dYdX, the decentralized exchange (DEX), has announced a 45% reduction in its trading rewards following a community vote. The proposal was introduced by Callen Van Den Elst, Wintermute’s DeFi envoy, in response to the downturn in the crypto market. The proposal aimed to reduce the platform’s yearly token inflation caused by excessive trading rewards.
Van Den Elst explained that the reduction in trading rewards would have a positive impact on the platform’s ability to fund initiatives in V4 in a sustainable and controlled manner.
“By reducing trading rewards, excess DYDX are retained in the rewards/community treasury. The community can access this through a governance vote, but most importantly, the retained DYDX will have a significant impact on the DAOs ability to fund initiatives in V4 in a sustainable and controlled manner,” he added.
Community Support for the Proposal
The proposal was met with overwhelming support from the dYdX community, with the votes in favor of reducing trading rewards outweighing the votes against by over 20 million dYdX. The approval had a positive impact on the platform’s namesake native token, which saw double-digit returns. Following the approval, dYdX’s native token rose more than 21% and is currently trading at $2.42.
The vote took place on-chain over a month after the DEX held a Snapshot vote to test community reaction to the idea. The proposal received great support from the dYdX community, with over 91% voting in favor.
A 6-Fold Plan for Sustainability
The current modification is part of Wintermute’s V4 Vanguard post, which details a 6-point strategy to make the dYdX a sustainable and neutral trading powerhouse.
The plan includes lowering trading rewards, adjusting maker and taker fees, instituting a market maker rebate program, eliminating trading fee discounts, implementing a yearly reduction in token emissions and amending reward distribution, and finally, instituting trading reward allocations per market.
