Long-term vision on lean protocol development

Governance/DAO Discussions
1

I don’t think anyone needs an explanation that dYdX is at a stage where it needs to define its direction—where the protocol is headed, what’s happening with the token price, and the overall interest in it.

I suggest that everyone who cares about the future of dYdX participate in this discussion.
It’s sad to say, but we might have lost this cycle to competing products. Although dYdX has certain advantages worth betting on, there’s no guarantee it will lead to success.

Personally, I believe dYdX should aim to achieve Product-Market Fit (PMF) for what the dYdX chain was originally built for: decentralization, transparency, an efficient community DAO , and no compromises.

@karpatkey proposed a token buyback. As I mentioned, I generally support this idea, but without cutting monthly expenses, it won’t lead to anything. First, it’s a drop in the bucket. Second, we’d essentially buy tokens from the market, put them in the treasury, and then inefficiently spend them.

How can we reduce expenses?
Start by defining who does what within the dYdX ecosystem and eliminate overlapping functions.
For example, if the Foundation handles marketing, institutional partnerships, and governance, other subDAOs shouldn’t be doing the same.

Here are the structures currently funded by the treasury (selling tokens):

  1. dYdX Foundation
  2. dYdX Grants
  3. dYdX Ops
  4. Treasury SubDAO

Let’s leave dYdX Trading aside—they’re working on protocol development (they have significant funding reserves, but long-term, we need to understand their motivation; everyone should be compensated for their work).

I’ll take the protocol’s revenue over the last 30 days from DefiLlama: $1.33M USD, and compare monthly expenses to this figure.

Now, regarding expenses, here’s my personal opinion:

  1. dYdX Grants: Operational expenses alone (excluding grants) exceeded $90K (6.8%) last month (this was the latest payment). Including grants, the amount is significantly higher—around $600K or ~45%. I’d like to see a detailed report on the results of these grants.
    Don’t just talk about 3-5 year plans and strategic partnerships. The community needs to determine if these expenses bring value to the protocol. Nearly $0.5M for long-term affiliate program collaborations? What has the protocol gained from this? Why such a long-term bet? Do we seriously think paying Reverie $70K/month is justified? Is it normal for one grantor to work on three projects simultaneously, while the other’s role is unclear?
  2. dYdX Ops DAO: We still haven’t seen the full 2024 report. According to Valentin, monthly expenses are $400-450K, or 33% of revenue. I skimmed the preliminary accounting report, and some expense items are concerning:
  • Travel expenses: I saw Four Seasons Hotel charges totaling $28,729 across 4 transactions. Seriously, Four Seasons??? Total travel expenses for 2024 were $120K. This brings us back to overlapping functions—if the Foundation handles partnerships, where is Ops DAO traveling for $10K/month? A $1,200 DOS Xmas party for a remote team—isn’t that excessive?
  • Salaries: Paid in USDC, dYdX tokens, from different wallets, etc. It’s unclear who performs which functions. For example, Stan is listed as a Governance Associate, but isn’t governance the Foundation’s responsibility? I’m not discussing compensation or bonuses here. I’m not attacking individuals, but please clarify roles.
  • Indexer: I’d like clarity on what portion of costs goes to infrastructure versus Imperator. Yesterday, I saw Imperator bought a Hype token on the HL platform for $160K. They’re a commercial entity and can do what they want, but if they had bought dYdX tokens for a comparable amount while the token is at ATL, this concern would vanish. I haven’t seen that. They’re the service provider receiving the most funding—I’d like to see some faith in dYdX.
  1. dYdX Foundation: I think they can publish their expense structure by category and some report on what worked and what didn’t. At least this structure didn’t immediately swap tokens for stables after receiving them, which shows they believed in the project’s success.
  2. Treasury SubDAO: There’s still little data, but I feel they should take more initiative on long-term project funding. If we’re spending 2-3x revenue monthly (and I’m not even mentioning that a only tiny portion of revenue goes back into the protocol)

I want to preempt the argument that top-tier employees and partnerships require top-tier pay. But then we should demand top-tier results—personally, I don’t see them. We can’t just burn money; it will run out soon.

I know I’ll get a lot of hate for this post, but someone had to ask these questions.

I want to invite all the stakeholders of dYdX and @antonio into this topic and discuss were are we going? Lets do the AMA with the subDAOs

6 Likes
2

I agree with the request to present the 2024 expense report and the need to enlighten the community about what efforts are being made to improve the product.
I would also like to write a note about the buyback program, which I fully support and I voted yes on the proposal presented for community voting.

It is necessary to understand that the Treasuru SubDAO will allocate the DYDX token acquired through the buyback system to the Staking Program, which implies 3 virtuous consequences for the protocol and token: 1. The acquisition of $DYDX creates buying pressure in the market and reduces the amount of tokens available for trading;
2. The allocation of these tokens in the Staking Program allows indirect investment in increasing the security of the DYDX Chain;
3. The allocation of these tokens in the Staking Program allows the increase of the treasury’s USDC reserves, constituting a source of financing for the protocol’s operations without using the massive sale of $DYDX as a means of financing.

I also want to invite all the stakeholders of dYdX and @antonio into this topic and discuss were are we going into the future.

2 Likes
3

I agree that buybacks and staking can make the protocol safer.
However, there’s a nuance.

DEP requested 4M USDC from the Treasury subDAO.
Simple math: 25% of our fees are spent monthly on token purchases and staking (with a staking APR of 6%) + 10% ($160k) received in usdc. How long will it take to get 4M usdc in the Treasury? Around 22 Months.
Ok you will say we have like 65M tokens in staking already with the current price of the token and APR 6% we are getting like 200k a month.
And if we add it to calculations we need just 11 month to get $4M.
DEP needs $4M to cover 14 month of operations.

You see that 25% tokens buybacks and staking, 10% fees monthly + staking yield from
65M tokens barely cover just the operation of DEP.

And its just one subdao

4

Appreciate you kicking off this discussion and happy to share my thoughts. I head up marketing at the Foundation but I’m writing this comment to share my personal views and not necessarily those of the Foundation.

The 25% buyback program isn’t a silver bullet, but it’s a step in the right direction to better align token holders with the long-term success of the protocol. While these buybacks alone won’t drive growth imo, it’s encouraging to see discussions around increasing the allocation and a clear product roadmap from dYdX Trading that lays out both short and medium term priorities.

On expenses, the Foundation is tightening budgets to ensure efficiency while continuing to support the ecosystem. I know there are broader concerns around spending across different dYdX entities, and I invite members of those entities to share their view points here. More structured proposals on optimizations would be valuable.

It’s worth noting that from a product perspective, IBC Eureka is a major unlock, enabling possible future additions of Spot Trading and Multi-Asset Margining, both of which could significantly impact protocol revenue and, in turn, buyback amounts. These kinds of developments are what will drive real long-term growth for dYdX.

Thanks again for kicking off the conversation, hoping my input helped shed some light on a few points.

4 Likes
5

Hi Chris @grundydx

Thank you for participating in the discussion. I’m interested in the personal opinions of the people behind the scenes, rather than a polished corporate response. So thank you. Allow me to share my personal view as a user of crypto Twitter regarding the marketing strategy.

I feel that dYdX is presented in a way that is quite disconnected from the market and users. The content I see is either interviews with stakeholders (which can sometimes be dull and repetitive with the same narratives) or obviously sponsored posts (which are actually very expensive ; I’ve seen on-chain payments to Stacy Muur) or some posts about “how great we are!”. You know, it’s a bit like Trump’s phrases, “you will be tired of winning,” while you’re bleeding from your eyes watching the red candles.
This generates a lot of hate in the comments.

If we emphasize that dYdX is in builder mode, trying to implement some long-term “features,” I think there needs to be more authentic support. The success of HL was due to a certain “cult” around it; dYdX also needs something similar, but unique to its context, history, current market phase, etc.

I’m not sure if it’s realistic to turn haters into fans, but if the marketing content were more “down to earth,” showing users that the team building the project is one of them, that people’s opinions matter, and that the team is close to them, providing a decent level of transparency, I believe it would improve the overall image of the project.

1 Like
6

All your DYDX ideas for new products over the past year are a failure.
You have not increased your customer base, but reduced it.

Your goal should be one in the coming year - to increase trading turnover on the platform.

And not spend money on developments, the ideas of which are then stolen by platforms with a hundredfold trading volume and clients.

I see two steps.

  1. Announce a new airdrop by the end of 2025, among clients. This will already increase the client base by 10 thousand. And you will finally spend the entire fund of dydx tokens to the treasury. And you will start living at the expense of the commission from the platform.

  2. Allocate part of the commissions to competitions. Trading leagues for efficiency. Although with a smaller prize pool, but the structure of the flight was several years ago in v3 and good information, updating the database, pleasant graphical interfaces. This will significantly increase the daily trading turnover on the platform.

7

First of all, I think it’s important to acknowledge the work of @RealVovochka in this forum. These comments reflect the time dedicated to understanding the project and contributing a vision to the debate.

I’d like to share my opinion on the project at this moment. The announcements from @antonio and the project itself mark a turning point and reignite the ambition to regain leadership in trading volume. In this regard, the priorities set for this year will likely have a significant impact on activity. Combined with the brand strength and the reliability that the project has demonstrated, this provides an excellent foundation to try to reverse the current inertia—an inertia that stems from the project itself rather than the market, which has continued to increase its market share against centralized solutions. I believe we all agree that this is the most probable scenario and the one where we want dYdX to play an important role.

I do not share the opinion that expenses should be reduced, although I do believe that a reflection is necessary on everything that has been developed over the past year and has not worked. Without this honest reflection, it is difficult to establish a solid foundation for using the current resources in the best possible way.

I also don’t think this is the right time for buybacks, as their impact would be marginal. The main issue lies in the deterioration of the project’s revenue, and I believe resources should be allocated toward recovering it. Of course, taking care of token holders is important, but right now, the best way to do that is by investing in growth. These buybacks would have a minimal impact compared to what capital investments could achieve. Given the project’s currently depressed market capitalization, the real appeal lies in its potential revaluation rather than in any dividend-like return.

The key is to allocate resources to developments that will have the greatest impact on the project. We should prioritize these over technological infrastructure improvements—though, of course, some are inevitable. The project should set clear objectives for each expenditure because one of the structural problems is the lack of a culture of accountability in many areas. This is evident in reports that would be difficult to accept in a more demanding environment.

In any case, I am optimistic. I believe Antonio’s leadership is becoming evident in these new communications, and this is starting to shape the organization again. However, I do miss having more debate before these announcements if the feedback shared in this forum is truly valued.

5 Likes
8

Hey @RealVovochka, thanks for your feedback. Could you share an example of a post you feel is disconnected from the market and users? That would help me bring it to the team for discussion on next steps.

From my perspective, Twitter is a powerful tool for reaching prospective traders, showcasing dYdX’s value propositions, and engaging with the community. We do this by sharing a mix of content, including protocol updates (new market listings, product roadmap, governance proposals), opinion pieces (interviews, DeFi’s future, crypto vs. fiat), and community-focused content (trading rewards, affiliate program, staking APR).

Looking at key metrics like follower growth, engagements, and impressions, this approach is delivering results but we’re always open to refining it especially based on community feedback.

That said, I agree that we can and should engage more with thoughtful Twitter comments, especially when users need support. We’ve already started doing this more from private accounts and will be increasing engagement from the dYdX handle moving forward.

Most negative comments we see are price-related rather than content-related though, which is common in crypto when a project’s token experiences volatility.

I agree that it’s important to be down to earth, authentic and part of the community and we’ve been taking steps to double down on this. Tweets like this, this and this as well as engagement in the comment section, on Discord and here on the Forum are designed to engage and show togetherness. Is there something else you think we should be doing? Thanks again for your feedback.

PS: Is there a brand you think is doing a great job on Twitter?

1 Like
9

The death of any high growth potential venture is to focus on political discussions of the details of minimizing costs rather than on how to maximize revenue

7 Likes
10

Hi, Antonio.

Thank you for the software roadmap. I want to say that in all the discussions we’re having here, there’s zero politics.

You mentioned that dYdX Trading has $150M in cash, and I see that you’re buying tokens from Binance to the address dydx1defy62dgpwg3mchet8e7ym4ekajv3pw540lyfj, which shows that you believe in the future of the project, and I respect that.

No one here is trying to cut any costs; I’m just asking questions about the directions in which the money is being spent. Perhaps it’s worth spending it more effectively to ensure sustainable revenue growth.
The discussion about cutting costs was only in the context of exchanging dYdX tokens, which negatively impacts the token price and could trigger a death spiral, because the token price is the best native marketing.

I’m not asking questions about where dYdX Trading spends its money; I’m asking about the efficiency of spending from the Community Treasury, and if the protocol were showing consistent growth, there wouldn’t be any questions.

So I’d ask that you refrain from mentioning “politics” in the future, because if I wanted to play politics, I would be bringing up completely different arguments. Thank you

2 Likes