DYDX Token Sees 30% Increase in Value Following Governance Vote to Reduce Transaction Rewards by 45%
In a move aimed at addressing token inflation and ensuring a sustainable funding mechanism for future initiatives, the dYdX community has passed a governance vote to reduce transaction rewards by 45%. The proposal seeks to reduce trading rewards to 1,582,192 DYDX from 2,876,712 DYDX. The excess 1,294,520 DYDX will accrue in the Rewards Treasury and can be used/directed by the dYdX community with a governance vote (Short Timelock).
The vote was conducted on Feb 15th, 2023, and received overwhelming support from the community. Of the 776 voters, 91.60% were in favor of the proposal, with a total of 27,534,218 DYDX in favor. This move is part of the V4 Vanguard Post, which seeks to align with a new distribution and emission schedule outlined in V4 Vanguard.
The rationale behind this move was the disproportionate allocation towards DYDX Trading Rewards in comparison to Liquidity Provider Rewards and the Community/Rewards Treasury. This change aims to address the issue of token inflation and ensure a sustainable funding mechanism for future initiatives.
The excess DYDX will now accrue in the Rewards Treasury, which can be accessed by the community through a governance vote. The retained DYDX will have a significant impact on the DAO’s ability to fund initiatives in V4 in a sustainable and controlled manner.
While there were community members not in favor of the reduction, the majority of the community was in favor of this proposal, as indicated in the Snapshot vote. DYDX, the token of the decentralized exchange, has seen a nearly 30% increase in value after the governance vote was passed. The token has had an impressive growth rate of over 120% since the beginning of the year, particularly after the project decided to postpone the token vesting schedule until December.
At the time of writing, DYDX is trading around $2.38, up 7% in 24 hours. This move by the dYdX community is a step towards ensuring a sustainable and controlled growth of the platform, and it will be interesting to see how this move will impact the platform’s future growth and initiatives.
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