- The increase in trading activity on the protocol is reportedly the reason for the shift.
- The proposal was approved on April 6 with 91.7% of the vote in favor.
In light of the recent uptick in activity on the dYdX decentralized crypto exchange (DEX), the community has decided to stake 20 million DYDX tokens in an effort to beef up security.
Staking tokens from the community treasury, which are now worth over $61 million at current prices, using the liquid staking protocol Stride was approved on April 6 with 91.7% of the vote in favor. The increase in trading activity on the protocol is reportedly the reason for the shift, according to dYdX.
The team stated:
“The rate of DYDX being staked to validators has plateaued and deposits to the exchange are growing at a tremendous pace. Over $140M USDC is held in dYdX v4, of which roughly $100M arrived in the past week.”
Beefing Up Security
Staking native tokens is one way the DEX plans to protect its network from a 51% assault-style control attempt. When an adversary acquires a large portion of a blockchain’s hashing power, they may influence the network and launch this kind of assault. Such assaults are prevented by decentralizing voting power.
Moreover, dYdX pointed out that their network architecture allows for a situation where an adversary might halt on-chain activities with just a third of the voting power. In addition, if these individuals control two-thirds of the voting power, they might abuse the dYdX Chain community’s and users’ funds.
The stablecoin USDC is used to store staking rewards on dYdX, which are created from the fees users pay while trading on the platform. Because of Stride’s methodology, DYDX stakes may grow automatically as time goes on due to the recompounded nature of rewards. The dYdX community will contribute 7.5% of the staked position to cover the cost of the staking service.
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Source: https://thenewscrypto.com/dydx-community-greenlights-staking-20m-dydx-tokens-to-boost-security/