dYdX VIP Affiliate Program - Proposal

Proposals
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Proposal

This proposal outlines a comprehensive VIP Affiliate Program for dYdX Chain, designed to drive sustainable growth, increase trading volume, and enhance community engagement. Building upon dYdX’s prospective Affiliate initiative, this potential program proposes a VIP Affiliate tier with enhanced rewards, robust governance oversight, and strategic marketing efforts.

Background & Objectives

dYdX Trading recently published a blog post unveiling the dYdX Unlimited software and the launch of an on-chain Affiliate Program. This program is strategically designed to catalyze growth for retail and onboard affiliates and key opinion leaders (KOLs). The current design of the Affiliate Program offers:

  • Lucrative Affiliate Earnings: Standard Affiliates can earn up to 15% of taker fees generated by users they refer, with potential earnings of up to $3,000 per referral per 30-day rolling period.
  • Referral Discounts: Referred users will start at fee tier 3, saving up to $300 on taker fees and $250 on maker fees.
  • Instant, On-Chain Payments: Affiliates will receive their earnings instantly on-chain, with payments settled every block in a fully permissionless, disintermediated, and automated manner, ensuring real-time transparency and quick access to funds.

We are proposing to activate and manage an additional VIP component of the dYdX Chain Affiliate Program:

  • Competitive Rates for VIP Affiliates: Based on our experience of managing affiliate programs, we propose that VIP affiliates who qualify can earn up to 50% of referred users’ taker fees, with a maximum of $10,000 per referral per 30-day rolling period.

The dYdX Unlimited software update is expected to include the functionality required for the dYdX community to launch the VIP Affiliate Program, and this represents a timely opportunity to secure a leading market position, driving unprecedented growth and community engagement around the launch of dYdX Unlimited.

Proposal Overview

Kuyen Labs is proposing to oversee the VIP Affiliate Program on dYdX Chain.

  1. VIP Affiliate Tier
  • VIP Affiliates will qualify to earn up to 50% of referred user taker fees, with a maximum of $10,000 per referral per 30-day rolling period.
  • Kuyen Labs has received a grant from the DEP to build a transparent dYdX community affiliate dashboard. This dashboard will enable transparent and detailed performance tracking of referred users, volume, and affiliate fees.
  1. VIP Affiliate Program Management
  • Kuyen Labs to oversee the VIP affiliate program.
  • Implement a rigorous vetting process for VIP affiliates, such as (note that additional criteria may be considered, and the requirements listed above are subject to change based on the evolving needs of dYdX Chain and the Affiliate Program).
    • Proven track record in referrals across centralized or decentralized exchanges
    • Minimum of 30,000 legitimate followers across social media platforms
    • Large social impact and following
    • Evidence of a significant amount of referred WAUs to the protocol
    • Demonstrated understanding of dYdX products and DeFi landscape
    • Affiliates must not be a professional market maker or trading firm
  • Commitment to compliance with regulatory requirements (see bottom of the proposal)
  • Provide ongoing support and resources to affiliates
  1. Governance and Oversight
  • Weekly governance proposals for whitelisted VIP affiliate approval, as necessary
  • Monthly and Quarterly performance reports and community feedback sessions
  1. Marketing and Growth Initiatives
  • Targeted marketing campaigns to attract high-quality affiliates
  • Develop and maintain up-to-date affiliate resources

Detailed Proposal

Reward Structure:

Standardized Reward Structure for affiliates is:

  • Up to 15% of taker fees from referred users for standard affiliates, with potential earnings reaching up to $3,000 per referral in a 30-day rolling period.
  • Up to 50% of taker fees from referred users for VIP affiliates, with potential earnings reaching up to $10,000 per referral in a 30-day rolling period.

Affiliate Program Management

Responsibilities of Kuyen Labs:

  • Manage VIP affiliate onboarding and vetting process. Kuyen Labs will leverage software that allows VIP applicants to verify ownership of their X account. Interested and eligible users can apply to become a VIP affiliate here.
  • Monitor affiliate activity for compliance and potential abuse
  • Develop and update affiliate marketing materials
  • Offer regular training and education sessions for affiliates
  • Own relationships with VIP affiliates via various means (i.e., creating, managing, and engaging in a TG chat or Discord channel with all VIP affiliates)

Governance and Oversight:

Governance Proposals:

  • VIP Whitelisting: Kuyen Labs commits to submitting weekly proposals, as necessary, for VIP Affiliate whitelisting approval
  • Proposals to include:
    • Profiles of proposed VIP Affiliates
  • The dYdX community can create a governance proposal at any time to modify or terminate the standard affiliate program and/or the VIP Affiliate Program or remove certain VIP affiliates.

Quarterly Reports:

  • Kuyen Labs will produce a comprehensive performance analysis of the Affiliate Program
  • Key metrics will include: User acquisition, trading volume, revenue impact
  • Proposed optimizations based on data and community feedback
  • Performance metrics of existing VIP affiliates
  • Any proposed changes to the program structure

Risk Assessment and Mitigation

Affiliate Fraud Prevention:

  • Regular audits of VIP Affiliate accounts and referral patterns
  • Clear terms of service with penalties for fraudulent behavior
  • Affiliates must not be a professional market maker or trading firm.

Financial Risk Management:

  • Monthly review of affiliate payouts
  • Ability to adjust reward tiers based on market conditions (subject to governance approval)

Regulatory Compliance:

  • The VIP whitelisting process will not be made available to users in restricted jurisdictions, including the U.S., Canada, and sanctioned territories.
  • Terms & conditions must be adhered to

Resource Allocation

Kuyen Labs Team:

  • 1 full-time equivalent (FTE) staff dedicated to program management
  • 1 PTE for technical integration and support
  • 1 PTE for marketing and content creation

Total Budget Request:

  • Kuyen Labs will apply to the dYdX Ecosystem Program for a 12-month grant to operate this program pending a successful governance vote.
  • Note that Kuyen Labs has received a grant to: 1) Build the front-end for the on-chain affiliate program and 2) build a transparent dYdX affiliate dashboard

Success Metrics and Evaluation

Key Performance Indicators (KPIs):

  • Increase in daily active users attributed to affiliates
  • Growth in trading volume from referred users
  • Revenue generated from affiliate-referred transactions
  • Affiliate satisfaction rate (measured through quarterly surveys)

Evaluation Timeline:

  • Monthly: Review of KPIs and adjustment of tactical approach
  • Quarterly: Comprehensive program review and community feedback session
  • Annually: Full audit of program performance and strategic alignment

Why Kuyen Labs?

Kuyen Labs, accelerated by a16z CSX, is a key contributor to the Fuul protocol, an advanced tool enabling crypto projects to acquire, engage, and retain users through sophisticated web3 incentives programs. Fuul is trusted by top DeFi projects like Vertex, Hashflow, Nektar, and Clipper to deploy affiliate programs, align incentives, and drive growth. Our expertise positions us as the ideal partner to enhance a VIP Affiliate Program.

Managing affiliate programs is not a “set and forget” task; it requires ongoing commitment, strategic planning, and active relationship management to ensure continued success. Kuyen Labs brings a wealth of expertise in affiliate marketing, with a proven track record of managing affiliate programs for Web2 brands and developing the Fuul protocol for DeFi projects since late 2023. Our experience spans dozens of DeFi initiatives, helping them launch and scale their affiliate programs effectively. Fuul has been instrumental in driving growth for top DeFi projects such as Vertex and Hashflow, achieving impressive outcomes like 43% and 31% of total trading volume driven by referred users. This extensive experience makes us uniquely qualified to elevate dYdX’s Affiliate Program to new heights.

Conclusion

This proposal addresses the community’s concerns while maintaining the core objective of enhancing dYdX Chain’s growth through a robust affiliate program. By implementing strict oversight, clear success metrics, and an aggressive approach to rewards, we aim to create a sustainable and effective VIP affiliate ecosystem for dYdX Chain.

We welcome further feedback from the community and are committed to refining this proposal to best serve the interests of all dYdX stakeholders.

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What is the budget you want to request for 12 month?

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I fundamentally disagree. Any referral program that relies on a two-tier system is inherently flawed, and worse, it requires costly manual oversight.

You claim this addresses community concerns, but in reality, it introduces new issues. No one here has advocated for a two-class system where select individuals (KOLs) receive preferential treatment. If the referral system were designed correctly, large social accounts would be naturally drawn to it without the need for exclusivity.

Furthermore, this is a closed system with arbitrary requirements, entirely under your control. Even if voting is involved for new approvals, you dictate what gets put up for a vote. The associated high management costs only exacerbate the problem.

A single, well-structured system with multiple tiers, where all users can achieve up to a 50% fee share based on performance, would be far more effective and equitable.

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Agree with you. Such closed system is absolutely unnatural for permissionless and decentralized protocol. I doubt someone be happy to provide personal details for 3rd party organization.
There should be permissionless tier system with no KYC or something.
And we don’t even talk about the costs of running such manual system

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Thank you both for your valuable feedback and for raising important points regarding our proposal. We’d like to address each of your concerns in a collaborative manner to provide further clarity.

Regarding our potential grant request:

If this proposal is successful, we will be requesting a $300,000 grant ($25,000 per month) for the execution of this project over the next 12 months. This is up to the discretion of the dYdX Ecosystem Program but we equally welcome feedback on this from the dYdX community.

Please note that if successful, our request would be that this should be allocated in monthly milestones. This means that if, at any point, the community decides to terminate the VIP portion of the Affiliate Program, Kuyen Labs will only be compensated for the period it was active. This structure ensures that the community retains control over the budget based on the program’s ongoing success and relevance.

Regarding a two-tiered affiliate program or introducing the VIP tier:

We understand your concern about the potential pitfalls of a two-tier system and the need for manual oversight. The main objective of activating an additional VIP tier is to attract larger-scale affiliates who have a significant impact on user growth and trading volume. Typically, these affiliates include large SEO blogs, aggregators, trading software companies, and major social media influencers, and these require active engagement. Many of these Affiliates won’t find the standard Affiliate commission competitive, and thus there’s a requirement for a team/individual to activate the maximum earning potential through a VIP program that isn’t automatically contemplated through the software permissionlessly today. The VIP tier is needed if we want to make the dYdX program competitive to those of centralized exchanges.

Regarding Kuyen Labs’ vetting process role:

Our proposal does not grant Kuyen Labs the sole right to propose affiliates for VIP status. We believe it is fair and in the community’s best interest to allow any member to propose affiliates for VIP consideration. However, we believe that our methodology of having strict criteria prevents gaming of the system, and we will utilize our software to prevent any malicious abuse. Ultimately, validators and stakers will have the final say in whitelisting decisions based on recommendations we will aim to provide transparently every week to the dYdX community.

It’s also worth highlighting that our role in the proposal goes beyond the vetting process. It includes reporting on program metrics, marketing initiatives to onboard affiliates, and VIP affiliate management. This holistic approach ensures that the program runs efficiently and brings measurable value to dYdX.

Regarding KYC requirements for VIP applicants

Due to the higher payout caps proposed for the VIP tier, today, an approval process is needed to ensure compliance with dYdX’s terms of service and prevent fraud. There have been a number of affiliate programs over the past few years (in DeFi) that have had ‘uncapped or unmanned’ programs, which have resulted in a significant amount of lost funds through self-referrals. This measure ensures the program’s alignment with legal and regulatory standards while maintaining an open environment for affiliates to join. We also don’t foresee any issues with prospective VIPs providing a dYdX Chain address or proof of social account ownership.

I hope this response clarifies our intentions and addresses your concerns. We genuinely believe that the VIP affiliate tier, with the proper checks and balances, can drive significant growth and benefit the entire dYdX community. We welcome ongoing feedback to refine the proposal in the best interest of all stakeholders.

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First of all, thank you for the proposal to create the Affiliate Program. It is a strategy that has proven to be very effective in many crypto projects. In the traditional world, it is a commonly used strategy that enhances user recommendations, although I understand that in this case it also aims to attract influencers.

Given the experience with these types of programs, I believe one of the most important data points to assess the proposal would be understanding the expected results we can achieve with dYdX given the current user base of the protocol. What would the conservative, normal, and optimistic scenarios be in terms of the main metrics? One metric that I believe would be interesting to add is TVL (Total Value Locked), which strongly correlates with trading activity as well.

Regarding the duration of the affiliate program, there’s mention of a maximum amount per affiliate and a 30-day window for these caps. What is the rationale behind these limits, and how long are these incentives for affiliates proposed to last?

Concerning marketing campaigns, would an additional budget be needed, or is it already included in the current budget?

I think to make a decision on the proposal, it’s crucial to understand what the likely impact on project metrics would be in a probable scenario, allowing us to evaluate if, in the short term, it is one of the most efficient options for the protocol to grow. Based on the experience with other affiliate programs, having this projection would be key when making the decision.

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As a KOL myself in the cryptospace for 5 years and having partnerships with most big exchanges I think this is a great idea.
DYDX is a great DEX, but there is so much competition as well. I dont think this proposal would have been needed if DYDX was top 5 DEX, but it isnt. If it wants to succeed (up to debate what succeeding is) or grow to be one of the biggest I think using KOLs is a great way to attract more users. They can have large audiences and have gained their trust. The latter is needed as DEXes tend to be difficult for many. They can make tutorials to make it easier, in different languages. In Netherlands for example there isnt much in Dutch for DYDX and language specific content will definitely help to gain trust and users. People want DEXes (we all still remember FTX all too good) but it is hard to understand.

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Thank you for presenting this proposal to the community forum. While you have taken care to outline your ideas, we have identified several issues that currently lead us to lean toward a negative vote if the proposal were presented as is. In the interest of providing constructive feedback and offering the opportunity for revisions, we will share the points of contention we have identified:

This is particularly concerning. At Govmos, we have a member (Phil_RX) who fits your VIP criteria. His insights suggest that such a 50% referral fee split is far from industry standards, except for brokers with questionable practices. He noted that typical practices rarely exceed 30%.

Secondly, you plan to allocate three personnel for this task over the next 12 months, including one full-time commitment. We believe this staffing allocation is overstated by a large margin.

For now, we would like to see you deliver on the grant and reassess the VIP tier at a later date. While the idea holds promise, we believe the current grant proposal lacks sufficient depth, especially in comparison to the significant workforce you propose. We recommend reviewing this proposal after delivering the Affiliate platform. Once you have it up and running, we suggest upgrading the platform incorporating a registration process for VIP affiliates using the criteria set out in your proposal, while reducing the fee model to 30% to align with realistic industry standards. If this registration demonstrates significant demand for VIP affiliates, then we would consider allocating paid staff to manage it. At present, however, the anticipated demand seems overstated relative to the immediate costs you propose for the chain.

We hope this message is not taken as an offense. We believe the proposal is premature and requires further development before being considered viable. We encourage you to test your thesis and gauge actual demand for such a VIP tier. If the demand is evident, we recommend your team apply for another grant to manage the VIP program, which would fall under the supervision of the grants sub-DAO—a more appropriate entity to review the allocation’s viability than the broader community.

Thank you for your time,
Govmos
pro-delegators-sign

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I believe the rationale is to prevent malicious actors from gaming the system. Without a cap and without KYC, users could refer themselves in an infinite loop earning commission on false trades.

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Thank you all for your thoughtful feedback and for engaging in this discussion. We truly appreciate the opportunity to provide further clarity on our proposal. Please find our detailed responses to your questions and concerns below.

Expected Results and Metrics:

While it’s challenging to guarantee specific outcomes for this tier, our experience shows that successful affiliate programs can drive around 30% of a project’s total transactions over time. For dYdX, a strong goal for the first 12 months could be a 15-20% increase in trading volume. As for TVL (Total Value Locked), we agree it’s an important metric, but we felt like affiliates would have limited impact on this independently, and it requires more of a one-on-one, high-touch business development effort to bring in more liquidity

Duration and Caps for the Affiliate Program:

The program’s duration and caps (e.g., maximum earnings per affiliate and 30-day rolling periods) align with industry standards and caps that are offered to be activated at the protocol level. We are proposing to activate the duration and caps through this governance proposal

Marketing Campaigns and Budget:

Our proposal covers creating marketing materials and outreach efforts to onboard affiliates into the program. However, it does not include expenses for paid ads, PR, or KOL collaborations. The dYdX Foundation already has a dedicated marketing team actively working in these areas, so we believe allocating additional budget for these activities would be redundant and potentially overlap with their efforts.

Addressing Concerns about the VIP Tier Payout Structure:

We understand the concern regarding the 50% fee split for the VIP tier. However, we came up with the 50% structure given comparable programs across the industry. For reference, here are three comparable programs that offer up to 50% trading fees: Binance, Bitget, and Bybit. These programs require KYC to join as well.

These examples demonstrate that our proposed fee split is competitive and realistic for attracting high-value affiliates. We should aim to be at parity or more competitive than centralized exchanges.

Team Allocation:

Based on our experience, the team size we propose is modest compared to industry standards. We propose a small team because of the program’s early stage. A quick LinkedIn search or inquiry with the affiliate teams of the major CEXs mentioned can reveal that they typically have larger dedicated teams (5-20 full-time employees) for managing their affiliate programs. Again, the team proposal came up based on our understanding and experience on how other programs work. We are of course flexible and supportive to what the dYdX community suggests, but we feel that this is the right approach.

Clarification on the Previous Grant:

With the previous grant, we are not building an affiliate platform per se. Instead, we are delivering two independent frontends: one for affiliates to track performance and optimize their strategies and another for the community to monitor the overall program metrics transparently. While both are related to the affiliate program, they operate as separate work streams and do not depend on each other.

Additionally, it’s important to note that this grant was awarded on a milestone basis, meaning we have not been paid anything upfront. Payment will only occur once these two frontends are delivered and approved by the dYdX grants team. This structure ensures accountability and alignment with the project’s goals.

We hope this clarifies our approach and intent. We look forward to ongoing discussions to refine our proposal for the benefit of the dYdX community. Thank you

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Thanks again for all the thoughtful feedback in this forum, telegram, and X!

Given the valuable support and ideas we’ve received, we’d like to invite everyone to an AMA on X with Leandro “Locha” Schlottchauer, Co-Founder & CEO at Kuyen Labs, to further discuss this proposal. This will be a great opportunity for the dYdX community, foundation team, validators, and ecosystem members to engage, ask questions, and share feedback.

We’re targeting Monday 14th at 3pm CET / 9am ET for the AMA. If the dYdX foundation team could assist with organizing this, it would be greatly appreciated!

We look forward to continuing the conversation both here on the forum and through the live AMA for those who prefer a more interactive discussion. Our goal is to gather as much feedback as possible, so feel free to share your thoughts in whichever format works best for you.

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As a major affiliate with Tier 1 exchanges, I can confirm that top content creators receive 40-50% revenue sharing, in addition to monthly fees. I have worked with companies like Binance, Bybit, and Bitget, all of which offer this level of revenue sharing. They also provide bonuses based on the monthly trading volume you generate, in addition to the revenue sharing and monthly fees.

Offering a lower revenue share would make dYdX less competitive compared to Tier 1 exchanges.

Moreover, a comprehensive affiliate dashboard is crucial for understanding which strategies are effective, tracking affiliate performance by address, and enabling communities like mine to assign specific roles on Discord (or other platforms) based on user IDs, blockchain addresses, and trading volume. Including ongoing marketing campaigns and materials within this dashboard would also help affiliates better promote dYdX, thereby improving conversion rates.

Regarding the number of people dedicated to affiliate programs, keep in mind that Tier 1 exchanges typically have departments of 50 to 100+ staff members managing affiliates and optimizing marketing and conversion performance.

I’m not a tech expert, and I may be biased as a content creator (full-time trading for seven years and working as an ambassador for dYdX for the past two years), but I believe that sharing current industry practices can help inform the discussion here.

@CryptoPicsou

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With all due respect, we would like to clarify that when we reference an industry standard of around 30% for premium referrals, we are referring to the general trading brokerage industry, not the more niche space in which crypto exchanges operate. Moreover, our experience shows that many of these exchanges engage in questionable practices compared to reputable, long-standing traditional finance brokers.

While it might be tempting to draw inspiration from platforms like Binance, we take a different stance on this matter. We reaffirm that a 50% fee split is simply unsustainable. Attempting to mimic the broader crypto market is not a sound strategy. Instead, we should draw from the long-standing experience of traditional finance rather than adhering to the prevailing practices of the crypto industry. Durability and sustainability should be prioritized over short-term momentum and marketing.

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Fantastic proposal! I think this is a big step in the right direction for dYdX. The affiliate program is an amazing idea that can leverage the power of the community and attract high-quality partners to drive real growth. In my experience, these types of strategies are game-changers when implemented right, and I believe dYdX has the potential to stand out here!

What excites me the most is how this approach can bring influencers and KOLs onboard to create educational content and tutorials, especially for newer users. Language-specific content, like Dutch or other underserved regions, would be a huge boost. Plus, with dYdX already being a respected name in the DeFi space, this initiative can push it even further towards becoming a top-tier DEX.

I’m looking forward to seeing how this plays out. Let’s make dYdX the go-to platform for decentralized trading and set new standards for how affiliate programs can supercharge protocol growth!

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Join us for an AMA today with Locha, Co-Founder & CEO of Kuyen Labs, as we dive into all the details of their dYdX VIP Affiliate Program proposal!

:spiral_calendar: Today, October 15.
:alarm_clock: 14:00 UTC.
:round_pushpin: dYdX Foundation Twitter Spaces

Tune in to learn about potential rewards, fee discounts, and much more :saluting_face:

AMA
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Hi everyone! We’re excited to announce that the dYdX community has voted in favor of our proposal. We want to express our deepest gratitude to everyone for their support and trust in our team.

Our next step is to apply to the dYdX Ecosystem Program (DEP) for funding, ensuring we have the resources necessary to build and optimize the program effectively.

For those interested in joining the VIP tier, we’re happy to share the initial application link here. We look forward to welcoming impactful partners to drive sustainable growth together.

Thank you once again for your support, and we’re excited to begin this journey with all of you!

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CleanShot 2024-11-25 at 16.03.10@2x
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These numbers might be incorrect.

This affiliate referred the dydx15m3lvgfwe4xad7wqyskvn6qz5w5ahue60hhemn account, which is an old user. I’m not sure exactly how the referral mechanism works, but it seems to me that commissions should be for NEW users, not old ones. Paying for existing users is not only strange from an economic standpoint but also misrepresents the overall results of the affiliate program.

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@KuyenLabs

CleanShot 2024-11-26 at 11.08.19@2x
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This affiliate referred the user from the message above under VIP status (50% fees 10k cap). Attracting existing users shouldn’t be possible by design.
You manage a VIP program with sufficient funding, so I expect such issues to be addressed within a reasonable timeframe.

Paying for existing users is an obvious loophole and a wasteful expenditure of the protocol’s revenue!

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Hi @RealVovochka! Thanks for raising this issue

As mentioned in our proposal above, dYdX’s affiliate program was developed by dYdX Trading (not Kuyen Labs). I understand where your confusion comes from and I think it’s good clarifying that Kuyen Labs’ roles are:

a) Present and update information on the performance of the affiliate program through the referral dashboard (which reads directly from dYdX’s indexers)

b) Manage the VIP affiliate program (onboard and follow up with VIP affiliates to make sure they can find success in the program)

We do not oversee the rules for the affiliate program nor had anything to do with design choices such as commissions for new vs. recurrent traders

I’m sure someone from the dYdX trading team will follow up shortly sharing more,

Thanks

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