirds of the voting power allows such actors to abuse the funds of users and the community dYdX Chain.

“Since the voting power is $456M today, a malicious actor could invest at least $912M in DYDX holdings and use user deposits and community assets to control the protocol. This seems like a lot today, but considering that only 11.5% of the total DYDX supply is held by bounty.” It won't be a big obstacle.

Savings rewards on dYdX are added to the stablecoin USD Coin (USDC) and are derived from the fees users pay to trade on the protocol. The Stride strategy allows the rewards of DYDX shares to automatically increase over time as they regroup. For staking service, the DIDX community charges a fee of 7.5% of the reserved space.

At the time of writing, Defillama's data shows dYdX locked on the chain at $504.48. The network generated over $48.59 million in payouts over the past twelve months.

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