Summary
This proposal seeks community approval to distribute $100,000 in DYDX as rebates for the last two weeks of the Loss Rebate Pilot Program. Rewards will be allocated proportionally to the top 100 traders who incurred the largest realized losses due to liquidations.
Abstract
This proposal outlines the second biweekly distribution under the Loss Rebate Pilot Program, providing partial compensation for realized liquidation losses incurred by the most impacted traders. The objective of this distribution is to continue evaluating whether targeted liquidation rebates can support trader retention and engagement while maintaining the integrity of the protocol’s risk framework.
The proposal requests the distribution of $100,000 in DYDX to the 100 accounts with the highest realized liquidation losses as of December 31, 2025, using a proportional allocation methodology.
Motivation & Rationale
Liquidations are a necessary mechanism to preserve protocol solvency but can significantly impact user experience, particularly during periods of elevated market volatility. The Loss Rebate Pilot Program was designed to assess whether partial, targeted rebates can mitigate the negative effects of liquidation events, improve trader sentiment, and encourage continued participation without distorting risk-taking behavior.
This second distribution proposes allocating $100,000 in DYDX to the top 100 addresses by realized liquidation losses. Analysis of loss concentration shows that a small number of traders account for a disproportionate share of total losses, resulting in a lower average recovery rate of approximately ~4% for eligible participants in this tranche. While the percentage recovery is reduced, this approach allows the program to maintain broad inclusion while preventing excessive allocation to a small subset of accounts.
The $100,000 distribution size reflects an intentional pacing of incentives across the pilot period, ensuring that sufficient funds remain available for subsequent distributions and allowing the community to assess the program’s effectiveness over time. This measured approach supports data-driven iteration while preserving the long-term sustainability of the Loss Rebate Pilot Program.
Program Report
This report summarizes liquidation activity and rebate eligibility for the second distribution period of the Loss Rebate Pilot Program.
- Total realized liquidation losses: $2.6 million between December 15-31, 2025. The currentleaderboard can be found here (on ‘Rebates’ tab).
- Eligible addresses: 100 addresses, representing the largest realized liquidation losses for the period between December 15-31, 2025.
- Rebate allocation: $100,000 in DYDX, equivalent to 526,315.79 DYDX, calculated using a 7-day TWAP of $0.19.
- Distribution method: Rewards will be distributed proportionally based on realized liquidation losses among eligible addresses, subject to successful claim submission as outlined below.
Specification
We request $100,000 in DYDX (equivalent to 526,315.79 DYDX, based on the 7-day TWAP of $0.19) from the Community Treasury to be distributed to the top 100 eligible addresses, as detailed here.
There will be no material changes in the distribution process. The distribution will still be executed via a claim-based flow implemented on dydx.trade, with eligible users notified through in-app or web notifications and directed to a dedicated claims page. Funds will be transferred to an account controlled by CLC (dydx1lxjqtqzsnnxygkax03d8ygxrm7er23xjqpg4e6) for distribution, with all transactions publicly verifiable via a block explorer. Eligible users will receive DYDX rewards within 7 days of submitting a valid claim, and the claim window will remain open for 30 days, after which any unclaimed funds will be returned to the Community Treasury.
Next Steps
We invite the community to provide feedback on this proposal. If there is no significant objection, we are planning to submit the on-chain proposal on January 8, 2025.