dYdX (DYDX) Price Analysis: dYdX Chain To Distribute All Fees To Stakers And Validators

Decentralized cryptocurrency exchange dYdX has announced the launch of its layer-1 blockchain after the successful creation of its genesis block. The new blockchain will operate using the native DYDX tokens. 

The dYdX Chain will distribute all network fees to validators and stakers on the platform. 

dYdX To Distribute Fees To Stakers And Validators 

Apart from allocating all accrued fees to its stakers and network validators, the layer-1 blockchain will also help expand the capabilities of the DYDX token on the version 4 platform. The alpha mainnet became operational at 1 PM EST on the 26th of October, with validators successfully creating the genesis block. The creation of the genesis block marks a significant transition for the decentralized derivatives platform. 

The Proof-of-Stake blockchain was built using Cosmos’ software development kit (SDK) and uses the CometBFt consensus mechanism as its consensus protocol. Validators can stake their DYDX token to secure the blockchain and carry out governance operations on the network. The dYdX Foundation also confirmed the extended utility of the DYDX token in version 4 and emphasized its role in boosting network security and governance. 

“The launch of the dYdX Chain network itself spanned a massive number of companies: @dydx_ops_subdao coordinating genesis & launch generally + hosting indexer & frontend @dydxfoundation coordinating community governance @noble_xyz, @circleapp, @coinbase for launching $USDC on Cosmos just in time @mintscanio for launching their block explorer day 1 many independent validators running the node software … and many more!”

DYDX Token Utility Expanded 

dYdX founder Antonio Juliano stated that the launch of the dYdX Chain depended on Circle and Coinbase launching on Cosmos in time for the creation of its genesis block. Juliano had previously described dYdX as an entirely new blockchain built on Cosmos SDK and the first-ever decentralized, off-chain order book. Furthermore, the new blockchain is entirely open-source. 

Before the launch of dYdX’s native layer-1 chain, the original DYDX token was an ERC-20 token that operated on dYdX’s Ethereum layer-2 protocol. To facilitate the transition from the Ethereum layer-2 protocol to its own layer-1 chain, dYdX’s community voted to adopt the DYDX token as the primary token of the dYdX Chain, adopt a one-way bridge from Ethereum to the dYdX Chain and give the wrapped Ethereum DYDX (wethDYDX) the same governance utility as ethDYDX in dYdX v3. 

Following the community votes and governance outcomes, the utility of the DYDX token has been expanded. This means it can be used for staking, governance on the dYdX Chain, and securing the network. Stakers and validators protect and secure the network and receive fees in proportion to their staked assets. The announcement from dYdX also highlighted that governance on the dYdX Chain will be more accessible than its previous Ethereum-based layer-2 protocol. 

“The dYdX Chain does not have the dYdX v3 concept of ‘Proposing Power’; instead, the governance module effectively enables any holder to create a governance proposal with a deposit.”

Fees Collected In USDC 

A dYdX Foundation spokesperson clarified the new chain’s security incentives would not rely on token inflation, like in other blockchains. The fee distribution mechanism will be managed through the Cosmosx/distribution model, ensuring an efficient system for fee allocation on the network. This will ensure that fees are distributed evenly among validators and stakers. 

The tokens will need to be staked through the blockchain’s governance system. Validators will receive the voting power of the tokens staked with them unless the token owner is voting on a proposal themselves. dYdX’s alpha mainnet marks the first phase of its transition to dYdX version 4. Currently in the alpha stage, the mainnet will primarily stress-test the network and onboard validators. A beta launch is also planned, subject to approval from a governance vote. 

DYDX Price Action 

The DYDX token is currently trading at $2.37, with its price predicted to drop by just over 7%, falling to $2.20 by the 2nd of November. Technical indicators indicate that the current sentiment around DYDX is bullish, while the Fear & Greed Index is currently at 65. dYdX’s 200-day SMA could drop next month, hitting $2.11 by the 27th of November. Meanwhile, its short-term 50-day SMA is estimated to hit $2.22 by the same date. 

The Relative Strength Index is a popular indicator that signals if a particular asset is oversold (below 30) or overbought (above 70). Currently, dYdX’s RSI value is just over 72, indicating that it is overbought. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.