The community of decentralized exchange dYdX has agreed to stake 20 million dYdX Chain tokens with Cosmos staking provider Stride as a security measure.
Trading Surge Necessitates New Staking Move
dYdX founder Antonio Juliano confirmed the news of the decision on X. Notably, the volume of tokens approved for the staking exercise is valued at $60 million based on the current market value of the tokens pegged at $3.06.
dYdX hit this milestone right after it announced plans to restructure operations by setting up a legal entity in the Cayman Islands.
Apart from encouraging stake diversity in its community, this dYdX’s decision comes as the DEX begins to experience a sudden surge in activity and it is the result of a proposal passed on April 6. Precisely, the proposal to stake the dYdX tokens passed with 91.7% of votes in its favor out of 81% participation.
“The rate of DYDX being staked to validators has plateaued and deposits to the exchange are growing at a tremendous pace. Over $140M USDC is held in dYdX v4, of which roughly $100M arrived in the past week,” dYdX identified.
Some of those who did not vote Yes to the proposal believe that the proposal’s passage will impact negatively on the attractiveness of the token. They opined that it could lead to a reduction in dYdX’s APY, making the token less attractive to new investors.
dYdX Staking To Checkmate Bad Actors
However, staking its token is a way for dYdX to protect its network from a potential control attack. This according to innovators is similar to a 51% attack where a malicious entity gains control over a significant amount of a blockchain’s hashing power and exposes the network to manipulation.
“Since the voting power today is $456M, a malicious actor must contribute at least $912M in staked DYDX to take control of the protocol, which would allow them to exploit user deposits and community assets,” dYdX explained.
Based on the design, the staked dYdX tokens will earn rewards in United States dollar-pegged stablecoins USDC. Over time, it would be compounded into dYdX tokens, thereby, creating a flywheel effect for stakers.
Contextually, “the yield from fees generated will be continuously used via Stride to buy DYDX which will be returned back to the treasury,’ Juliano said.
The dYdX community has voted to stake part of the treasury
The yield from fees generated will be continuously used via Stride to buy DYDX which will be returned back to the treasury
— Antonio | dYdX (@AntonioMJuliano) April 7, 2024
The post dYdX Community Ratifies $60M Treasury Stake For Security Boost appeared first on CoinGape.
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