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DYdX Proposal to Slash Token Issuance Wins Early Support

In theory, this could boost the price of DYDX, based on the basics of supply and demand.

By Sage D. Young|Edited by Nick Baker, Bradley Keoun

Updated Jul 31, 2023, 5:15 p.m. Published Jul 31, 2023, 5:15 p.m.

The governance vote comes almost a month after dYdX, which has about $346 million in total value locked, launched its public test network on Cosmos.(Bettmann/Getty Images) — The governance vote comes almost a month after dYdX, which has about $346 million in total value locked, launched its public test network on Cosmos. (Bettmann/Getty Images)

Community members of dYdX, the large decentralized exchange (DEX) for trading perpetual contracts, are voting on whether to slash rewards to liquidity providers, a move that could save the business $1 million a month and slow issuance of its DYDX token.

And based on the votes submitted so far, the proposal appears on track to pass.

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If passed – voting ends Tuesday – the governance proposal will reduce the amount of DYDX given to liquidity providers per epoch to 575,342, a 50% decrease that amounts to about $1 million at current prices. Antonio Juliano, dYdX’s founder, said on X (the site formerly known as Twitter) that overall DYDX token emissions would be cut by roughly 25%.

In theory, less issuance could be a net positive for DYDX’s price based on the basic laws of economics (limiting supply can boost prices).

The change would be an “overall positive for the community,” per the proposal’s forum discussion posted by Max Holloway, CEO of blockchain research and development firm Xenophon Labs.

The price of DYDX, the native governance token for the decentralized exchange, is up 2.3% in the past 24 hours, according to CoinGecko.

dYdX Governance token DeFi

Sage D. Young

Sage D. Young was a tech protocol reporter at CoinDesk. He cares for the Solarpunk Movement and is a recent graduate from Claremont McKenna College, who dual-majored in Economics and Philosophy with a Sequence in Data Science. He owns a few NFTs, gold and silver, as well as BTC, ETH, LINK, AAVE, ARB, PEOPLE, DOGE, OS, and HTR.