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Decentralized exchange dYdX is about to release a stack of tokens in a scheduled unlock event. How will the prices of its native token of the same name react?
On Feb. 14, the decentralized derivatives exchange dYdX will unlock 6.5 million DYDX tokens. The scheduled token release equates to 0.65% of the total supply, so its impact should be minimal.
At current prices, the dYdX token unlock is valued at around $15.9 million.
Furthermore, just 20.4% of the total supply of 1 billion DYDX tokens is unlocked. This gives it a market capitalization of around $361 million.
The remaining 80% of the tokens will be unlocked in frequent small increments over the next three years.
DEX Tokenomics Adjusted
dYdX tokenomics is also weighted in favor of early investors. Almost 30% of all of the tokens are allocated to that category. Additionally, a further 30% is split between the team and the community treasury.
20% of its tokens go towards trading rewards, and 8% is for liquidity provider rewards. The rest is split between future employees, retroactive mining rewards, and staking pools.
DYDX unlocks are scheduled every month until July 2026. From December 2023, the amount released increases substantially for the team and investors. The dYdX Foundation announced this change in previous unlock schedules in late January.
Project governance is also conducting a vote to reduce trading rewards by 45% from 2.9 million to 1.6 million tokens per epoch.
The Sandbox is also unlocking tokens today, but with a much larger release. Around $250 million worth of SAND tokens will hit the markets in a few hours, and prices are already dropping.
Price Outlook
Token prices have slid 3.1% on the day as the next unlock approaches. As a result, DYDX was trading at $2.42 at the time of writing.
The past couple of weeks have been bearish for the DEX token, as it has shed 16% over the last seven days.
Like its DeFi brethren, DYDX has suffered heavy losses during the bear market. The token is currently down 91.3% from its September 2021 all-time high of $27.86.
These scheduled token unlocks may be beneficial for long-term vesting and tokenomics, but they tend to batter prices in the short term.