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Will the dYdX DEX adopt a new Trading Rewards Formula?

by Dalmas Ngetich
Jul 21, 2022 - 12:00 am
in Blockchain
Will the dYdX DEX adopt a new Trading Rewards Formula?

SLN recently put up a proposal to change the trading rewards formula. The rewards formula will now be based on fees. Reward emissions will be reduced by 25%.

SLN Capital has put up an interesting proposal for discussion:

💵 Change trading rewards formula to be based only on fees
💰 Reduce trading rewards emissions by 25%

I'm *in favor* of the proposal, and left my personal thoughts on the forumshttps://t.co/0j23JqZTGJ

— Antonio | dYdX (@AntonioMJuliano) July 20, 2022

SLN Capital proposes to collapse the formula to w=f; the proportion of total fees paid. “w” stands for individual trader score, and “f” is the total fees paid by a trader in an epoch. In a bid to finance more productive projects to support the ecosystem, monthly emitted trading rewards will be reduced by 25% and they will also be transferred to the community treasury. Trading rewards can be based on volume instead of fees paid.

The platform believes now is the time to simplify things, and a simpler formula will only make things easier going forward. Non-professional traders will get to know how rewards are earned.

The reduction was proposed to fund programs that attract new users and improve the protocol, especially now that reward emissions for traders are high.

Furthermore, since there would no longer be a penalty in rewards for having the best fees, choosing to distribute the reward emissions by volume rather than by fees paid might potentially multiply the value of holding staked dYdX. However, this might result in lower benefits for new users, so it should be examined to see if it is preferable.

Some community users have shared their thoughts on this proposal, and most are in support. Some believe it would create a fairer dynamic for smaller traders. Many others share this sentiment because of the high price of trading rewards per epoch. 

After some deliberation with the community, a snapshot poll is to be presented in order to effect these changes. A separate on-chain vote will be required if the proposal gets enough support.

Tags: Blockchain
Dalmas Ngetich

Dalmas Ngetich

His primary focus is on technical analysis (crypto is, obviously, *not* crypto without the twirls of price action), the magic of DeFi, and NFTs. He is specifically training his eyes and effort on DeFi—and how the tech is changing investment, opening up opportunities for everyone—and the possibilities of NFTs.

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