With 85% of DYDX tokens now unlocked, the dYdX team has initiated a buyback scheme aimed at enhancing value within the ecosystem.
The team behind the decentralized exchange dYdX has launched its inaugural buyback of DYDX tokens, intended to bolster trust in the asset. Starting Monday, 25% of net protocol fees will be allocated toward monthly buybacks — purchasing DYDX from the market and staking it to bolster network security, as detailed in a recent company update.
Previously, all of dYdX’s protocol revenue was directly distributed to ecosystem participants. However, this new buyback initiative will slightly alter that structure:
- 10% – Treasury SubDAO for initiatives promoting financial sustainability.
- 25% – MegaVault.
- 25% – Buyback Program.
- 40% – Staking Rewards.
The dYdX team asserts that this arrangement guarantees that protocol revenue is “strategically reinvested into the ecosystem, thereby enhancing network security, governance, and long-term viability.” The initial setup earmarks 25% of net protocol fees for buybacks, though ongoing community discussions are considering the possibility of increasing this percentage to 100% over time.
Buyback amid reorganization
Founded in 2017 by Antonio Juliano, dYdX serves as a decentralized exchange that enables users to trade cryptocurrencies, engage in margin trading, and lend assets without the need for intermediaries.
This buyback initiative surfaces during a period of significant transformation for dYdX. In October, the exchange experienced the departure of several team members, including key personnel. CEO Antonio Juliano announced layoffs affecting 35% of the core team as part of a major restructuring. In a blog entry, he noted that the organization needed to adapt because “the company we’ve built is different from the company dYdX must become.”
“The decision to downsize was a recognition that the company we’ve built is not aligned with the future direction of dYdX. We’re moving forward with clarity and renewed enthusiasm. We aim to achieve great things.”
dYdX
Earlier in May 2024, Juliano transitioned from his role as CEO to assume the positions of chairman and president at dYdX Trading. Former operating partner Ivo Crnkovic-Rubsamen has since taken on the CEO role.
Venturing into new territories
In 2024 alone, dYdX recorded an impressive $270 billion in trading volume and generated $46 million in net protocol fees across 150 markets. Since its launch in 2021, its cumulative trading volume has exceeded $1.46 trillion, based on company statistics.
The buyback program seems designed to strengthen DYDX tokenomics at a potentially pivotal moment in its emission timeline. As of March, approximately 85% of DYDX tokens have been unlocked, with emissions anticipated to decline by about 50% in June, and all token unlocks expected to conclude by June 2026.
Additionally, the dYdX Community Treasury holds around 190 million DYDX tokens, constituting nearly 20% of the overall supply, earmarked for future community-driven initiatives.
“This ensures that resources remain available for further development and scaling of the protocol.”
dYdX
The buyback effort follows dYdX’s transition from Ethereum to its proprietary layer-1 chain in 2023. At present, about 86% of DYDX tokens are on the dYdX Chain, while the remaining 14% exist on Ethereum as ethDYDX. Following this migration, the community is contemplating the cessation of support for the cross-chain bridge by June, which would eliminate any unbridged ethDYDX tokens from circulation on the dYdX Chain.
The team points out that if the buyback allocation were to rise to 100% of net protocol fees, it could “significantly hasten the depletion of tokens in circulation while further enhancing network security and fostering validator incentives.” Whether or not the dYdX community will support such a bold initiative, which could profoundly influence the protocol’s long-term economics, remains to be seen.
“As the program is implemented, conversations are already underway regarding the potential for further expansion.”
dYdX
Following the announcement of the buyback program, market reaction has been favorable with the DYDX token surging 7% to $0.7224, while trading volume on crypto exchanges soared by 225%. However, despite this increase, the token’s value is still down 84% from its peak of $4.52, which was achieved in March 2024.
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