dYdX community to vote on staking 20M DYDX with Stride

Multichain liquid staking protocol Stride is proposing that the dYdX community participate in securing its network through staking 20M DYDX ($67 million) from its community pool with Stride 2’s liquid staking protocol.

The proposal’s purpose is to enable dYdX community members to increase the economic security of the chain and redistribute stake weight among validators.

According to the proposal, the dYdX chain currently has around 115 million DYDX ($388 million) staked even though the liquid supply of the token is over 320 million DYDX ($1.08 billion). 

Read more: Liquid staking is now live on dYdX chain

Additionally, the proposal notes that there has been a plateau in DYDX token stakes despite the increase in the number of deposits on the chain. Malicious activity will likely increase as deposits and the size of the community treasury grow, meaning it will be important to diversify part of the community treasury.

“Through Stride, the community would only need to agree on a total amount to stake. All other responsibilities, including validator selection, amount to stake, compounding rewards and redelegating as needed would be managed through Stride,” the proposal suggested. 

Staking rewards on dYdX are earned through fees paid by users to trade on the protocol and are accrued in the form of USDC stablecoins. Stride currently has a mechanism for auto-compounding rewards back into staked DYDX, meaning the community treasury will accumulate over time. 

Read more: Stride wants to become the enshrined LST protocol for Cosmos Hub

Stride charges a protocol fee of 10% for the staking rewards of liquid tokens. The protocol notes that this fee will be reduced by 2.5% to 7.5% on the staked position, allowing most USDC inflows accrued from the staking rewards to end up directly in the community treasury.

This means that 90% of rewards will auto-compound DYDX into the community treasury’s staked position, 2.5% of rewards will be rewarded to the community treasury in the form of USDC and 7.5% of the rewards will be given to the Stride protocol.

The proposal was posted on the dYdX forum on March 15, and a signaling post will go live on Tuesday, March 19, concluding on March 23.

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