A new 50/50 allocation between Stakers and Buybacks to amplify DYDX’s impact.

Governance/DAO Discussions
1

This proposal aims to adjust the current fee distribution to maximize the impact of dYdX revenues on the DYDX token price and further strengthen investor confidence in the protocol’s long-term value.

Proposed new distribution:

  • 50% Stakers

  • 50% Buyback Program

  • 0% Treasury SubDAO

  • 0% Megavault

Current distribution:

  • 40% Stakers

  • 25% Buyback Program

  • 25% Megavault

  • 10% Treasury SubDAO

:light_bulb: Motivation

  • The Treasury SubDAO already holds over 60 million DYDX tokens, making further 10% allocations unnecessary.

  • The Megavault will benefit indirectly from higher token prices and increased protocol activity.

By allocating a larger share to Stakers and Buybacks, we strengthen buy pressure and staking incentives, potentially creating a positive feedback loop:

Price ↑ → Rewards ↑ → More Traders → Volume ↑ → Revenues ↑ → Price ↑

:triangular_ruler: Specification

  • Adjust fee distribution to:

    • Stakers: 50%

    • Buyback Program: 50%

    • Treasury SubDAO: 0%

    • Megavault: 0%

:brain: Rationale

  • Stakers (50%): Increased rewards drive greater staking participation and network support.

  • Buyback (50%): Higher structural demand supports DYDX price appreciation.

  • Treasury SubDAO (0%): Its large reserves make further allocations redundant.

  • Megavault (0%): Will benefit indirectly without requiring direct allocation.

:globe_with_meridians: Expected Impact

  • Positive price action through larger buybacks.

  • Boosted confidence among current and future investors.

  • Higher staking participation.

  • Stronger trading incentives → more traders → higher volume → increased protocol revenue.

  • Self-reinforcing growth loop.

:hammer_and_wrench: Implementation

  • Smart contract parameter update.

  • Governance vote.

  • Community communication and coordination with SubDAOs.

I invite all community members to share their thoughts and support this proposal to help dYdX reach its full potential through a more impactful fee allocation. :grinning_face:

5 Likes
2

Now we have two DRCs regarding buybacks :slight_smile:

IMHO your’s looks good for a long run. My suggestion is to add it after mine (100% buybacks for 3 months).

3 Likes
3

Sounds great! I’m totally fine with that plan :+1:

1 Like
4

LFG. I’d start with a trial experiment at 100%. After that, we can move on to finding the right balance, gradually reducing it in steps (let’s say 90/10 → 80/20 → 70/30), since it’s quite difficult to determine the optimal ratio between staking yield and the token’s price impact

The positive price impact should take priority, because APR alone can’t offset a negative token price movement. That’s why even with the current 40% allocation, staking doesn’t look attractive. The goal is to maintain a positive impact on the token’s price while still providing a reasonable staking yield. But we’ll see, maybe we won’t even want to move away from the 100% allocation! : )

3 Likes