Enhancing Security Measures: dYdX Community Approves Token Staking Proposal
As the dYdX platform experiences a surge in trading activity, the community has taken steps to bolster security by approving a proposal to stake 20 million DYDX tokens.
Proposal for Security Enhancement
The recent proposal put forth by dYdX focuses on the importance of beefing up security measures due to the rising deposits and trading volumes on the platform.
- dYdX discloses a total value locked (TVL) of approximately $140 million on the dYdX Chain, with over 114 million DYDX tokens staked, valued at around $456 million.
- The proposal notes a stagnation in the rate at which DYDX tokens were being staked to validators despite significant staking activity.
- Over $140 million USDC is currently held in dYdX v4, with a $100 million influx in the week before the proposal.
- Anticipated growth in deposits is expected to continue as dYdX v4 gains popularity and trading volumes surge.
Protecting Against Threats Through Token Staking
By staking DYDX tokens, the dYdX community aims to decentralize voting power and enhance the network’s resilience against security threats.
- Staking native tokens is a proactive measure to prevent potential control attempts akin to a 51% assault.
- dYdX’s network architecture allows for scenarios where a third of the voting power could halt on-chain activities.
- With two-thirds of the voting power, adversaries could exploit the community’s and users’ funds.
Approval of Token Staking Proposal
The community’s decision to stake tokens from dYdX’s treasury, valued at over $61 million, was approved with an overwhelming 91.7% majority on April 6. This move enables more efficient staking of the treasury using Stride 6’s liquid staking protocol.
The yield from fees generated will be continuously used via Stride to buy DYDX which will be returned back to the treasury.
Through this arrangement, the community retains control of the funds while delegating capital deployment responsibility to Stride. Staking rewards, in USDC, are derived from trading fees on the dYdX protocol and reinvested over time through Stride.
- The community incurs a 7.5% fee for this service, with Stride reducing its protocol fee on the staked position.
- This results in significant USDC inflows to the community treasury.
Hot Take: Securing the dYdX DEX
By taking proactive measures to stake DYDX tokens and enhance security protocols, the dYdX community is committed to safeguarding its decentralized exchange against potential threats and vulnerabilities. Upholding a strong stance on network security contributes to fostering trust among users and stakeholders, ensuring a robust and resilient ecosystem for decentralized trading activities.
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