dYdX Treasury SubDAO - Staking Program

This post outlines the Principles, Validator Selection Criteria and Secondary Criteria that will be applied for the selection of delegators as part of the Staking Program run by the dYdX Treasury SubDAO.

If you think you are eligible based on the Validator Scoring Criteria, please reply to this forum post with your email (or, if preferred, respond with a note on this post and send your email to @karpatkey as a personal message). We will send you a self-declaration form to gather additional information on the Secondary Criteria.

Principles

The principles for delegating DYDX tokens to dYdX Chain validators are based on the Stake Delegation Principles published by the dYdX Foundation.

  • Independence: the Treasury SubDAO will delegate to validators that are independent from each other to the best of the Treasury SubDAO’s knowledge.
  • Decentralisation: the Treasury SubDAO will aim to distribute its delegated stake across as many validators as possible, subject to administrative constraints and reasonable operational limitations.
  • Proportionality: the Treasury SubDAO will aim to make proportional delegations to dYdX Chain validators based on their respective stake weight. However, certain factors, such as decentralisation goals outlined in the selection criteria below, may justify overweighting delegations towards a given validator.
  • Non-Majority Delegation: the Treasury SubDAO’s delegated stake weight in the dYdX Chain will aim to be less than 50% of the network’s total active stake weight.
  • Meritocracy: The Treasury SubDAO will have complete and absolute discretion in deciding which dYdX Chain validators it wishes to delegate to.
  • Periodic Reviews & Rebalancing: The Treasury SubDAO will periodically review and rebalance its delegations when appropriate. The review of the Treasury SubDAO’s stake delegations shall occur at least quarterly.

The above principles are introduced for transparency and serve as practical, non-binding guidelines for the Treasury SubDAO. The Treasury SubDAO shall retain complete and absolute discretion over any stake delegation and related decisions. For clarity, compliance with applicable laws and regulations will always precede adherence to these principles.

Validator Scoring Criteria

This is the list of metrics considered when selecting validators to receive Treasury SubDAO delegations. The criteria were heavily inspired by “Good Practices for Validators and Stakers” published by the dYdX Foundation and the “MEV Committee - Validator Guidelines” published in the forum.

Primary data sources used in the evaluation scoring are the Observatory dashboard, Numia and Mintscan.

Orderbook discrepancy

  • Validator average orderbook discrepancy ≤ mean average orderbook discrepancy
    • Incentivise decreasing orderbook discrepancy across the network, as high discrepancy negatively impacts the trading experience on dYdX.

Performance

  • Validator uptime
    • Incentivise high validator uptime for consistent block production and addition to the network, as this creates greater guarantees of timely order execution.
    • We think Validator uptime ≥ 98% is a reasonable target.
  • Validator commission ≤ asset-weighted commission
    • Incentivise healthy commission rates and competition among validators and optimise staking rewards for the Treasury SubDAO.
  • Validator average block time ≤ mean average block time
    • Incentivise low network latency, as latency is one the most relevant components of dYdX user trading experience.

Governance Participation

  • Validator governance participation rate (since Treasury SubDAO delegation) ≥ 80%
    • Incentivise high validator participation in governance. It’s measured since delegation date but past participation rate while in the active validator set will be considered as indicative.

Nakamoto Coefficient

  • Delegating to certain validators would contribute to a higher Nakamoto coefficient
    • Improve network decentralisation and distribution of stake weight among the active validator set.

Secondary Criteria

Secondary Criteria are criteria that rely on a self-declaration from the validators or are otherwise subjective and challenging to verify independently. These are desirable characteristics and not a firm requirement for validator eligibility.

If you think you are eligible based on the Validator Scoring Criteria, please reply to this forum post with your email (or, if preferred, respond with a note on this post and send your email to @karpatkey as a personal message). We will send you a self-declaration form to gather additional information on the Secondary Criteria.

Operations & Security

  • Validator uses self-owned hardware
    • Incentivise bare-metal setups, as they promote higher decentralisation versus cloud servers.
  • Validator securely stores keys outside of the validator machine
    • Incentivise good validator security practices.
  • Validator has a backup node
    • Incentivise increased operational efficiency and security of validators.
  • Validator does not have any potential conflicts of interest related to MEV, Market Making, Professional Trading Firms or other similar business lines
    • Reduce conflicts of interest & strong incentives to extract MEV from users.
  • Validator operates through a limited liability entity
    • Incentivise proper legal setting for protection of validator’s operation and DYDX stakers/Treasury SubDAO delegation.
  • Validator is compliant with local laws and regulations
    • Incentivise compliance to reduce legal risk of the validator’s operation and DYDX stakers/Treasury SubDAO delegation.

Transparency

  • Validator has introduced itself in the forum
  • Validator has an available two-way communication channel
    • Incentivise validator responsiveness and communication.

Ecosystem Considerations

  • Validator contributes to the dYdX ecosystem
    • Incentivise ecosystem alignment and value add from validators based on (and not limited to): tooling, educational material, block explorers, threat identification, and upgrades.
  • Validator runs or supports dYdX Chain infrastructure (e.g. testnet node, price feeds, RPC, relayers).
3 Likes

support@autostake.com

A friendly reminder:

hello@tienthuattoan.com

info@cosmicvalidator.com

bartender@interstellar-lounge.org

Thanks!!

fredy@dragonstake.io

Crypto Learning Club

info@cryptolearningclub.org

As a staker, I find it hard to see the benefits this could bring me. However, I can clearly see the impact it will have on the staking rewards I receive, as we will be affected. I feel that the yield is already quite low at the moment; isn’t this placing the burden on stakers, especially since the token price keeps dropping and the yield is struggling to make up for ?

1 Like

Nansen (was Stakewithus, but acquired by Nansen)

stake@nansen.ai

We are already contact with your team, however here is our direct email if necessary: contact@pro-delegators.com

This is Willem at Kiln, our teams are already in touch but I’m sharing my email here in order to be sent the self-declaration form.

Email: willem.brandeler@kiln.fi

gijs@lavenderfive.com

Also a note: Observatory doesnt correctly handle horcrux + Sentry validator approach, please fact check any recommendations from their location info with the validators themselves.

[UPDATE] Delegation and next steps

Delegation to selected validators

As part of the staking program, DYDX tokens have been delegated from the Treasury SubDAO to an initial set of validators. While we appreciate everyone’s involvement with the dYdX ecosystem, the selected validators are unique value providers and ecosystem catalysts to dYdX, contributing best-in-class performance, strategic partnerships, essential developments, high-impact efforts and/or constructive community engagement.

Below, is the list of validators who received delegation:

Allnodes
AutoStake
BinanceNode
Chorus One
Coinbase
coinhall .org
Cosmic Validator
Cosmostation
Crosnest
Crypto Learning Club
CryptoCrew X Defi Dojo
Dora Factory
ECO Stake
Enigma
Figment
Imperator .co
Informal Systems
Keplr
Kiln
Kingnodes
Lavender.Five Nodes
Ledger by Meria
Meria
Nodes.Guru
OKX Earn
Pareto
polkachu .com
PRO Delegators
Silk Nodes
Smart Stake
Stakecito
Staked
TTT VN
Validation Cloud

Long-term vision and next steps

As we look to the future, our vision extends beyond the immediate focus of the staking delegation and looks at the long-term success of the dYdX protocol. This was reflected in the selection of the initial set of validators who received delegation. We carefully considered a whide range of factors and ultimately decided to benefit unique value providers and ecosystem catalysts for the dYdX ecosystem.

We are eager to build a sustainable and thriving ecosystem, focused on long-term value creation and high-impact.

We are committed to reviewing delegations at least quarterly, to encourage continuous improvement and positive contributions. As we are aware of discussions that could impact the validity of the above delegations, we will keep the situation monitored and review the delegations as needed.

2 Likes

What is the reason to provide delegations to BinanceNode, OKX earn they are never participating in the governance. I think ledger by meria is the same. Always abstaining

The selected validators are unique value providers and ecosystem catalysts to dYdX, contributing best-in-class performance, strategic partnerships, essential developments, high-impact efforts and/or constructive community engagement.

2 Likes

It is not good news, the selection of validators made by Karpatkey. I thought they would genuinely follow the criteria outlined in dYdX Treasury SubDAO - Staking Program, which I believe would have maximized the ability to strengthen governance. However, looking at the selection, it has been entirely discretionary. It’s understandable that they prefer not to provide many details, as it would be really difficult to publicly defend that the criteria were followed.

This allocation, I believe, should not have been made prior to the vote on validator removal, as it clearly impacts the weighting of each validator.