This is a strong proposal that goes in the right direction. Ending protocol-level trading rewards and consolidating incentives into the Surge program is a great initiative. For most traders, protocol rewards were minimal (on average <6% of fees), while disproportionately benefiting a small set of large makers. By unifying rewards under Surge, incentives become simpler, more transparent, and more sustainable—saving DYDX emissions while reallocating them more efficiently and equitably.
It’s also important that this change comes alongside the fee tier simplification proposal, which removes exchange/maker share conditions and lowers the entry barrier for new makers. Together, these adjustments should strengthen participation, improve fairness, and keep dYdX competitive and attractive.
A few points to keep in mind as this moves forward:
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Some large players may see a meaningful reduction in rewards, so clear communication on the long-term sustainability benefits will be key.
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Liquidity depth should be closely monitored after implementation to ensure there are no adverse effects.
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If needed, part of the savings could be redirected to Surge to maintain competitiveness.
Overall, the combined fee and incentive changes should mitigate most of the potential downsides, especially for targeted tiers. This feels like a positive and pragmatic step for the protocol.