coinspress.com
The dYdX community has approved staking 20 million DYDX tokens to enhance security amid a surge in activity on the decentralized crypto exchange (DEX).
This decision, passed on April 6 with 91.7% of votes in favor, allows for the staking of tokens worth over $61 million from the community treasury using the liquid staking protocol Stride. dYdX has responded to the increasing trading activity by noting a plateau in DYDX staked to validators and a significant rise in deposits to the exchange, totaling over $140 million in dYdX v4, with around $100 million added in the past week.
Staking involves locking cryptocurrency to support blockchain network operations, with participants committing their tokens to the network in exchange for rewards. By staking its native tokens, dYdX aims to safeguard its network against potential control attacks, such as a 51% attack, where a malicious entity gains significant control over a blockchain’s hashing power.
dYdX has highlighted vulnerabilities in its network architecture, where an attacker could potentially pause on-chain operations with one-third of the voting power, or misuse funds with two-thirds of the voting power. To prevent such scenarios, dYdX has set a high barrier for malicious actors, requiring over $912 million in staked DYDX to take control of the protocol.
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Staking rewards on dYdX accrue in USD Coin (USDC) and are generated from trading fees. The Stride mechanism allows DYDX stakes to increase automatically over time through recompounded rewards, with a 7.5% fee paid by the dYdX community for the staking service.
At the time of writing, dYdX’s total value locked on-chain stands at $504.48 million, with the network generating over $48.59 million in fees over the past twelve months, as reported by DefiLlama.