dYdX Community Stakes 20 Million Tokens To Increase Security Amid Rising Trade Activity
Summary:
The dYdX crypto exchange community has agreed to stake 20 million DYDX tokens to fortify security as trading activity increases. Over 91% of votes approved the proposal, allowing tokens worth above $61 million to be staked using the Stride protocol. This measure intends to protect the network from potential control attacks. Staking rewards on dYdX are given in USD Coin (USDC) and stem from user trading fees. The community will pay 7.5% on the staked position for the service. At present, dYdX holds total value locked on-chain at $504.48 and has generated over $48.59 million in fees over the past year.
In an effort to enhance security amid increasing activity, the community of crypto exchange dYdX has authorized the staking of 20 million DYDX tokens. Garnering 91.7% favorable votes, the decision permits the staking of tokens from a community treasury, valued above $61 million as per current rates, using the Stride staking protocol. This step responds to escalating trade operations on the protocol, stated dYdX. The exchange asserts that while the staking rate of DYDX tokens has remained constant, deposits are rapidly increasing. Over $140 million USDC is held by dYdX v4, with approximately $70 million coming in during the last week.
Staking, defined as the locking up of cryptocurrency to aid a blockchain network's functioning, includes transaction processing and block validation. Aspectors or "stakers," engage their tokens as stakes within the network and receive rewards, usually additional tokens, for their service and potential token value risks. The act of staking its native tokens is the DEX's method of protecting its network from possible control attacks akin to a 51% attack. Preventing such attacks would be helped by decentralizing voting power.
dYdX relayed that its network structure makes it possible for an intruder, holding just a third of the voting power, to halt on-chain functions. Possessing two-thirds of voting power would enable such parties to possibly mishandle user and community funds within the dYdX Chain.
Given the current voting power is $456 million, a wrongdoer would need to stake at least $912 million in DYDX to assume control of the protocol, which could then result in the misuse of user deposits and community resources. "This may seem substantial now, but when we consider only 11.5% of DYDX's total supply is staked, it's not a remarkably high threshold," noted dYdX.
dYdX offers staking rewards in the form of stablecoin USD Coin (USDC), generated via the fees imposed on protocol users. The Stride mechanism allows for the automatic growth of DYDX stakes as rewards get recomposed. A 7.5% fee will be levied on the staked position as a fee for staking services by the dYdX community.
According to data from DefiLlama, the total value held on-chain by dYdX currently stands at $504.48, with the network earning over $48.59 million in fees in the past year.
Published At
4/7/2024 8:48:50 PM
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