Token distribution

I have a question about why the majority of proposals are focused on reducing the emission of dydx tokens?
Initially, the idea was to distribute the tokens in a decentralized manner. There was a tokenomics model created where the team and investors have a certain portion of the supply.
The other part of the rewards should have been distributed to the users of the protocol through staking rewards, trading rewards, LP rewards, etc. Now we’re seeing that a bigger portion of these rewards will go to the community treasury
If the tokens are not distributed to a large number of users, after unlocking, the team and VC will control a majority of the supply. And whoever controls the majority of tokens also controls the community treasury. Isn’t this a risk for decentralization, which we want to achieve in V4? It’s more like a philosophical question. No offence to the Team and Investors.

I’m not saying that the team or investors should get fewer tokens, maybe the problem can be solved with a more progressive governance system, one that truly uses the community treasury in the best interests of the community, with direct participation and control from the community


dYdX stands with an unparalleled opportunity to challenge centralised counterparts by offering attractive incentives. An aspect we mustn’t overlook, as these centralised entities also endeavour to entice their user base with similar strategies. Consequently, the priority should be to amplify the allure of rewards and incentives on dYdX.

The evident allure of trading rewards, however, has been diminished by their recent reductions, leading to an observable decline in the user base, trading volumes, and revenues. Particularly with the upcoming launch of Version 4, the timing of these reductions seems misplaced.

In response, it appears more advantageous to enhance rewards and expand their distribution avenues. Opportunities for this expansion could include rewarding affiliates, newly registered accounts, loyalty, and accomplishing activity-based milestones, among others. Such an approach would not only entice more users to join dYdX but also nurture user loyalty and ongoing engagement.

On another note, the approach towards the community treasury necessitates re-evaluation. With a current runway of 200 years, the least of our concerns should be extending it further. It would seem more strategic to reduce this runway to a more dynamic 10-20 year timeline. Such a shift could fuel investments into projects directly contributing to growth. These investments could span marketing and advertising initiatives, sign-up bonuses, developing user-friendly trading tools, NFT-related ventures, and trading competitions.

Moreover, I agree with your concerns about the potential risk to decentralisation. Ensuring the broad distribution of tokens is paramount for maintaining a truly decentralised platform. I firmly support your notion of a more progressive governance system that aligns the use of the community treasury with the community’s interests.


It is better for the team to do a good job in market value management and empower the token economy than to increase transaction mining. Who will trade when tokens are always inflated and rewards cannot cover costs? Those of you who have done research have forgotten the most fundamental attribute of tokens, which is the financial attribute. The spiral increase of token value can bring more users and transaction volume. There are many exchanges to choose from in the market.

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For the currently launched testnet, there is very little reaction to DYDX V4 in the market. In my opinion, most of the encrypted users are here to make money, not to do charity. When the value of DYDX tokens is getting lower and lower, I believe that Everyone will have no interest in transaction mining.

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Hey, @jake
I didn’t quite understand your comments, what exactly are you suggesting? Reducing emissions did not have any positive impact on token price at all. Of course, the price is influenced by both supply and demand, but in crypto, I believe that demand plays a much bigger role. So, increasing the number of users through rewards could have a positive effect on protocol’s capitalization. Obviously, there’s no perfect solution; everything is done through trial and error.