[DRC] Realized Losses Rebate Pilot Program

[eguegu]

Summary

This proposal seeks community approval to launch a one-month pilot Realized Loss Rebate Program starting December 1, 2025, that rewards traders with points and potential rebates of up to $1M for experiencing loss events. The program is designed to retain traders and attract additional volume to the dYdX ecosystem during challenging market conditions.

We request an allocation of $1M in DYDX from the Community Treasury for funding the program. The program report and actual distribution will be submitted via a separate community spending proposal once the program has been completed.

Abstract

The Realized Loss Rebate Program introduces a gamified incentive layer for traders who are liquidated on dYdX. Participants will earn loss event points for each qualifying event, allowing them to compete on leaderboards and become eligible for rebates paid out after the end of the month.

By reducing the net cost of loss events for the most active and highest-value users, the program aims to improve trader retention, increase engagement, and strengthen dYdX’s positioning within the broader perpetuals trading landscape. The pilot will run for one month, starting December 1 until December 31, 2025, with a total funding of up to $1M in DYDX from the Community Treasury, subject to a future distribution proposal.

Motivation & Rationale

Losss are an unavoidable component of leveraged trading. However, for high-intent traders who meaningfully contribute to open interest, volume, and fees, liquidation-related losses can be a point of friction that negatively impacts long-term retention, particularly during periods of heightened volatility.

Across the industry, several perpetual exchange platforms have begun experimenting with mechanisms that offset trader losses or provide retention incentives tied to realized losses. Aster has launched Machi Mode, distributing loss points, while Variational is currently incentivizing traders through Loss Refunds. This shift reflects a broader competitive trend: exchanges increasingly recognize that supporting active traders through downside events can materially enhance user loyalty and trading consistency. Introducing a Realized Loss Rebate Program enables dYdX to experiment with a similar dynamic that emphasizes fun, competition, and loyalty.

Preliminary data show that traders who frequently experience losses also represent a substantial share of platform activity and fee generation, underscoring the value of retaining them through targeted incentives. From November 1 until today, there have been ~32k liquidations from 1.4k addresses. These addresses have contributed $9.6B in volume and $450k in fees. Meanwhile, the top 20 liquidated addresses amassed $8.5B in trading volume, accounting for over 84% of the total exchange volume over the period.

A structured pilot Realized Loss Rebate Program allows the community to evaluate whether such an incentive reduces churn, encourages continued participation after loss events, and strengthens dYdX’s competitive position

Specification

• The Realized Loss Rebate Program will operate as a points-based system in which users earn loss points for each qualifying realized losses of a leveraged position.
• Points accumulated throughout the month-long pilot will position users on a leaderboard that determines their eligibility for rebates.
• At the end of the pilot, top participants will receive a percentage rebate of their realized losses amounts, distributed proportionally based on leaderboard ranking.
• The program will have a funding pool of up to $1M in DYDX, allocated from the Community Treasury. We will deliver transparent reporting at the end of the pilot and the distribution proposal. This proposal does not seek to distribute funds at this time; it only authorizes the launch of the program framework.

Next Steps

We invite the community to provide feedback on this proposal. If there is no significant objection, we will submit the on-chain text proposal on Thursday, November 27, 2025.

[Iguana]

While the Liquidation Rebate Program has strong potential to improve trader retention, the proposed leaderboard-ranking distribution model introduces structural inefficiencies and fairness issues.

First, leaderboards inherently concentrate rewards into a very small subset of users, disproportionately benefiting the highest-volume or most aggressive traders. This contradicts the stated goal of improving retention across the broader population of liquidated users. Under the current structure, hundreds or thousands of affected traders would receive no meaningful rebate, despite contributing fees, open interest and liquidity to the protocol.

Second, leaderboard systems encourage perverse incentives. A competitive ranking mechanism may unintentionally motivate traders to take excessive or artificial risks to climb the leaderboard—introducing moral hazard, unnecessary volatility, and worse overall trading behaviours. A rebate mechanism should stabilize user experience, not gamify liquidation severity.

Third, tying rewards only to top-ranked addresses reduces the program’s ability to measure its true impact. A pilot designed to test retention should emphasise breadth of participation, not just depth among the top 1–5% of users. A narrow distribution provides weak signal on whether the program benefits the wider trader base, making post-pilot analysis less reliable.

A pro-rata distribution model—rebates paid proportionally to each user’s liquidation loss—directly aligns incentives with actual impact. This approach:

• ensures fair compensation for all participating users, not just a small elite cohort

• mitigates competitive or risk-seeking behaviour

• provides a cleaner, more representative dataset on user retention across segments

• aligns with the pilot objective: evaluating whether a rebate reduces churn and improves loyalty at scale

In short, the leaderboard system dilutes fairness, introduces behavioural risk, and limits the program’s evaluative value. A proportional-rebate model is more equitable, safer, and better aligned with the stated purpose of the pilot.

[1ED]

dYdX faces structural challenges in its product evolution. The platform’s frequent version overhauls create substantial migration friction for users and liquidity providers, preventing long-term accumulation. Its uncompromising pursuit of full decentralization further constrains the trading experience, resulting in slower execution, reduced smoothness, and an overall usability gap compared to platforms that offer near-centralized performance.

The market-making environment presents another set of issues. Fully open on-chain data increases strategy-exposure risks, making high-quality market makers more likely to leave—especially when returns are already thin. Additionally, the chain lacks meaningful incentive structures, support mechanisms, or profit-sharing models at the protocol level, reducing the attractiveness of staying or scaling market-making operations.

Meanwhile, competing platforms are pursuing entirely different strategic vectors—such as buyback programs, points systems, and incentive frameworks—that position them more competitively. Without corresponding initiatives, dYdX is gradually falling behind as gaps in user experience, performance, and ecosystem incentives continue to widen.

[tak]

I’ve just submitted proposal-321.
Don’t miss the chance to vote.

[Govmos]

We struggle to see how this pilot could benefit the ecosystem. Incentivizing liquidations through a ranking or point-based system feels fundamentally misaligned with responsible trading. Every element of the proposal — points, leaderboards, rebates tied to liquidation events — introduces the kind of moral hazard we should avoid, not encourage.

If the intention is to support high-intent traders facing unexpected volatility, a much simpler and safer approach would be to consider a proportional rebate mechanism rather than a competitive structure that risks promoting reckless leverage.

In its current form, we cannot support this proposal.

[Shanks23]

A reward for getting liquidated?
I’ve never read such nonsense.

Trading should be rewarded so traders have an incentive to stay, but being rewarded for getting liquidated makes absolutely no sense…

(You got liquidated? Here’s a $2000 reward to get liquidated again.)

Those who generate profits should be rewarded because it benefits the ecosystem. What’s the point of rewarding someone who is liquidated and no longer has the funds to continue trading?

[JTrader]

When will be more info about the liquidation rebate program? about the points leaderboard the percentage of liquidation that would give back etc.It would be nice some example also , so all will be clear and transparent

[apt]

bro just discovered how casinos and sport betting work

the most profitable financial industry in human history

[Shanks23]

Since when do people who lose their money on Casinos and Sport betting get a Reward ?

The most profitable financial Industry in human history is the Trading Market

[eguegu]

Hi dYdX Community,

Based on early encouraging data from the first two weeks of the Loss Rebate Pilot Program, we propose extending the pilot through January 2026 to allow for a more comprehensive evaluation of its impact.

During the first two weeks of the program:

• Traders who received loss rebates generated $571M in trading volume and $46k in fees.
• 91% of eligible traders were existing users, while 9% were new traders, indicating both retention and incremental user acquisition.
• Total realized liquidation losses during the period were $1.7M, with 100 addresses qualifying as the most impacted traders.
• Since the claims frontend went live, 27 traders have already submitted claims within the first few days, suggesting healthy engagement despite the upcoming holiday period.

Extending the pilot through January would allow the community to:

• Observe trader behavior beyond the initial launch period,
• Evaluate the program across a longer market and volatility cycle,
• Gather higher-confidence data to inform whether loss rebates should be adjusted, scaled, or discontinued.

We propose allocating up to $1M in DYDX to fund the Loss Rebates Pilot Program throughout January 2026.

Given the upcoming holiday period, we plan to submit the formal text proposal shortly.

[tak]

Proposal-333 submitted.
Don’t miss the chance to vote!

[eguegu]

Hi dYdX Community,

Based on further data from the six weeks of the Loss Rebate Program, we propose extending the program through February 2026 to support continued trader retention while onboarding new traders and driving sustained market activity.

Since launch, during the six weeks of the program:

• $150,000 in DYDX has been allocated across 288 addresses, of which 237 are unique, indicating broad participation across the dYdX trading community.
• 72 addresses have claimed their loss rebates so far. Loss rebate claims are currently live for December, with the first January distribution subject to community approval.
• Traders receiving loss rebates have generated $4.2B in trading volume, representing 12% of total exchange volume, and $165K in trading fees, accounting for 25% of total protocol fees generated during the period.

This performance highlights the Loss Rebate Program as a highly positive ROI incentive, effectively retaining high-impact traders while contributing meaningfully to protocol revenue.

For February, the Loss Rebate Program will focus on liquidation events, rather than broader realized losses. Under this structure, traders liquidated on non-BTC perpetual pairs will be eligible to receive a rebate on a portion of their losses.

This refinement is intended to allow the community to:

• Onboard new traders during periods of heightened market volatility, when liquidation risk is elevated and incentive support can meaningfully reduce participation friction,
• Retain high-impact traders who contribute significant trading volume and fee generation to the protocol, reinforcing sustained activity rather than short-term usage,
• Gather higher-confidence data to inform whether the Loss Rebates Program should be future adjusted, scaled, or discontinued.

We propose allocating up to $1M in DYDX to fund the Loss Rebates Program throughout February 2026.

[tak]

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Proposal is here: #340