[DRC] dYdX Community Staking Proposal

This proposal was co-authored by Reverie and Stride Labs.

Disclosure: Reverie is an investor in Stride.

Summary

  • As of today, the total value locked (TVL) or total deposits on the dYdX Chain are roughly $140 million, with the chain having slightly more than 114 million DYDX tokens staked, which are valued at approximately $456 million (at a market price of $4).
  • The rate of DYDX being staked to validators has plateaued and deposits to the exchange are growing at a tremendous pace. Over $140M USDC is held in dYdX v4, of which roughly $100M arrived in the past week. Given the growing adoption of dYdX v4 and recent market volatility driving trading activity, we assume that this rate of deposit will continue to increase in the coming weeks and months.
  • As deposits grow, the incentive for malicious activity increases with it. Ideally, this would be matched with increasing economic security to outweigh malicious incentives.
  • The community treasury and community treasury vester collectively have over 230M DYDX, valued at around $920M ($4 market price). Of this, 80M ($320M) has vested and is available for distribution by the community.
  • We propose that the community participate in securing the protocol by staking 20M DYDX from the community pool through Stride’s liquid staking protocol.
  • The benefits of this proposal include: (1) the dYdX community can take ownership in protecting users and supporting the growth of dYdX by increasing economic security, (2) the dYdX community can address concerns with stake weight concentration among top validators by proactively delegating to active validators with less voting power, and (3) diversifying a portion of the community treasury into USDC.

Background

The dYdX Chain launched as a proof-of-stake protocol with an active set of 60 validators leveraging CometBFT for consensus. DYDX, the L1 token of the DYDX Chain, may now be used for staking, contributing to the security of the network, and governance of the dYdX Chain. The total amount of DYDX staked to dYdX Chain validators determines the protocol’s economic security - securing user deposits and securing other community assets, like DYDX in the community pool. A malicious actor only needs to control ⅓ of the network voting power to halt the chain and ⅔ of the network voting power to potentially exploit user or community funds on the dYdX Chain.

As of today, the total value locked (TVL) or total deposits on the dYdX Chain are roughly $150 million, with the chain having slightly more than 114 million DYDX tokens staked, which are valued at approximately $456 million (with the market price of DYDX being $4 per token). Typically, the value of the staked DYDX tokens should surpass the total deposits to make sure that executing an attack on the network is excessively costly.

Using the parameters above means roughly $304M (⅔) of voting power is needed to reach consensus.

If we assume the current stake is honest, the cost to attack the protocol by reaching two-thirds of total voting power can be denoted as follows:

⅔ = Malicious Voting Power / (Malicious Voting Power + Current Voting Power)

Since the voting power today is $456M, a malicious actor must contribute at least $912M in staked DYDX to take control of the protocol, which would allow them to exploit user deposits and community assets. This sounds like a lot today, but isn’t such a high barrier when we factor in that only 11.5% of the total supply of DYDX are staked as well as the value of user deposits and community assets.

The amount of staked DYDX, initially growing rapidly, has effectively plateaued in recent weeks. This leads us to assume, particularly given the attractive yield offered to stakers (+20% APR), that a natural limit for liquid DYDX available to be staked has been reached. Existing holders not already staked are presumably either unable or unwilling to stake for various reasons (e.g. trading inventory, stake concentration, regulatory, or other).

Meanwhile, deposits to the exchange are growing at a tremendous pace. Over $150M USDC is held in dYdX v4, of which roughly $100M arrived in the past week. Given the growing adoption of dYdX v4 and recent market volatility driving trading activity, we assume that this rate of deposit will continue to increase in the coming weeks and months.

As deposits grow, the incentive for malicious activity increases with it. Ideally, this would be matched with increasing economic security to outweigh malicious incentives. To protect users and the protocol, we must also continue increasing its security via the amount of staked DYDX.

Additionally, the top ten validators in the active set currently hold two-thirds of the voting power, the top three hold one-third, and the top validator holds roughly 24%. In other words, ten of the sixty active validators have control over the dYdX protocol given the CometBFT consensus mechanism. A concentration of voting power among few validators can hurt the resilience of the protocol and liveness guarantees. If a top three validator goes offline, it suddenly becomes much harder for the protocol to reach consensus. Voting power should be distributed more evenly across the active set to improve resiliency and liveness.

Description

We propose that the community participate in securing the protocol by staking a portion of the community pool. In this model, the community can take ownership in protecting users and supporting the growth of dYdX by increasing economic security. Additionally, the community can address concerns with stake weight concentration among top validators by proactively delegating to active validators with less voting power.

Staking the community pool offers an opportunity to increase the protocol’s growth potential, by allowing for more deposits into dYdX, while also improving its resiliency. As a neutral, protocol-aligned staker, the community guarantees a certain amount of honest and sticky voting power to the protocol. The community effectively serves as a fallback for liquid capital constraints, leveraging its sizable community pool to proactively address scaling issues.

The community pool has over 230M of DYDX, valued at around $920M ($4 market price). Today, 80M ($320M) has vested and is available for distribution by the community. The remaining 150M ($600M) will continue to vest over the next two years. Some of that amount has been allocated to incentives, but most of it remains unallocated for future use. Proactively staking some of this idle capital allows the protocol to grow, without actually removing funds from the community. With staking, the community retains control of all the capital committed, which can be reclaimed at a future time should more liquid DYDX be committed and security organically increased. In other words, no funds are lost or spent through this initiative, only temporarily allocated for a more productive use.

How should we stake the treasury?

The community as a whole may not be able to agree on and efficiently maintain a staking delegation of the treasury. Since the community is represented by tokenholders, contributors, and active validators, agreeing on the amounts and eligible validators may be difficult given conflicts and coordination constraints. Similarly, the need to actively manage a staked position with things like reward accrual and redelegations (in the event of a validator going offline, for example) presents additional challenges for a community-run delegation program.

We propose leveraging Stride’s liquid staking protocol, already active on the dYdX Chain, to more efficiently stake the treasury. Through Stride, the community would only need to agree on a total amount to stake. All other responsibilities, including validator selection, amounts to stake, compounding rewards, and redelegating as needed would be managed through Stride. Ultimately, control of the funds remains with the community, Stride is just being delegated the responsibility of productively deploying the capital on its behalf.

Staking rewards on dYdX accrue in USDC, since they originate from the fees users pay to trade on the protocol. Stride’s current mechanism implements auto-compounding of rewards back into staked DYDX, continuously increasing the amount staked through rewards accumulated.

Stride’s mechanism for auto-compounding the rewards back into staked DYDX presents an added benefit for this initiative. By auto-compounding rewards, the number of DYDX staked by the treasury increases automatically with time, continuously bolstering the protocol’s economic security.

Additionally, Stride has agreed to reduce its protocol fee to 7.5% on the staked position to the community treasury, which will result in substantial USDC inflows to the treasury (more on this below). An added benefit of this proposal is that the treasury is diversifying its asset exposure into stablecoin assets while continuing to benefit from protocol-owned security that increases over time.

Most importantly, Stride presents the easiest path to execution using a community-owned interchain account controlled through governance. Instead of depending on special governance messages, or a future authz implementation, this solution lets the community execute a straightforward, one-time treasury spend proposal. We believe this is the best solution for a timely proposal to pass, addressing the immediate concerns for protocol security and growth.

Specification

Below, we explore technical details for how the community should delegate the treasury with Stride.

How will it work?

Stride has deployed a dYdX Community Pool ICA (Interchain Account) address on dYdX Chain. This account is controlled by the Stride validator set. Any DYDX deposits to this address are detected using ICQs (Interchain Queries), liquid staked with Stride, then returned to the dYdX Community Pool as stDYDX.

To liquid stake the DYDX in the dYdX community pool, the dYdX community can pass a community spend proposal of DYDX tokens with the dYdX Community Pool ICA address as the recipient address. Any DYDX sent to this address will be liquid staked with Stride and returned to the community pool as stDYDX.

Once the community pool receives its stDYDX, it is in full control of its liquid staked tokens. Stride delegates the underlying DYDX across the active set to increase economic security and promote a decentralized validator set. Stride will follow its current guidelines for selecting validators in the active set, and manage those delegations to ensure productive and fair staking participation.

Should the dYdX community choose to unstake these funds, it can do so following the same process in reverse: pass a community spend proposal of stDYDX tokens with the dYdX Community Pool ICA address as the recipient. Any stDYDX deposits to this address are detected using ICQs (Interchain Queries) and redeemed via Stride. After the unbonding period, the unbonded DYDX is returned to the dYdX Community Pool, along with all earned and auto-compounded staking rewards.

Amount

20,000,000 DYDX

The community pool has over 230M of DYDX, of which 80M is vested and sitting idle. Given the sizable amount available, and lack of any other immediate large-scale funding initiatives, we propose delegating 20,000,000 DYDX from the community pool. This 20M will guarantee a significant amount of additional economic security, allowing the protocol to continue growing at a rapid pace without concern for security.

Term

The community will have the ability to unstake the DYDX at any moment and return the principal amount of DYDX plus any rewards back to the community treasury through a governance vote. For the sake of this proposal, we propose staking these funds for at least 12 months, barring any funding needs that supersede the need for economic security.

Stride Fee Reduction

Given the amount of stake contributed to the Stride protocol with this proposal, Stride is offering to reduce its protocol fee on the community pool stake by 2.5%. As a result, based on current staking APRs (21%) approximately $420,000 of USDC will accrue in the dYdX community treasury per year.

Rather than being auto-compounded, this portion of the rewards is simply sent directly to the community treasury.

With the fee reduction, the staking reward breakdown allocations for the staked position are as follows:

  • 90% of rewards used to auto-compound DYDX into the treasury’s staked position, growing it over time.
  • 2.5% of rewards flow directly to the dYdX community treasury as USDC.
  • 7.5% of the rewards flow to the Stride protocol

Using this model, the treasury gets the benefit of both auto-compounding to increase security and USDC inflows to help diversify the treasury’s holdings.

Proposal

We propose that the community stake 20M DYDX through Stride to increase protocol security and improve the distribution of voting power for resiliency. This proposal is merely a signaling proposal. It will be put up for voting alongside a comparable governance proposal on Stride. If both proposals pass, a second proposal will be put up for voting to send 20M DYDX to the community owned interchain account, which will sweep to Stride for delegation to the active validator set. Using Stride’s auto-compounding methodology, the community will continuously increase its staked position, allowing for more economic security to grow overtime.

Next Steps / Timing

The proposed timeline for execution of the joint proposal and staking process is as follows:

Date dYdX proposed schedule Stride proposed schedule
Friday 3/15 dYdX forum post live Stride forum post live
Tuesday 3/19 dYdX signaling proposal on-chain Stride signaling proposal on-chain
Thursday 3/21 Stride software upgrade proposal to enable the rebate goes on-chain for voting
Saturday 3/23 dYdX signaling proposal concludes Stride signaling proposal concludes
Sunday 3/24 dYdX puts executable community spend proposal on-chain
Monday 3/25 Stride upgrade proposal concludes
Wednesday 3/28 Community spend proposal concludes. Tokens are sent to the Stride ICA on dYdX Chain if the proposal passes
Friday 3/29 Tokens are fully staked with Stride and stDYDX is returned to dYdX Chain treasury

FAQs

Why Stride? Why not delegate directly from the Community Pool?

A governance proposal on v4, which includes votes from the active validator set, will lead to significant biases across voting populations. Similarly, it may be susceptible to manipulation and/or a governance attack if malicious attackers vote to stake all tokens to one validator.

Stride can act as a trusted, independent party to promote an even distribution among the active set. Stride is incentivized to continue to deliver on the proposal because the dYdX community may withdraw its stake from the Stride protocol through a new proposal at any time.

Why auto-compound rewards?

We believe that the immediate focus should be to grow the number of staked DYDX. By auto-compounding rewards back to DYDX and staking them, the community introduces a reinforcing loop of continuously expanding economic security, furthering the protocol’s growth potential over time. We also think this presents the easiest solution to managing the stake position today.

How does auto-compounding work?

At a high-level, Stride converts the USDC staking rewards into DYDX and compounds that DYDX using the following process:

  • Stride’s interchain account on the dYdX Chain claims the staking rewards every 6 hours
  • From there, the account transfers the USDC staking rewards via IBC to Osmosis, where it is swapped for DYDX in the associated DYDX / USDC liquidity pool.
  • After being swapped, the resulting DYDX is returned via IBC to the same interchain account on the dYdX Chain.
  • Finally, the interchain account stakes the DYDX with validators on the dYdX Chain.

This process is repeated every 6 hours, and is handled fully non-custodially thanks to the interchain accounts on dYdX and Osmosis.

What will happen to the staking APR on dYdX Chain?

Because this proposal will result in staking rewards accruing to an additional 20M DYDX tokens and increase total staked DYDX by 17%, we anticipate a reduction in the dYdX Chain staking APR from 21.32% to roughly 18%. We believe that this modest reduction is well worth the additional economic security guarantees gained by the protocol.

How will Stride allocate the community’s staked DYDX?

From the moment that Stride launched liquid staking for the dYdX chain in January, delegations have been chosen with the dYdX chain’s security in mind. Stride’s delegation criteria are heavily inspired by the dYdX Foundation’s published take on good practices for validators and delegators. Some non-exhaustive factors that are considered as part of the validator selection process include:

  • The validators’ respective contributions to dYdX in testnet and mainnet so far, including node and infrastructure operation, testing, maintenance, bug reporting, engineering contributions, dashboard and tooling maintenance, social advocacy / marketing, and more
  • Position in the active set. Because 33% of vote power is currently concentrated in the top 2 validators, no stake will be delegated to the top 33% of vote power until such time as stake weight distribution across the set improves
  • MEV considerations on a particular validator, leveraging the Skip Validator MEV dashboard
  • Validator operations and security, to the extent that this is easily discoverable using publicly available means.
  • Node performance and latency.
  • Governance participation.

Tokens delegated to Stride are currently split evenly amongst 28% of validators in the dYdX active set. New validators have been added to the validator set on a regular cadence since launch (approximately 3-4 validators every few weeks), and will continue to be added until an optimal distribution in the range of 40 - 50% of validators receive delegations from Stride. The next validator set addition will occur on March 27.

Stride monitors existing delegations on a frequent basis to ensure that host-zone validators continue to adhere to delegation guidelines. In the event that validators become inactive, are frequently jailed, or otherwise operate in a manner that harms the host-zone, Stride acts swiftly to redelegate from the impacted validator. Examples in which this has been done in the past on other host-zones can be found here and here.

Similarly, Stride will continue to monitor its delegations on the dYdX chain and make adjustments as necessary, redelegating from validators that become inactive, participate in MEV, or otherwise negatively impact the chain. Stride will work with stakeholders like the MEV council to ensure that delegations remain allocated in a manner that prioritizes chain security and growth.

10 Likes

As a validator on dYdX, a governor on Stride chain, and a validator on CosmosHub that secures Stride through ICS, we support this proposal. The proposal. It is a win-win-win for everyone:

  • For dYdX community, it increases chain security and accrues USDC rewards
  • For Stride, it increases its total locked value and thus revenue
  • For Stride validators like us, we benefit with additional stakes
  • For Cosmos ecosystem as a whole, we benefit as a unit. For example, you can imagine that the proposal will improve dydx chain security, thus encourage more traders into dydx v4 trading. This in turn will mint more Noble USDC. The more Noble USDC liquidity will help lift all chains in the ecosystem as these USDC can be secured IBCed (instead bridged) into any cosmos chain.

Polkachu

3 Likes

One of the better proposals I have read, I really like the development of dYdX as DAO.

I will definitely vote YES

3 Likes

I like the creative approach of this proposal by Stride. It makes use of passive community pool funds and significantly/continually increases the DYDX holdings for the community pool while at the same time making lesser liquid DYDX available in the market. A net positive for the ecosystem.

Smart Stake,
dYdX validator, part of Stride dYdX liquid staking validator set, and a Stride governor

2 Likes

Huzmond from Enigma here. We are validators on dYdX, governors on Stride, and whitelisted validators on Stride delegation on dYdX.

We have a positive sentiment and support this proposal. With this delegation, it will increase the decentralization of the validator set, allow the community pool to earn revenue via staking and thereby providing more security to the protocol. Lowering the Stride fees is a good step forward and we think it will in the overall have a positive impact on dYdX chain

1 Like

this proposal makes very sense, it helps strengthening v4 security as well as bringing benefits to community, partners and token holders, definitely support it.

1 Like

We appreciate the idea by reverie and if there is clear community agreement we will also support this as a validator.

We would like to acknowledge though that Lavender.Five Nodes has a conflict here as a Stride governor/validator and stdYdX delegation recipient.

Additionally we think it makes sense to solicit at a minimum pStake for a similar proposal so to distribute the counterpart risk.

Best,
Ertemann
Lavender.five Nodes

5 Likes

pSTAKE Finance supports Reverie’s rationale and the need for more economic security and dYdX network decentralization.

Trusted liquid staking providers like Stride and pSTAKE Finance can abstract away delegators validator selection decisions to ensure the dYdX network sovereignty and promote decentralization.

We echo that the proposed community pool spend to liquid stake 20M DYDX tokens is reasonable considering factors like total community pool and vesting balances, foreseeable spends, and economic security added to the dYdX network.

However, we advocate for an open and decentralized approach involving an equal split of the proposed 20M DYDX tokens between Stride (stDYDX) and pSTAKE Finance (stkDYDX).

pSTAKE Finance contributors’ in-depth rationale and thought process can be found in a separate dYdX forum post here.

8 Likes

Imperator.co, as an active contributor to the dYdX ecosystem (validator & indexer for v4 maintainer), fully supports this proposal!

By staking 20M DYDX from the community pool through Stride, dYdX is not only fortifying its defenses but also ensuring a more decentralized, fair, and resilient network.
This strategic move reflects a commitment to guarding against potential vulnerabilities while optimizing the use of the community pool’s assets. Moreover, the financial benefits and diversification into USDC represent a prudent approach to treasury management.

We commend this proposal for its comprehensive approach to community engagement, security enhancement, and financial insight

1 Like

I think it makes sense to at the minimum consider splitting the allocation between Stride and pStake. It has all the mentioned benefits plus dilutes the risk of concentrating all of the communities funds in 1 protocol.

It is worth mentioning that this doesn’t come without a cost. This will cost the community $1M in rewards going to stride.

Do we really want a protocol with a centralized validator selection to get all of these rewards? As I said, minimum consideration should be to split this allocation.

Disclaimer: Interbloc is a governor on Stride.

8 Likes

Needs a review. Here are my thoughts & suggested changes:

After reviewing this proposals, it’s evident that the move to allocate 20M DYDX for staking is a vital initiative for reinforcing the security and fostering the growth of the dYdX network.

While on one hand, we are discussing the risks of concentrated staking power highlight an important concern for our community, on the other hand, this is promoting liquid staking with a single protocol. So, here it’s crucial to consider the broader implications of centralizing liquid staking power. This concern is not just about security but also about the overall health and decentralization of our ecosystem, as highlighted in the accompanying proposal - ‘Diversify potential dYdX Community Staking with Stride and pSTAKE Finance’

The suggestion to diversify our staking strategy by involving both Stride and pSTAKE is a thoughtful counterpoint that deserves serious consideration. By supporting two protocols, we not only distribute the staking power more evenly but also leverage the unique strengths and contributions of each to enhance the network’s resilience and user experience.

Given the dynamic nature of the DeFi ecosystem and the rapid growth of the dYdX network, adopting a diversified liquid staking approach could serve as a strategic move to ensure long-term stability and growth. This would not only address the immediate concerns outlined in this proposal but also align with our collective vision for a decentralized and secure network.

I appreciate the thoroughness of the initial proposal & the alternative perspective provided by pSTAKE & have also shared my thoughts there.

Both contribute valuable insights into how we can best secure and decentralize the dYdX network. I look forward to engaging further on this topic and exploring the best path forward for our community.

SuperEra

5 Likes

Should we commence staking of the community treasury, it will reduce the earnings for current stakers, which is undoubtedly a negative aspect to consider.

The reasons why major token holders have bridged their tokens into the dYdX Chain but have refrained from staking them should be investigated. Possible concerns may include legal risks, a lengthy unbonding period, or other factors.

In the event that the community decides to stake a portion of the community treasury, it is imperative to distribute tokens across a maximally large set of validators. It is essential to utilize both available liquid staking protocols(stride and pStake) to mitigate any risks and maintain decentralization.

I wish to highlight that this proposal has been put forward by Reverie, who are 1) investors in Stride and 2) members of the social slashing committee. Given the centralized approach to validator selection for staking within Stride, this company would gain excessive influence over validator decisions, which I believe poses significant risks

We are giving away ~1m$ per year to stride. Think about it. What protocol is really gaining for such amount of money? If you concern about the security simply staking to bottom 40-50 validators with clear parameters of redelegation is a better solution

6 Likes

While I agree that this proposal will enhance DYDX’s security and decentralization, it can be improved.

My main issue is that the 20M is staked with Stride, which will also gain a lot of $ from the fees. With this said, pSTAKE should also be included in the 20M - a split between the two protocols would be the greatest approach.

Luckily, pSTAKE has already posted a proposal discussion (please do go and get involved in it). One important differentiator between the two proposals is that:

  • Stride reduces its fee by 2.5%
  • pSTAKE waives it completely

If the 20M does get split between the two protocols, I propose Stride should also consider waiving the fee.

In addition to this, upcoming DYDX Liquid Staking providers should also be included in this (given the protocol adopts a security-first approach such as Stride and pSTAKE).

Thank you for reading,
Dan from Cosmonaut Stakes

7 Likes

As a trusted validator, and service provider for the dYdX chain, we fully support this initiative and would like to highlight the following:

  • the dydx chain can benefit from additional stake distributed across a select number of validators, currently the genie coefficient of the chain is among the worst in the ecosystem with the top stakers having no regard for chain security or function.
  • The amount of tokens currently staked to the chain is just a small percentage of the total dydx distributed. Having more stake on-chain will reduce the risks of a whale taking more control of the network.
  • The amount being requested is not huge, and it is our opinion that there is enough community pool funds to warrant grants to multiple liquid staking protocols.
  • Staking community pool funds will keep revenue generated by the protocol returning to the community pool enabling more sustainability for the future DAO operations.

We would like to see some further discussion in the distribution of rewards to drastically increase the amount of USDC that is retained by the community pool. We would propose a split such as:

  • 50% to auto-compounding
  • 45% to dYdX community treasury
  • 5% to Stride protocol

Null.

2 Likes

Monopoly of DYDX liquid staking would of course benefit Stride, Reverie (as an investor), and the Stride validator set (may of whom have clearly indicated their COI here. Thumbs up for transparency.)

The question is less about what is good for Stride, and more about what is good for DYDX.

Is it good to subsidise just one LST provider, if the aim is to increase security and decentralisation?

Perhaps splitting community pool stake between two LST providers would offer greater security and decentralisation.

See forum proposal: Diversify potential dYdX Community Staking with Stride and pSTAKE Finance

pStake do not use a closed validator set, instead assigning stake algorithmically to increase decentralisation.

Financially, the DYDX community pool would benefit more by splitting the proposed 20M DYDX between Stride and pStake.

Instead of charging the reduced Stride fee of 7.5%, pStake propose charging 0% fees. Additionally sharing 20% of their entire DYDX liquid staking revenue with the DYDX community pool.

4 Likes

The current power concentration of a total of almost 69% of staked tokens held by the top 10 validators and almost 32% by the top two(!) alone is definitely a challenge that needs to be addressed. dYdX is blessed with top-notch validator operators with impeccable integrity in the top slots, but it can’t count on its luck forever.

In that regard, we support the proposal. Generating yield form a portion of the community funds is also commendable.

That being said, we would like to see the tokens staked in a different manner than with Stride alone. While Stride is definitely a force for good in dYdX, the community should fund a more diverse approach with less conflicts of interests attached.

We thank @pSTAKE for their proposal, which we definitely support. We would also like to hear how this massive amount of tokens could be used to strengthen the longer tail of validators even more.

E.g. delegating increased amounts to smaller validators, as long as they have 100% governance participation and are in the active set, combined with a bootstrapping measure for community-ran validators so that they can reach the top 60.

Further issue to point out is this:

Which should definitely be taken into consideration.

3 Likes

Informal Systems is a validator on dydx and for stride on ICS, we are also part of the Stride dydx liquid staking validator set.

We fully support this proposal to stake 20,000,000 dydx from the community pool and increase the security of the dydx chain. This both benefits the dydx community as well as increases the amount of dydx staked through stride.

Furthermore we would also consider a separate proposal to allocate more dydx from the community pool to pSTAKE in an effort to spread the stake between multiple liquid staking providers.

2 Likes

Returning to this, we were wondering why the community tokens should be staked via liquid staking providers. Are there plans to use the LSTs further? Otherwise, it would be more profitable to stake in a wide set of minority validators and rotate from time to time.

1 Like

I understand the idea of fortifying the chain security of DYDX by using community pool funds, but it doesn’t solve the underlying question.

If the conclusion is that the amount of DYDX staked has leveled out and is not increasing anymore, why are we not asking the question why that is happening first? If this question is not answered beforehand… then there is a measure chosen which will in the end not solve the problem.

I am also glad with the transparency of validators that they are part of the DYDX valset as well as the whitelisted validators from Stride. There is a clear conflict of interest for these validators, which I hope will be reflected in validators voting “Abstain” at the very least.

Looking at the choice of LST-provider it is indeed hard needed to at least include pStake, but I would also like to investigate if QuickSilver can be included as well. In the end DYDX benefits from diversification on that field as well which also reduces systemic risk and exposure to just one party.

4 Likes

Some validators are also investors in Stride in my opinion they should “Abstain” for sure

I am definetely against a centralized set of validators and addition of pStake and maybe QuickSilver in the future can help with fair distribution. Also I think the comission for such huge amount shouldnt be higher than 3%

5 Likes