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dYdX Launches Buyback Program Amid Ecosystem Reorganization

With 85% of DYDX tokens already unlocked, dYdX has introduced a buyback program aimed at enhancing its ecosystem and boosting token value. The decentralized exchange team announced that starting Monday, 25% of net protocol fees will be allocated to monthly buybacks. DYDX tokens will be purchased from the open market and staked to bolster network security.

Revenue Allocation Breakdown

Previously, all protocol revenue was distributed directly to ecosystem participants. However, the new buyback initiative shifts this allocation strategy:

  • 10% – Treasury SubDAO for financial sustainability initiatives.
  • 25% – MegaVault.
  • 25% – Buyback Program.
  • 40% – Staking Rewards.

The dYdX team emphasizes that this setup ensures protocol revenue is “strategically reinvested into the ecosystem, strengthening network security, governance, and long-term sustainability.” While the initial allocation dedicates 25% of fees to buybacks, ongoing community discussions are exploring the potential for increasing this percentage up to 100% over time.

What Is dYdX?

Founded in 2017 by Antonio Juliano, dYdX is a decentralized exchange that enables users to trade crypto, engage in margin trading, and lend—all without intermediaries. The platform has become a notable player in the decentralized finance (DeFi) space.

Restructuring and Leadership Changes

The buyback program coincides with significant organizational changes at dYdX. In October, the company underwent a major restructuring, including layoffs impacting 35% of the core team. In a public statement, Juliano acknowledged that the company needed to evolve to align with its long-term goals. He stated:

“The decision to let go was a realization that the company we’ve built is different from the company dYdX must be. We will move forward with clarity and renewed passion. We will create amazing things.”

Earlier in May 2024, Juliano transitioned from his CEO role to serve as chairman and president of dYdX Trading. Former operating partner Ivo Crnkovic-Rubsamen has since stepped in as CEO.

dYdX Trading Volume and Tokenomics

In 2024, dYdX reported $270 billion in trading volume and generated $46 million in net protocol fees across 150 markets. Since its launch in 2021, the platform’s cumulative trading volume has exceeded $1.46 trillion.

As of March, approximately 85% of DYDX tokens have been unlocked. Emissions are expected to decrease by 50% in June, with all token unlocks projected to conclude by June 2026. The dYdX Community Treasury currently holds 190 million DYDX tokens—representing nearly 20% of the total supply—which are reserved for future community-driven initiatives.

“This ensures that resources remain available to further develop and scale the protocol.”

Migration to Layer-1 Chain

In 2023, dYdX migrated from Ethereum to its dedicated layer-1 chain. As of now, 86% of DYDX tokens are on the dYdX Chain, while the remaining 14% exist on Ethereum as ethDYDX. The community is actively considering discontinuing support for the cross-chain bridge by June, which would remove unbridged ethDYDX tokens from circulation on the dYdX Chain.

If the buyback allocation were increased to 100% of net protocol fees, it could significantly accelerate the reduction of tokens in circulation while enhancing network security and validator incentives. Discussions are already underway to explore this possibility.

Market Response

Following the announcement of the buyback program, the market reacted positively. The DYDX token surged by 7% to $0.7224, with trading volume on crypto exchanges increasing by 225%. Despite this uptick, the token remains down 84% from its all-time high of $4.52, reached in March 2024.

Disclosure: This article is for educational purposes only and does not constitute investment advice.

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