# \[DRC\] Revenue Share on dYdX **URL:** \ **Category:** Proposals\ **Tags:** drc\ **Created:** [October 30, 2025, 1:54pm UTC](https://dydx.forum/t/drc-revenue-share-on-dydx/4702 "2025-10-30T13:54:08Z")\ **Posts on this page:** 19\ **Page:** 2
**Author:** ![Cosmic\_Validator](https://dub1.discourse-cdn.com/flex013/user_avatar/dydx.forum/cosmic_validator/32/696_2.png) [@Cosmic\_Validator](https://dydx.forum/u/Cosmic_Validator)\ **Post date:** [November 6, 2025, 4:56pm UTC](https://dydx.forum/t/drc-revenue-share-on-dydx/4702/24 "2025-11-06T16:56:39Z")
> [@Nemus\_Stakecito](#): > > If higher buybacks and burns lead to a higher DYDX price We shouldn’t plan the long term strategy of dYdX based on pure speculation. Buybacks were introduced around March this year and since then the DYDX token price dropped by over 50%. It is worrying to see many trying to base decisions on ‘it may pump the token price’. There is a serious problem on dYdX with very little revenue for stakers, if we don’t improve this but make it worse removing the little share of revenue left for stakers, then naturally this will lead to large unstaking and dumping of DYDX, since the main utility of DYDX is as staking token to secure the network and earn trading fee revenue. For perps trading DYDX is not needed at all, dYdX v3 started without a token meaning a token wasn’t needed, then it was created purely as a governance token. But currently the main utility of the DYDX token is to secure the network and earn trading fee revenue, if we remove this utility nobody would want to buy or hold DYDX and the price will dump further ---
**Author:** ![KPK](https://dub1.discourse-cdn.com/flex013/user_avatar/dydx.forum/kpk/32/2775_2.png) [@KPK](https://dydx.forum/u/KPK)\ **Post date:** [November 7, 2025, 9:36am UTC](https://dydx.forum/t/drc-revenue-share-on-dydx/4702/25 "2025-11-07T09:36:13Z")
[Sharing this here as well from the other discussion](https://dydx.forum/t/80-of-fees-to-buybacks-for-3-months/4670/84): The Treasury SubDAO executes the Buy & Stake program approved by the DAO (stage [1](https://www.mintscan.io/dydx/proposals/225) & [2](https://www.mintscan.io/dydx/proposals/231)) — buying DYDX (open market + OTC) and staking it with validators, increasing the delegated stake and strengthening the network security. **Execution results (last 3 months):** | Month | DYDX bought | USDC spent | | --- | --- | --- | | Aug | 1,091,967 | $720,375 | | Sep | 1,026,281 | $668,318 | | Oct | 230,951\* | $82,670 | \*No OTC purchases were executed in October. The Treasury SubDAO also used the Rev Share address for OTC purchases when Buyback revenues alone could not sustain the intended buying pace. At present, 25% of dYdX protocol revenue is allocated to DYDX Buybacks, resulting in roughly $386k/month in realised purchases (3-month average). The Treasury SubDAO currently facilitates around **1 million DYDX purchases per month** , funded in USDC through operational inflows, meaning these tokens are **NOT** directly sold back into the market. Following ongoing forum discussions, the following redistribution of protocol revenue is being considered: | Model | Buybacks | Treasury | Megavault | Staking | | --- | --- | --- | --- | --- | | Current | 25% | 10% | 25% | 40% | | 75% Proposal | 75% | 5% | 5% | 15% | | 80% Proposal | 80% | 5% | 0% | 15% | The proposed changes would **triple the monthly buyback budget** (to reach ~$1.16M USDC/month) but also reduce staking rewards from 40% to 15%. This reduction represents a significant decline in validator incentives. Staking rewards are a crucial component of the network’s economic security; compressing them may weaken validator retention and motivation to stay online. Such a shift could increase validator churn and exits, thereby undermining the network’s equilibrium and overall security. We therefore encourage the ecosystem to consider targeted support mechanisms during the transition period in order to preserve validator stability and ensure the network continues to operate securely while the new revenue allocation is phased in. ---
**Author:** ![Cosmic\_Validator](https://dub1.discourse-cdn.com/flex013/user_avatar/dydx.forum/cosmic_validator/32/696_2.png) [@Cosmic\_Validator](https://dydx.forum/u/Cosmic_Validator)\ **Post date:** [November 7, 2025, 2:45pm UTC](https://dydx.forum/t/drc-revenue-share-on-dydx/4702/26 "2025-11-07T14:45:02Z")
> [@KPK](#): > > At present, 25% of dYdX protocol revenue is allocated to DYDX Buybacks, resulting in roughly $386k/month in realised purchases (3-month average). So currently with 25% revenue share for buybacks it was around $386k/month for buybacks while the Treasury subDAO in your buy & stake program spent around $700k/month for the buybacks? In the scenario of 95% revenue share for stakers and 5% for the treasury, this increased staking yield would lead to how much more spent monthly in your buy & stake program, and would this be a higher amount of buybacks than reducing staking yield to 15% and increasing buybacks from protocol revenue alone to 80%? @staza @RealVovochka I think this calculation and comparison is key, because if with 95% share for stakers this leads to more buybacks via the Treasury buy & stake program than with 80% share for buybacks alone, then definitely the model 3 of 95% for stakers and 5% for treasury should be implemented ---
**Author:** ![thquattro](https://avatars.discourse-cdn.com/v4/letter/t/df788c/32.png) [@thquattro](https://dydx.forum/u/thquattro)\ **Post date:** [November 7, 2025, 3:08pm UTC](https://dydx.forum/t/drc-revenue-share-on-dydx/4702/27 "2025-11-07T15:08:36Z")
the best way its to increase the staking by 10% and the buyback by 25%. 50% buyback 50% staking rewards 0% treasury 0% mégavault We are increasing the revenue for stakers on one hand, and reducing the amount of DYDX available on the market, which then ends up being staked with our validators. It’s a win-win for everyone. ---
**Author:** ![staza](https://dub1.discourse-cdn.com/flex013/user_avatar/dydx.forum/staza/32/2134_2.png) [@staza](https://dydx.forum/u/staza)\ **Post date:** [November 7, 2025, 3:33pm UTC](https://dydx.forum/t/drc-revenue-share-on-dydx/4702/28 "2025-11-07T15:33:31Z")
So to summarise, we have 2 buybacks happening in parallel at this moment: 1. With the 25% revenue share for buybacks, this equates to about $386k per month spent on buying back DYDX tokens. (This is based on approximate annual revenue of ~$20M, though exact figures fluctuate with trading volume.) 2. Separately, the Treasury subDAO’s “buy & stake” program spent around $700k per month on buybacks. This program uses Treasury funds to buy DYDX tokens and then stake them. It’s effectively an additional buyback mechanism, but the bought tokens are staked rather than distributed. This $700k is higher than the direct protocol buybacks, likely because the Treasury has accumulated funds over time or uses its allocation efficiently. ---
**Author:** ![staza](https://dub1.discourse-cdn.com/flex013/user_avatar/dydx.forum/staza/32/2134_2.png) [@staza](https://dydx.forum/u/staza)\ **Post date:** [November 7, 2025, 3:50pm UTC](https://dydx.forum/t/drc-revenue-share-on-dydx/4702/29 "2025-11-07T15:50:54Z")
Additional thoughts on “95% to stakers, 5% to Treasury” model: The Treasury’s 5% allocation, though smaller, could be amplified so that with higher yields, the Treasury’s staked holdings earn more rewards, which can be reinvested into buying more DYDX (compounding effect ish). ---
**Author:** ![Cosmic\_Validator](https://dub1.discourse-cdn.com/flex013/user_avatar/dydx.forum/cosmic_validator/32/696_2.png) [@Cosmic\_Validator](https://dydx.forum/u/Cosmic_Validator)\ **Post date:** [November 7, 2025, 4:14pm UTC](https://dydx.forum/t/drc-revenue-share-on-dydx/4702/30 "2025-11-07T16:14:32Z")
> [@staza](#): > > Separately, the Treasury subDAO’s “buy & stake” program spent around $700k per month on buybacks. This program uses Treasury funds to buy DYDX tokens and then stake them. It’s effectively an additional buyback mechanism, but the bought tokens are staked rather than distributed. This $700k is higher than the direct protocol buybacks, likely because the Treasury has accumulated funds over time or uses its allocation efficiently. @KPK I think the funds for the buybacks are not ‘funds in the treasury’ but rather a % of the USDC staking rewards received as part of your delegation program? Also @staza staking the buybacks is good because they increase the security and resilience of dYdX and also they are similar to ‘burns’ because they are locked in staking and not sold in the markets > [@staza](#): > > The Treasury’s 5% allocation, though smaller, could be amplified so that with higher yields, the Treasury’s staked holdings earn more rewards, which can be reinvested into buying more DYDX (compounding effect ish). I agree in model 3 the exact % for stakers and the treasury needs to be studied in detail to see which brings the best results overall, with 5% and 95%, 10% and 90% and other combinations ---
**Author:** ![Cosmic\_Validator](https://dub1.discourse-cdn.com/flex013/user_avatar/dydx.forum/cosmic_validator/32/696_2.png) [@Cosmic\_Validator](https://dydx.forum/u/Cosmic_Validator)\ **Post date:** [November 11, 2025, 12:35pm UTC](https://dydx.forum/t/drc-revenue-share-on-dydx/4702/31 "2025-11-11T12:35:47Z")
Why did you put the proposal onchain in a rush and so unprofessionally without addressing all the valid arguments and concerns? @KPK @staza @RealVovochka and many others presented clear arguments against this proposal and why it puts at risk the integrity and security of dYdX affecting very negatively stakers and validators. Moreover, staza presented an analysis where it shows with numbers that a higher revenue share for stakers actually brings better results long term. Moreover, Kpk also explained how they already have their own buy & stake program which is like a buyback program and more effective than using such high revenue share for more buybacks. Other topics like DYDX for Surge being allowed only to be staked and many other relevant arguments were just ignored by Nethermind and they rushed to put the proposal onchain so we voted NO and very dissapointed about this behaviour with a proposal that has major implications for dYdX and putting at risk its core integrity and security ---
**Author:** ![staza](https://dub1.discourse-cdn.com/flex013/user_avatar/dydx.forum/staza/32/2134_2.png) [@staza](https://dydx.forum/u/staza)\ **Post date:** [November 11, 2025, 4:28pm UTC](https://dydx.forum/t/drc-revenue-share-on-dydx/4702/32 "2025-11-11T16:28:40Z")
Also, I would study Uniswap’s recent proposal which involves activating fee switch to divert a portion of protocol swap fees toward benefiting UNI token holders. However, this is not through direct revenue sharing. Instead, the fees are routed to a smart contract called the “token jar,” where UNI holders can voluntarily burn their tokens via a “fire pit” mechanism to withdraw an equivalent amount of crypto from the jar, effectively reducing the token supply and aiming to increase the value of remaining tokens. The proposal also includes a one-time retrospective burn of nearly 100 million UNI tokens (valued at around $800 million), representing fees that would have accrued if the switch had been active since Uniswap’s launch. This setup provides indirect value accrual via deflationary pressure rather than direct payouts, emphasizing burns over direct distribution. ---
**Author:** ![Cosmic\_Validator](https://dub1.discourse-cdn.com/flex013/user_avatar/dydx.forum/cosmic_validator/32/696_2.png) [@Cosmic\_Validator](https://dydx.forum/u/Cosmic_Validator)\ **Post date:** [November 11, 2025, 5:52pm UTC](https://dydx.forum/t/drc-revenue-share-on-dydx/4702/33 "2025-11-11T17:52:19Z")
This about uniswap can’t really be compared for several reasons. First, uniswap doesn’t need to worry about security as dYdX, or incentivizing stakers or validators, however dYdX needs to manage its own security and for that it is critical to have a yield for stakers and validators to maintain a sufficient level of security. Also, in the case of uniswap the goal is to focus on UNI token holders, but in the case of dYdX the yield is in USDC, stakers may prefer a larger USDC yield and don’t care so much about DYDX and similarly for validators. And if burning is such a big goal for dYdX why not burning like uniswap tokens from the treasury rather than taking away yield from stakers to burn this? ---
**Author:** ![staza](https://dub1.discourse-cdn.com/flex013/user_avatar/dydx.forum/staza/32/2134_2.png) [@staza](https://dydx.forum/u/staza)\ **Post date:** [November 11, 2025, 9:02pm UTC](https://dydx.forum/t/drc-revenue-share-on-dydx/4702/34 "2025-11-11T21:02:19Z")
Fair enough. Thanks a lot. ---
**Author:** ![nethermind](https://dub1.discourse-cdn.com/flex013/user_avatar/dydx.forum/nethermind/32/2764_2.png) [@nethermind](https://dydx.forum/u/nethermind)\ **Post date:** [November 12, 2025, 12:54pm UTC](https://dydx.forum/t/drc-revenue-share-on-dydx/4702/36 "2025-11-12T12:54:30Z")
Dear dYdX Community, The [proposal](https://www.mintscan.io/dydx/proposals/313/) to adjust protocol revenue sharing is now live. This proposal builds upon the recent [text proposal](https://www.mintscan.io/dydx/proposals/304) to allocate 80% of protocol revenue for the buyback program, which received strong community support. The text proposal was non-binding and a good indication of community support to increase the percentage of protocol revenue directed to the Buyback Program. The main difference between our proposal and the previous text proposal to increase buybacks to 80%: - 75% to the Buy & Stake Program - 5% to MegaVault Rationale for a 5% allocation of revenue to Megavault: - Reduced allocation would help reduce MegaVault’s scope to focus on providing liquidity on newly listed markets, potentially improving its performance over time. - Market listings are still dependent on depositing $10K into Megavault. As such, we have recommended the following revenue share allocation through the [on-chain proposal](https://www.mintscan.io/dydx/proposals/313/): | Allocation | Current Revenue Share | Proposed Revenue Share | | --- | --- | --- | | Buy & Stake Program | 25% | 75% | | MegaVault | 25% | 5% | | Treasury SubDAO | 10% | 5% | | Stakers & Validators | 40% | 15% | We encourage the community to vote in accordance with their vote on the text proposal to carry forward the momentum from [Proposal #304](https://www.mintscan.io/dydx/proposals/304) and align incentives with long-term protocol growth. ---
**Author:** ![staza](https://dub1.discourse-cdn.com/flex013/user_avatar/dydx.forum/staza/32/2134_2.png) [@staza](https://dydx.forum/u/staza)\ **Post date:** [November 12, 2025, 1:20pm UTC](https://dydx.forum/t/drc-revenue-share-on-dydx/4702/37 "2025-11-12T13:20:37Z")
> [@nethermind](#): > > the recent [text proposal](https://www.mintscan.io/dydx/proposals/304) to allocate 80% of protocol revenue for the buyback program, which received strong community support. You missed the point that it was 3 months trial and your proposal is limitless ---
**Author:** ![Cosmic\_Validator](https://dub1.discourse-cdn.com/flex013/user_avatar/dydx.forum/cosmic_validator/32/696_2.png) [@Cosmic\_Validator](https://dydx.forum/u/Cosmic_Validator)\ **Post date:** [November 12, 2025, 1:35pm UTC](https://dydx.forum/t/drc-revenue-share-on-dydx/4702/38 "2025-11-12T13:35:09Z")
> [@nethermind](#): > > This proposal builds upon the recent [text proposal](https://www.mintscan.io/dydx/proposals/304) to allocate 80% of protocol revenue for the buyback program, which received strong community support. > [@staza](#): > > You missed the point that it was 3 months trial and your proposal is limitless Exactly, the previous text proposal was just for 3 months trial and keeping the same revenue share for stakers from other sources like the treasury. This proposal from Nethermind is totally different, it is not a 3 months trial but indefinite and they didn’t address at all the issue of cutting huge revenues from stakers and validators, therefore it seems that either Nethermind overlooked and didn’t understand the previous text proposal or they intentionally are trying to confuse the dYdX community into voting in favour of their proposal ---
**Author:** ![moshen](https://avatars.discourse-cdn.com/v4/letter/m/f19dbf/32.png) [@moshen](https://dydx.forum/u/moshen)\ **Post date:** [November 19, 2025, 8:04am UTC](https://dydx.forum/t/drc-revenue-share-on-dydx/4702/39 "2025-11-19T08:04:35Z")
**The repurchased tokens do not have a burn mechanism, and staking rewards are almost nonexistent.** ---
**Author:** ![mioafeng](https://avatars.discourse-cdn.com/v4/letter/m/c6cbf5/32.png) [@mioafeng](https://dydx.forum/u/mioafeng)\ **Post date:** [November 22, 2025, 6:39am UTC](https://dydx.forum/t/drc-revenue-share-on-dydx/4702/40 "2025-11-22T06:39:51Z")
The repurchased tokens can be burned. ---
**Author:** ![staza](https://dub1.discourse-cdn.com/flex013/user_avatar/dydx.forum/staza/32/2134_2.png) [@staza](https://dydx.forum/u/staza)\ **Post date:** [November 22, 2025, 6:03pm UTC](https://dydx.forum/t/drc-revenue-share-on-dydx/4702/41 "2025-11-22T18:03:47Z")
@nethermind We have a major unstaking event happened right after this proposal passed - 10M tokens will be unstaked on 11.12. The effect of no term changes which you purposed must be analyzed in a greater details. [https://analytics.smartstake.io/dydx](https://analytics.smartstake.io/dydx) ![Screenshot 2025-11-22 at 19.00.05](https://europe1.discourse-cdn.com/flex013/uploads/dydx/original/2X/2/271fcc80d4400424eb6edd1884901472817785b2.png) ---
**Author:** ![Cosmic\_Validator](https://dub1.discourse-cdn.com/flex013/user_avatar/dydx.forum/cosmic_validator/32/696_2.png) [@Cosmic\_Validator](https://dydx.forum/u/Cosmic_Validator)\ **Post date:** [November 25, 2025, 1:22pm UTC](https://dydx.forum/t/drc-revenue-share-on-dydx/4702/42 "2025-11-25T13:22:14Z")
@nethermind as I mentioned, small buybacks doesn’t have any positive effect on the price, since your proposal passed the dYdX price has just been going more and more down, the only think you achieved is hurting dYdX stakers with less than half the revenue share, who will now unstake and drive the price even lower. I will start preparing with other community members a proposal to direct 95% revenue share to stakers as it should be, the treasury subdao is already doing buybacks ---
**Author:** ![sethrollings22](https://dub1.discourse-cdn.com/flex013/user_avatar/dydx.forum/sethrollings22/32/2631_2.png) [@sethrollings22](https://dydx.forum/u/sethrollings22)\ **Post date:** [December 8, 2025, 3:08pm UTC](https://dydx.forum/t/drc-revenue-share-on-dydx/4702/43 "2025-12-08T15:08:55Z")
> [@nethermind](#): > > Nethermind DeFi Research provides technical research and advisory services to venture capital firms, hedge funds, and protocol teams. Our focus areas include protocol due diligence, quantitative modeling, tokenomics design, and risk analysis. All outputs are grounded in cryptoeconomic rigor, delivering actionable insights and technically sound recommendations. > > Nethermind Research received a [grant](https://www.dydxgrants.com/grants/tokenomics-research-v2) from dYdX Grants to review dYdX Chain incentives, dYdX fees, the distribution of net revenue and tokenomics, among other things. > > # **Background** > > In March 2025, dYdX DAO updated its [net revenue distribution](https://dydx.forum/t/drc-dydx-treasury-subdao-dydx-buyback-program/3433) as follows: > > - 40% to stakers, > - 25% to buybacks, > - 25% to MegaVault, > - 10% to Treasury subDAO. > > This research aims to evaluate potential adjustments to the current revenue share distribution in light of the MegaVault’s performance, ongoing buyback activities, staking dynamics, and the overall progress of the project. Recently, community members have proposed buyback allocations ranging from [50%](https://dydx.forum/t/a-new-50-50-allocation-between-stakers-and-buybacks-to-amplify-dydx-s-impact/4668) to [100%](https://dydx.forum/t/drc-three-month-experimental-trial-allocate-100-of-net-protocol-fees-to-dydx-buybacks-and-fund-validators-from-community-treasury/4670) of protocol revenue. This study seeks to provide a data-driven analysis to support and further the ongoing discussion around these proposals, ensuring that any decisions regarding revenue distribution are grounded in sound analysis and aligned with the project’s long-term sustainability and growth objectives. > > The research reviews the current allocation by focusing on the following aspects: > > - Is the MegaVault delivering enough value for the protocol? > - Should staker allocations be adjusted? > - Can buybacks meaningfully offset inflation and strengthen token sentiment? > > # **Key Takeaways/ Recommendations** > > - Reduce MegaVault rewards and product revamp from 25% to 0 - 5%. MegaVault has failed to attract users despite current incentive levels. TVL collapsed from $32M in September to $9M, a 72% decline, indicating poor product-market fit. Compared to other incentive programs like Surge, MegaVault is 3x more expensive to bootstrap volume and liquidity. MegaVault rewards could be reduced and/or combined with product improvements such as quoting in fewer markets, maximizing the revenue impact for the protocol and improving the product performance. > - Increase buybacks up to 75%. DYDX token price has fallen significantly over the past months. At present prices, the protocol could repurchase up to 5% of total supply annually. Historical analysis of DeFi protocols buyback announcements shows market-positive reception, with tokens outperforming 13.9% on average post-announcement. Tripling buyback allocation from 25% to 75% would strengthen tokenomics while signaling confidence to the market. > - Reducing stakers allocation from 40% to 15% - 20%. Despite declining yields over the past year, stakers exhibit strong retention—demonstrating low APR sensitivity. This “stickiness” indicates current rewards are sufficient to maintain network security and decentralization. > - Reduce Treasury subDAO allocation from 10% to 5%. As dYdX prices remain depressed, buybacks should be prioritized over Treasury. > > ## **MegaVault** > > We assess whether MegaVault’s 25% revenue allocation delivers enough benefits to justify the cost. > > We assess MegaVault performance across three dimensions: > > 1. incremental trading volume generated, > 2. net protocol fee contribution, and > 3. strategy returns excluding the incentives distributed. > > We then compare these benefits against the actual incentive costs and benchmark alternative incentive structures such as Surge for cost-efficiency > > **Key Takeaways** > > - On average, MegaVault costs in incentives 3.24x-3.76x more than front-end Surge rewards to generate equivalent volume and fees. The protocol pays 14x more in incentives than it receives in net fees generated. > - Excluding incentives, MegaVault has delivered since inception -16.7% annualized returns to investors. The strategy has underperformed consistently since inception, with performance declining sharply from March 2025 onward and deteriorating further following October’s market downturn. Without massive incentive support, the product is fundamentally uncompetitive as a liquidity strategy. > > **Volume Generated** > > We look historically at how much volume is generated per of TVL in the Megavault. Excluding some brief spikes at the launch of the Megavault and in March 2025, the annualized volume/ TVL in the vault has remained under $200 p.a. > > ![Pic1](https://europe1.discourse-cdn.com/flex013/uploads/dydx/original/2X/c/cc71900f222305faf2e63f3644002b017dcfa7ea.jpeg) > > Trading volumes reflect broader DEX market conditions, which have grown significantly year-over-year. To isolate MegaVault’s performance from market fluctuations, we normalize volumes to $15 billion annually—the average DEX volume over the past three months. This provides a more stable baseline for expected performance. > > ![pic2](https://europe1.discourse-cdn.com/flex013/uploads/dydx/original/2X/e/e4c52ee19917367252501893ff8fd93fe2130de0.jpeg) > > Since May 2025, the annualized average volume generated by the vault has been around 122 per of TVL. > > ![pic3](https://europe1.discourse-cdn.com/flex013/uploads/dydx/original/2X/4/483f08a4975b8136adb546fa78d5f5596f00cbd7.jpeg) > > **Fees Generated** > > The MegaVault provides liquidity that facilitates taker trades on the protocol, generating fees both from its own taker trades and from taker trades it supports by supplying liquidity to other users. Since the vault automatically obtains the best positive fee tier, attention can be focused on taker fees generated by other users’ liquidity. For a simplified, optimistic revenue estimate, we assume all vault trades are maker trades (which generate taker fees for the protocol). In September 2025, the average taker fee was 2.9 bps, with the protocol retaining 1.45 bps after redistributing 50% through the Surge Program. Given an average annual trading volume of $122, each $1 in MegaVault capital generates about 1.77 cents in trading fees for the protocol annually, which is relatively low compared to the capital deployed. > > **Cost to the Protocol** > > The chart below shows annual Megavault rewards (MegaVault Reward APY) funded solely by dYdX’s 25% revenue share allocation (excluding other fees). > > ![pic4](https://europe1.discourse-cdn.com/flex013/uploads/dydx/original/2X/6/6914f3c65653592ea762123d3190251ef6002ee3.jpeg) > > For each $1 of Megavault TVL, dYdX distributes on average $0.25 annually from the revenue share to attract $122 in annual trading volume—yet captures only $0.0177 in annual protocol fees. This means the incentive cost is about 14 times higher than the vault’s benefits to dYdX, making it a low-return initiative. We note that recently, the amount distributed to Megavault users has risen significantly, reaching $0.50 annually per $1 of TVL deposited. > > By comparison, the front-end rewards program in September cost $1M, generated $1.58B in volume, and earned $535K in fees, or $267K net after Surge rewards. > Thus, the MegaVault is roughly 3.5 times more expensive than front-end rewards for generating equivalent trading activity. > > ![pic5](https://europe1.discourse-cdn.com/flex013/uploads/dydx/original/2X/8/831b6a3180721c0b18d8c5216cd09d982160ab95.jpeg) > > We also note that introducing a [fee holiday](https://dydx.forum/t/drc-fee-holidays-on-dydx/4632) on selected markets could be a more cost‑effective way to boost trading volumes, since both current options distribute more rewards than the fees generated. > > **MegaVault Competitiveness** > In this section, we assess the MegaVault’s performance as a product, excluding revenue share. Without incentives, the vault’s annualized return stands at –16.7%. Performance remained stable until March, then declined steadily, with a sharp drop in October following the altcoin flash crash. > > ![pic6](https://europe1.discourse-cdn.com/flex013/uploads/dydx/original/2X/7/733f2fd8b9d77ed91698717ba2d3b4b71b40b396.jpeg) > > To attract liquidity, the protocol must offer substantial incentives—around 35% per year since inception—which is significantly higher than those distributed to standard liquidity pools. > > **Recommendation** > > The performance of MegaVault as a market making product has been particularly disappointing since inception and has remained attractive at the cost of large revenue share redistributions. So far Megavault has failed to generate significant value for the protocol in terms of extra volume versus its cost. > > We believe that this can be better achieved by other rewards initiatives such as fee holidays, Surge rewards and rewards tailored to front end traders. As a result, we recommend reducing the revenue share. The product needs significant revamping in terms of capital efficiency and performance before allocating significant rewards to the scheme. > > ## **Buybacks** > > **Key Takeaways** > > - dYdX currently allocates 25% of its revenue share to buybacks. At current prices, this accounts for between 1.3% and 1.7% of diluted supply annually. > - Increasing buybacks following a reduction in MegaVault incentives would create more buying pressure and send a positive signal to traders. > - Whilst dYdX price levels remain depressed, we recommend prioritizing buybacks over staking and Treasury DAO allocations. A 75% allocation could buyback up to 5% of total diluted supply annually. > - Based on past announcements from other DeFi protocols, we estimate that this could lead to an average 13.9% price outperformance versus ETH. > > **Impact on Diluted Supply** > > Buybacks effectively reduce token inflation and are well-regarded by traders and fundamental investors. The DYDX token, currently depressed after losing 72% over the past year (as of October 21, 2025), makes buybacks especially impactful. > > Assuming a $20M annual protocol revenue and various revenue share allocation to buybacks, we analyzed the annual percentage of diluted supply that could be repurchased based on the dYdX token price. > > ![pic7](https://europe1.discourse-cdn.com/flex013/uploads/dydx/original/2X/3/3415be377db3a13736e08efbb767001aa9d474ab.jpeg) > > With the token priced between $0.30 and $0.40, current annual buybacks range from 1.25% to 1.67% of diluted supply and they could be increased between 3.75% and 5% should the revenue share allocation increase to 75%. > > **Impact on Sentiment** > > Buybacks also boost investor sentiment. To quantify this, we analyzed major 2025 buyback announcements and their impact on token price—excluding ongoing programs like Hyperliquid’s buyback since TGE. On average, the token outperformed ETH by 13.9% in the two days following buyback announcements. > > ![pic8](https://europe1.discourse-cdn.com/flex013/uploads/dydx/original/2X/d/dc0f371872cb7915854d3b43c61d75a31dd279a5.jpeg) > > ## **Stakers Allocation** > > Staking secures the dYdX chain and encourages token holder loyalty, supporting long-term token price appreciation.This section measures staker sensitivity to APR changes analysing the effect of [the November 14, 2024 governance vote (proposal 182)](https://www.mintscan.io/dydx/proposals/182). The vote reduced staker revenue allocation from 100% to 40%, creating a significant yield decline. We analyze this policy change to determine whether increasing staking rewards would generate substantial buying pressure from stakers seeking to maximize returns. > > **Key Takeaways** > > - Despite cutting staking yield from 9.38% to 4.17% by reducing staker revenue allocation from 100% to 40%, staking participation rose from 31.49% to 34.01% of total supply in two months. > - Only 17.9% unstaked, showing strong commitment and confidence among stakers despite lower rewards. > - As a result, a reduction of the revenue share to 15-20% is recommended to prioritize buybacks. > > **Impact of the Revenue Share Reduction** > > Historically, DYDX staking has remained relatively stable with no clear relationship to APR fluctuations. > > ![pic9](https://europe1.discourse-cdn.com/flex013/uploads/dydx/original/2X/7/7bf9b793ac709c6bccdfee0d9fbbeb86174ef2c2.jpeg) > > In November 2024, the protocol reduced staker revenue allocation from 100% to 40%, cutting staking yield from 9.38% to 4.17%. Despite the yield reduction, staking participation increased to 34.01% of total supply (247.5M tokens) within two months—up from 31.49% (236.4M tokens). > > ![pic10](https://europe1.discourse-cdn.com/flex013/uploads/dydx/original/2X/0/026deb3c731f0659828a3a3b8f1660a565c4df80.jpeg) > > Only 17.9% of stakers unstaked within two months, demonstrating strong commitment to maintaining their positions > > ![pic11](https://europe1.discourse-cdn.com/flex013/uploads/dydx/original/2X/8/87fd6fdaa2eaf585b7c969e07fd1d3289bc71bdc.jpeg) > > ## **Recommendations** > > We recommend prioritizing buybacks in light of the depressed DYDX price and the opportunity to create sustained buying pressure and long-term token value. At current levels, the protocol could repurchase up to 5% of total diluted supply annually, ranking dYdX among the top protocols in terms of buybacks. This strategic shift would be funded by reallocating revenue away from the currently underperforming MegaVault—which saw a 72% decline in TVL—and reducing allocations to stakers and Treasury. Increasing buybacks from 25% to 75% of protocol fees is expected to strengthen market confidence and reinforce tokenholder alignment and boost price while supporting the ecosystem’s long-term growth. > > # **Report** > > For more details, please refer to our [research report](https://drive.google.com/file/d/14I1ijZ2hm0gRdNZVp6Z8Vp62Muv5hvHb/view?usp=sharing), you can even share these stats using a reliable sharing [source](https://xendarapp.com/xender-apk-for-macos/). > > # **Next Steps** > > We are looking for feedback from the community. We are aiming to submit a formal governance proposal with final details in the upcoming days. > > **Disclaimer** > > _It is important to note that this report only contains research data points and theoretical proposals for their independent evaluation by readers. All of the proposals in this report would require an active governance decision by the dYdX community to be implemented(and, in certain cases, and in addition, the collaboration of certain ecosystem participants, such as the treasury subDAO, for example). Nethermind has no control over any decision to implement any of the proposals mentioned in this report or the way that they may be implemented._ > > _Nothing in this report should be considered as financial, legal, tax or any other form of advice, nor as an instruction or invitation to act by anyone. This report has been prepared and is being published for informational and educational purposes only._ > > _Kindly note that this proposal is not intended to create a contractual relationship between Nethermind and the receiving party. Any engagement of services shall be subject to a separate agreement that outlines the terms and conditions of the engagement. Please note that the contents of this proposal may be subject to intellectual property rights owned by Nethermind._ Based on the insights shared, the recommendations clearly point toward prioritizing capital-efficient mechanisms like enhanced buybacks while scaling back underperforming incentives such as the MegaVault. If you want to share this analysis with your team or community for quick feedback, you can simply transfer the file through any reliable mobile-to-mobile , or from mobile to PC sharing platform for faster collaboration. [Previous page](https://dydx.forum/t/drc-revenue-share-on-dydx/4702.md?page=1)