A significant percentage of the dYdX community has rallied around a proposal to roll out a market maker rebate program.
The proposal was approved on Wednesday morning after enjoying massive backing from members of the DAO. Out of the nearly 800 votes the proposal received, just 20 persons kicked against the idea, translating to a meager 0.31% of the voting power. It is worth mentioning that the result is a signal to dYdX Trading to implement the proposed changes since the community has no power over trading fees.
According to Callen, the creator of the proposal, there is a need to lower the protocol’s reliance on LP rewards and “incentivize liquidity in a natural way.” He noted that dYdX’s sustainability largely hinged on retaining liquidity providers and traders. Therefore, it was expedient for the protocol to introduce a Market-Making Fee Program separate from the current LP rewards program.
The proposal recommended 5 tiers of fees based on maker volume as a percentage of the 30-day exchange volume on the exchange. Callen notes that the proposed fee tiers tally with the standard obtainable on most top centralized exchanges.
Once implemented, market maker rewards will be directly proportional to maker volume and not the size of the reward pool.
Over at the dYdX forum, the idea was widely welcomed by the community. Alucard.eth opined that the DEX needed to break its sole reliance on “a static pool and flow of Liquidity Provider (LP) rewards that are subject to significant variance based on the price swings of the $DYDX token.”
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