Diversify potential dYdX Community Staking with Stride and pSTAKE Finance

Thanks for sharing your thoughts, @John_Galt. My reply is limited to addressing your concerns about ‘economic security’.

Some of the points mentioned (especially the way of putting them) are vague and presented without actual data to back them up.

These points are also blown out of proportion and done to propagate an incorrect and biased impression of ‘economic security’.

Is economic security the feasibility of carrying out a 33% or 67% attack on a PoS chain? Or is it the total value of tokens locked? Or is it the chain’s security source in the first place?

I would argue it is a mixture of all of the above.

Sound and Reliable Economic Security

Reverie’s thesis involves increasing the dYdX chain’s economic security by increasing the adoption of DYDX token staking, aka the chain’s bonding ratio. I completely agree with this take. A big part of how economically secure a chain comes from the total bonded ratio of the chain, which dictates token float, the feasibility of attacks, and more. This is the primary concern and the problem that this proposal tries to address.

The most vulnerable attack to PoS chains is the extremely dominant 67% Attack. If an attacker can accumulate that much stake, they could enforce hard censorship by not attesting to blocks produced by other validators. This would allow the attacker control over the chain.

In a recent research report titled “Breaking BFT: Quantifying the Cost to Attack Bitcoin and Ethereum", leading research professionals have found that an attacker (single or nation-state) would not be able to profit from attacking PoS chains like Ethereum, Cosmos Hub, Stride, or Persistence One due to the Total Cost Associated with carrying something on this scale out.

For your consideration, let’s assume an economic benefit exists for such a 67% attack to happen on Persistence One. The attacker would likely need to begin by buying XPRT.

The Persistence core-1 chain is one of the most resilient chains and has produced blocks since April 2021. Since its genesis, XPRT staking has provided sound and reliable economic security to the ecosystem, measured by the bonding ratio of the chain.

On average, > 70% of the XPRT tokens have remained locked in the chain’s staking module. Persistence One has remained in the top 5 PoS chains by bonded ratio. An event where a single attacker can amass such a vast stake is possible but highly unlikely due to XPRT’s float and robustly designed economic security mechanisms.

It is also important to note that in liquid staking, tokens are locked on the host chain, in this case, dYdX. In the unlikely scenario that an attacker gains control over the Stride or Persistence One blockchain, the attack would first be public. Bad actors won’t be able to benefit from this, thanks to the 30-day unbonding period, and it can be addressed with an emergency upgrade (3-day voting period on dYdX).

The economic security of the stake is critical, as you have highlighted very well. What matters more is the feasibility of overpowering said economic security.

Diversified Economic Security

I, like other Persistence One contributors, believe in the concept of hedging security. We should look at security from the perspective of ‘abundance’.

We should think about “How much security is enough”? vs trying to agree on “How much security is too little?”.

In that quest, here are two key ways the Persistence One ecosystem is doubling down on the above thesis:

  • Persistence One will adopt the Bitcoin security solution Babylon offers to add to and strengthen its ecosystem. This integration enables unlocking multiple billions of dollars of economic security provided by BTC (if not trillions).
  • Persistence One is building the Restaking Infrastructure of Cosmos, which involves bolstering its security first and then offering this security bundle to consumers. The Restaking of LSTs of Stride, pSTAKE, LP Tokens of Osmosis, Dexter, and Stablecoins will all add to the economic security of the ecosystem.

By not placing all eggs in a single basket, Persistence One will be a leading ecosystem for diversified economic security.

Liquid Staking dApp Security

One of the crucial things (and equally important) your reply fails to highlight is dApp security, which potentially (and practically) involves more risks than the Stride/Persistence blockchain in the current context.

pSTAKE Finance and Stride share the same ideology of security over everything. This is visible with the multiple audits, bug bounty programs, on-chain monitoring, and other security measures these protocols have set up.

Notably, pSTAKE Finance has also undergone a dedicated security audit for stkDYDX.

However, dApp security risks don’t always come from code.

It is important to have both layers of defense: economic incentives to discourage centralized cartels from acting anti-socially, and anti-centralization incentives to discourage cartels from forming in the first place.

As highlighted in the original post above, pSTAKE’s unique delegation model was developed to ensure that stkDYDX remains a true force of decentralization for the dYdX Ecosystem.

This prevents the risk of an attacker taking control of the protocol’s delegation model to redirect its entire stake to a malicious validator.

Final Thoughts

Overall, I agree with your point of ensuring high economic security. At the same time, I want to highlight again that the feasibility of overcoming economic security is more critical than economic security.

In line with the above, it is a fair ask for the dYdX Community to consider splitting the 20M DYDX tokens with Stride and pSTAKE.

Stride does have more $ value in economic security than Persistence One currently. I encourage the dYdX community to share thoughts on whether that warrants an unequal split of the originally suggested 20M DYDX tokens.


Seems there’s two concerns:

  1. The concern of concentrating too much power with a single entity or protocol and creating a single point of failure and

  2. The concern that there won’t be enough economic security to secure the $10M were this to be split with Persistence.

It would really be helpful to understand what the likelihood is of something going wrong in either scenario. While growing the pie is important, ensuring assets are secured is of more importance. Babylon mainnet isn’t live yet and so it’s hard to also kind of factor that in.

Similarly, ensuring we limit single points of failure is just as crucial.

While initially my thought was grow the pie, would be nice to hear more from both sides on why 100% or 50% is a better solution.


I couldn’t link some of the things mentioned in my original reply so sharing those separately here.

  1. Breaking BFT: Quantifying the Cost to Attack Bitcoin and Ethereum research report - papers(.)ssrn(.)com/sol3/papers(.)cfm?abstract_id=4727999

  2. Quote from Vitalik on cartel formalizations and incentives - medium(.)com/@VitalikButerin/a-proof-of-stake-design-philosophy-506585978d51

  3. Graph showing XPRT bonding ratio - analytics(.)smartstake(.)io/persistence/stats


I’ve been trying to stay out of this discussion as much as possible as I’m both a Stride contributor and a member of the dYdX Ecosystem Development Program, but I just quickly want to address this:

While initially my thought was grow the pie, would be nice to hear more from both sides on why 100% or 50% is a better solution.

I don’t think these two things are mutually exclusive. The pStake team can put up a separate proposal for an amount that they think would be the best fit given their current dYdX TVL of $200k, their economic security, and other issues.

There’s no reason that pStake receiving a staked allocation should be predicated upon that stake being deducted from Stride. I’m quite confused on why their proposal was framed this way tbh. pStake needs to be evaluated on their own merits, and their own benefits and tradeoffs need to be properly discussed independent of how they differ from other LST products.

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What are your thoughts on this @pSTAKE / @vandkar / @Pawel_PK?

About having 2 separate proposals that are each evaluated individually?
The intertwined nature of these proposals makes it difficult to assess each on its own merits without considering the implications of the other.

For me now, because I saw this prop first, I almost can’t now decide on the other one while considering this one since they are tied to each other, yet in reality, are completely separate and from separate teams.


In my opinion there should be bids, 20 million each for the project with separate contracts for 12 months. No taking away from anyone and a bidding war.


how is pSTAKE sustaining itself if they are taking 0 fees

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This seems like a fair option on the surface

However we should also we warry of further dilution of rewards for the average non LST stakers


It’s amazing to see pStake team come in with these ideas and folks giving their comments. So diversification, decentralization and TVL growth is all I envisioned from this. These two protocols are amazing and thus, creating an atmosphere of a large choice for users.

I will encourage a split here between pstake and stride, this will foster a long time growth not just for the protocols and its communities but also for dYdX and Cosmos at large.


Hi everyone, I just want to share some thoughts, like @RoboMcGobo points out neither of the allocations are excluded from each other i’m also annoying as why ppl like @John_Galt comes here to make a case of why DYDX shouldn´t be trusted on Pstake even when his arguments are completely wrong, seems like STRD don’t wanna share anything that can be monopolized, but STRD and Pstake are completely different solutions, it´s sad to watch two AEZ projects brawl as dogs for a piece of meat, even in the proposal of STRD, Pstake support his arguments as many ppl in this thread but STRD people come here to prevent us from get anything spreading FUD, very sad indeed. If there are need for a separate proposal then it´s ok but i don´t really see the case as STRD has their own in other post, and their allocation is completely independent for Pstake allocation.

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Imo, Stride put forward a proposal that should be evaluated on its own, based on its merits. Similarly, Persistence should put forward an independent proposal as well, that should stand on its own, and also be evaluated based on its merits.

I don’t believe this would set the right precedence tbh, asking to receive 50% from someone else’s proposal. And if projects started doing this to one another, it could create a very unhealthy type of competition within the Cosmos ecosystem.

I’m a huge supporter of Persistence by the way, so I’m not coming here with a bias towards Stride, we (Stakecito) do validate both Stride and Persistence networks.

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Just to make sure all information is correct in this thread. The other post has been brought forwards by Reverie, not by Stride.

Looking from the point of me as a non-LST user and investor in DYDX (like you did on one of our Osmosis discussions, so it would be really cool if you would continue looking at things from all angles even while being linked to Stakecito). I am really not happy that my APR will go down from 21% to 18% because we utilise the community pool. This will immediately impact my own rewards, for which I have taken a risk to invest in from a long time ago.

I see talks about having 2 proposals on chain, but it is extremely important that the APR for normal investors will go down even further (like @AutoStake mentioned already). So let’s please just stick to the maximum of 20 million DYDX which is already a lot. So these proposals can’t be viewed separately, unless Reverie lowers the initial amount in the first place.


Not sure what the point is in adding any of this to the discussion. We are discussing dYdX, on the dYdX forums and so let’s stick to dYdX. You can make your point without going out of context.

My being linked to Stakecito has nothing to do with anything here, stating my personal views and only mentioned that we validate both networks.

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I was referring to the good approach I saw on the Osmosis forum, and lacking that same approach here ^^

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I am lacking what approach? Could you please focus on the topic in discussion instead of focusing on me.

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I did ^^

But I also expected a response from your side with the same angle, where also the normal investor is taken into account. And that angle is harmed with the proposal in the first place, but even worse when propagating multiple proposals.

It is completely different when the APR goes down because we get more stakers. But that would also mean more people get DYDX from the market, which has a better price effect. In that case the investor would be happy, since the APR going down and price going up is beneficial. Raiding the community pool is only negatively affecting the investor…

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Now that we’re back on topic, I will respond:

  1. Reverie and Stride Labs (Not Reverie alone) put forward this proposal. Reverie is also an investor in Stride. Their interests are aligned.

  2. Solicitng 50% of their proposal that they worked on imo is not right. I am not saying Persistence should not be able to have the same opportunity, I’m saying, imo, Persistence should, based on their merits, submit a separate proposal for consideration.

  3. Remember that my very first post in here was grow the pie. So naturally, even I initially saw this sharing idea as a good idea. The more I pondered over it and the precedent it would setting, the more I realised it was not.

  4. There are too many factors to consider, and right now they are not comparable that it would make sense to split this prop in the way that is being suggested tbvh. For example, if there was an equal TVL etc etc. then splitting would be more feasible. Remember the request is that the split be in half.

  5. I don’t believe this is a fair proposal at all.


Here I totally agree that the talks should be around any ratio at all (not necessarily 50:50, but also not 0:100), as long as we stick to the 20 million DYDX to avoid diluting rewards for normal investors to much.

  1. As for the APR, if validators have an issue with this, they should absolutely reject the Reverie proposal, not force them to modify it to include a party that it is not clear whether their interests are aligned or not
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Yeah, this bit was what made me start questioning this prop to begin with :slight_smile:

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