Stride, a multichain liquid staking protocol, has recently put forward an exciting proposition for the dYdX community: a collaboration to stake 20 million DYDX tokens, valued at approximately $67 million from Stride’s community pool into the Stride 2 liquid staking protocol. The objective behind this proposal is to bolster the economic security of the dYdX chain and redistribute stake weight among validators more equitably.
Background and Context
Currently, the dYdX chain boasts a staggering $388 million in DYDX tokens staked, while its liquid supply surpasses 320 million DYDX tokens, valued over $1.08 billion. This disparity arises due to the recent increase in deposits on the chain but a stagnation in the staking of DYDX tokens.
Staking Mechanics and Community Decision Process
The importance of diversifying the community treasury to thwart potential malicious activities as the community treasury and deposits expand is a significant focus in the proposal. Stride’s proposition outlines that the dYdX community would only need to determine the total amount of tokens to be staked, with Stride managing all other aspects, including validator selection, staking amounts, compounding rewards, and redelegations when required.
Staking Rewards Mechanics
The staking rewards mechanism within the dYdX ecosystem is an integral aspect of the proposal. Rewards are generated through user fees on trades and accumulated in USDC stablecoins. The auto-compounding mechanism of Stride for rewards back into staked DYDX allows the community treasury to expand over time.
Proposed Protocol Fee Reduction
Stride proposes a reduction in the protocol fee on staked positions from 10% to 7.5%, ensuring a larger portion of USDC inflows from staking rewards goes directly into the community treasury.
Community Engagement
The proposal was shared on the dYdX forum on March 15, with a signaling post slated for March 19 and concluding on March 23. This initiative aims to generate conversation within the dYdX community regarding the staking collaboration with Stride.
The Future of Staking Collaboration
As the dYdX community discusses this potential collaboration, it represents a significant step forward in strengthening the economic security of the chain and fostering more equitable distribution among validators. Stay tuned for updates on this exciting development within the dYdX ecosystem.
Conclusion
In summary, Stride’s proposal for a collaboration with the dYdX community to stake 20 million DYDX tokens into Stride 2 aims to enhance the economic security of the dYdX chain while redistributing stake weight among validators more equitably. With a focus on staking rewards mechanisms, community decision processes, and potential protocol fee reductions, this initiative promises to foster valuable discussions within the dYdX community.
