As outlined in our comments on the forum post of Reverie and Stride Labs, we support the prospect of allocating Idle DYDX to Liquid Staking Protocols
The initial proposal mentioned two key reasons to utilize DYDX as LSTs. Our view is that both these benefits are further increased by diversifying LST exposure, rather than concentrating everything in one protocol.
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Increased chain security: pStake deposits to 37 dYdX chain validators, while Stride deposits to 28 validators. Diversifying LST exposure will further decentralize validator voting power (as shown in simulations by pStake here).
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Value accrual for DYDX treasury: pStake terms are 0 fees and 20% of revenue sharing on all staked DYDX from the non community pool: These terms are substantially better than those proposed by Stride (7.5% fees). DYDX would benefit from the value accrual of both staking on Stride and pStake.
Additionally,
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Diversifying into both LST protocols align with our idea of decentralisation.
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The terms laid out by pStake (0% fee + 20% revenue share of all additional liquid staked DYDX) are attractive for the value accrual of the DYDX treasury. To highlight this difference, 20m DYDX staked on pStake would save the protocol close to $1m in fees compared to Strides proposal. When pStake turns on their fee switch, DYDX treasury will accrue revenue from the pStake non community pool.
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In pStakes previous proposal for 10m DYDX, we raised concerns about pStakes low current total value of DYDX staked ($180k). We feel more confident with lowered amount and outlined onboarding process.
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Based on the previous discussions, we feel confident that the economic security is high enough to justify 5m DYDX.
We see value in converting Idle DYDX to LSTs, and feel the fees and terms proposed by pStake are fair and reasonable. This decision would increase chain security, improve decentralization, and accrue value to the DYDX treasury. For this reason we support the proposal.