Question
DYDX holders are bracing for a massive event next month, as 105% of the circulating supply will be distributed to investors and team members.
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Have holders begun preparing for this massive unlock? If so, what actions are they taking to prepare? How do you expect the market to react in the weeks leading up to and following the unlock? Back up your assertions with data.
About DXDY
The dYdX protocol token, $DYDX, is now live. The initial distribution will occur over the following 28 days. $DYDX will become transferrable at approximately 15:00 UTC on September 8th, 2021.
The token has been deployed to Ethereum at 0x92D6C1e31e14520e676a687F0a93788B716BEff5
. Alongside the launch of $DYDX, we are also releasing:
- A new governance product available at dydx.community
- Retroactive mining rewards for past users of dYdX protocols
- Liquidity mining rewards for traders & liquidity providers on dYdX's Layer 2 Perpetuals
- A liquidity staking pool where $USDC stakers can earn rewards for providing liquidity
- A safety staking pool where $DYDX stakers can earn rewards for securing the system
- Trading fee discounts based on $DYDX holdings
$DYDX is not available in the United States or other prohibited jurisdictions. If you are located in, incorporated or otherwise established in, or a resident of the United States of America, you are not permitted to receive a distribution of, or transact in $DYDX. Trading fee discounts are subject to change at the discretion of dYdX Trading, Inc.
Community & Growth
dYdX is the market leader in developing trustless & open protocols for advanced crypto-financial products. Over the last three years, dYdX has supported over $11 billion in volume across perpetuals, margin, and spot trading with over 64,000 unique traders, and originated over $250 billion in borrowing & flash transactions from dYdX liquidity pools.
In February of 2021, dYdX and StarkWare launched a Layer 2 protocol for cross-margined perpetuals, based on Starkware's StarkEx scalability engine and dYdX's Perpetuals smart contracts, enabling significant improvements to non-custodial trading at scale. Traders can trade with zero gas costs, and in turn, lower trading fees and reduced minimum trade sizes.
The launch of the dYdX Layer 2 protocol came with a new focus on global growth, outside of the United States. Since launch, the Layer 2 protocol has achieved product-market fit for non-custodial advanced financial services:
Over $3.5 billion in volume from over 18,000 unique addresses (by deposit)
Launched 22 markets, from sectors such as DeFi, emerging Layer 1 blockchains, and more
With the launch of the dYdX Foundation, the dYdX Layer 2 protocol is now well-positioned for community-led growth & development towards the goal of becoming one of the largest community-controlled cryptoasset exchanges.
Introducing the token
With an industry-leading product and a strong trajectory of organic growth, the dYdX Layer 2 protocol is ready for the next phase of its evolution — handing over control to the community through the launch of $DYDX.
$DYDX is a governance token that allows the dYdX Protocol's community to truly own & govern the dYdX Layer 2 protocol. By enabling shared control, $DYDX aligns incentives between traders, liquidity providers, and partners of the Layer 2 protocol. $DYDX enables a robust ecosystem around governance, rewards, and staking – each designed to drive future growth & decentralization of the dYdX Layer 2 protocol. Launching alongside $DYDX are two staking pools designed to promote liquidity and safety on the dYdX Layer 2 protocol. Rewards programs for trading and liquidity provision on the dYdX Layer 2 protocol, and for past usage of all dYdX protocols will help drive growth and adoption of the dYdX Layer 2 protocol.
Allocations
A total of 1,000,000,000
$DYDX have been minted, and will become accessible over five (5) years, starting on August 3rd, 2021 at 15:00:00 UTC. The initial five-year allocation of the total supply of $DYDX is as follows:
50.00%
or500,000,000
to the community as follows:25.00%
or250,000,000
to users who trade on the Layer 2 Perpetuals Protocol, based on a combination of fees paid and open interest7.50%
or75,000,000
to past users who complete certain trading milestones on the Layer 2 protocol7.50%
or75,000,000
to liquidity providers based on a formula rewarding a combination of uptime, two-sided depth, bid-ask spreads, and the number of markets supported5.00%
or50,000,000
to a community treasury2.50%
or25,000,000
to users staking $USDC to a liquidity staking pool2.50%
or25,000,000
to users staking $DYDX to a safety staking pool
27.73%
or277,295,070
to past investors of dYdX Trading15.27%
or152,704,930
to founders, employees, advisors, and consultants of dYdX Trading or the Foundation7.00%
or70,000,000
to future employees and consultants of dYdX Trading or the Foundation
A maximum perpetual inflation rate of 2.00%
per year will increase the supply of $DYDX beginning after five years, ensuring the community continues to have the resources to continue contributing to the Protocol.
Although the community allocation has been established as presented above, $DYDX holders have full control over how the community allocation is used going forwards.
Rewards & Staking Pools
The $DYDX governance token can be earned in one of two ways: rewards from using the Protocol, or through staking $USDC or $DYDX to pools.
All rewards & staking contracts operate on 28-day cycles, referred to as epochs.
During each epoch, all $DYDX earned from retroactive, trading, or liquidity mining rewards will only become transferrable at the end of the epoch. During each epoch, all $DYDX earned from safety or liquidity staking pools can be withdrawn at any time.
On September 8, 2021, eight (8) days after the end of Epoch 0, the initial transfer restrictions will be lifted and approximately 8.11%
of the $DYDX supply will become liquid. The following chart shows the total liquid supply over time.
Retroactive Mining
The success of the dYdX Layer 2 protocol is the result of thousands of community members who have been trading on the dYdX Layer 2 protocol and its predecessors over the past three years.
$DYDX has been allocated to historical users of all dYdX protocols based on a snapshot ending July 26, 2021, at 00:00:00 UTC. There are five allocation tiers that depend on the usage across all dYdX protocols. In line with restrictions on the availability of $DYDX and the dYdX Layer 2 protocol in the United States, retroactive mining is not available to users located in, or incorporated or otherwise established in, or a resident of, the United States or any other prohibited jurisdiction. Any accounts that were clearly associated with bot activity speculating on a future airdrop are also excluded from retroactive rewards.
To claim $DYDX, historical users must meet the following milestones on the Layer 2 protocol within the first 28-day epoch, referred to as Epoch 0.
Any historical volume on the dYdX Layer 2 protocol counts towards a user's claim milestone. Any unearned $DYDX at the end of Epoch 0 will be forfeited and automatically distributed to the community treasury.
More details regarding the retroactive mining rewards can be found here.
Staking Pools
The Liquidity Staking Pool is now live, and is accessible here. This pool will run until August 3, 2026 at 15:00 UTC.
The Safety Staking Pool will automatically go live on the Protocol at the end of the first epoch, and will be accessible here. This pool will run until September 8, 2026 at 15:00 UTC.
Liquidity Pool
To further liquidity network effects and incentivize professional market makers, $DYDX will be distributed to users who stake $USDC to the Liquidity Staking Pool. Known and community-approved market makers will use the staked $USDC to make markets on the dYdX Layer 2 protocol, furthering liquidity available across the markets. The market makers will not be able to withdraw the $USDC from the Protocol, requiring them to use it only in the Protocol. However, a portion of staked $USDC could be lost if a market maker were to lose funds and be unable to replenish the liquidity staking pool.
Stakers will receive $DYDX, distributed continuously according to each staker’s portion of the total $USDC in the pool. Stakers must request to unstake funds at least 14 days before the end of the epoch in order to be able to withdraw funds after the end of that epoch. If stakers do not request to withdraw, their staked $USDC is rolled over into the next epoch. More details can be found here.
The initial approved market makers include Wintermute, Amber Group, Kronos, Sixtant, and DAT Trading who have been actively market-making on the Layer 2 protocol since launch.
Safety Pool
User safety & protection have been of key focus since the launch of the Layer 2 protocol. For this reason, $DYDX will be distributed to users who stake $DYDX to the safety pool to create an additional safety net for users of the Layer 2 protocol. Stakers’ decision to lock $DYDX into the Safety Pool could result in a shortfall event, which may result in the potential slashing of staked funds at the discretion of $DYDX governance. Stakers will receive $DYDX continuously proportional to their portion of the total $DYDX in the pool.
Stakers must request to unstake funds at least 14 days before the end of the epoch in order to be able to withdraw funds after the end of that epoch. If stakers do not request to withdraw, their staked $DYDX is rolled over into the next epoch. The Safety pool will go live upon the $DYDX becoming transferrable on September 8th, 2021 at 15:00 UTC. More details can be found here.
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DYDX General numbers
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