dYdX Community to Vote on Staking $67M DYDX with Stride Protocol

The dYdX community is set to vote on a proposal by multichain liquid staking protocol Stride to stake 20 million DYDX tokens, worth approximately $67 million, from its community pool. The signaling post will go live on March 19 and conclude on March 23.

The proposal aims to increase the economic security of the dYdX chain and redistribute stake weight among validators. Despite the liquid supply of the DYDX token being over 320 million ($1.08 billion), only around 115 million DYDX ($388 million) are currently staked.

As deposits and the size of the community treasury grow, the proposal suggests that malicious activity will likely increase, making it important to diversify part of the community treasury. Stride offers a solution by managing validator selection, staking amounts, compounding rewards, and redelegation.

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's mechanism for auto-compounding rewards back into staked DYDX will allow the community treasury to accumulate over time.

Stride charges a 10% protocol fee for the staking rewards of liquid tokens, which will be reduced to 7.5% on the staked position. 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 USDC, and 7.5% will go to the Stride protocol.

The proposal was posted on the dYdX forum on March 15, and the community will have the opportunity to vote on the matter between March 19 and March 23. If approved, the collaboration with Stride could help secure the dYdX network and diversify its community treasury.