The dYdX community has approved staking 20 million DYDX tokens to boost security amid a surge in activity on its decentralized crypto exchange (DEX).
With 91.7% of votes in favor, the proposal, passed on April 6, enables staking tokens worth over $61 million, through the Stride liquid staking protocol. dYdX aims to fortify its network against control attacks by decentralizing voting power.
Staking serves a dual purpose for dYdX. Firstly, it increases the overall amount of DYDX tokens locked within the network. This makes it more expensive for malicious actors to acquire a controlling stake and manipulate the protocol. Currently, an attacker would need a staggering $912 million in staked DYDX tokens to gain such control, a significant hurdle considering only 11.5% of the total supply is currently staked.
Secondly, staking rewards participants with USD Coin (USDC), a stablecoin pegged to the US dollar. These rewards are generated from trading fees collected by the platform, providing a passive income stream for stakers. dYdX will pay a 7.5% fee for the staking service.
The dYdX architecture presents a scenario where an attacker with a significant amount of voting power could disrupt operations or even steal user assets. By decentralizing voting power through increased staking, dYdX aims to mitigate these risks.
The move comes as dYdX witnesses rapid growth, with over $140 million in USDC deposits in its v4 platform, $100 million of which arrived in the past week.
Data from DefiLlama shows dYdX’s total value locked at $503.37 million, with $48.59 million in fees generated over the past year. This move reflects dYdX’s commitment to bolstering security and sustaining growth amidst increasing activity in the decentralized exchange space.
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