Proposal: Whitelist dYdX with 1M $BNT co-investment

This proposal is expected to appear on Snapshot for voting on 2021-10-31T12:00:00Z. Make sure to stake your vBNT for voting before this date and time to participate in the DAO decision.

Proposal to Whitelist dYdX

TL;DR

  • Proposal to whitelist dYdX.
  • Co-investment of 1,000,000 BNT.
  • There are no security concerns that could prohibit whitelist status.
  • The token was launched on the 8th of September of 2021 and therefore poses an impermanent loss protection risk as volatility is expected to be higher than other established tokens/projects.
  • There is no reason to doubt the legitimacy of the dYdX project. dYdX investors include Paradigm, Kronos Research, Defiance Capital, CMS Holdings, Delphi Digital. The exchange is powered by Starkware L2.
  • The benefit to Bancor is clear. Providing dYdX liquidity will attract token LPs to Bancor, increase trade volume and promote synergies between Bancor and dYdX.

Liquidity

Token Address: 0x92d6c1e31e14520e676a687f0a93788b716beff5

Deepest dYdX pool is dYdX/ETH on Uniswap v3 with $34.90m liquidity [1] and Sushiswap dYdX/ETH with $9,531,634.61 liquidity [2].

A 1m BNT would allow for a dYdX/BNT pool with a depth of roughly $8m.

Token Security

dYdX has a circulating supply of 56,337,466 dYdX and a maximum supply cap of 1,000,000,000 dYdX for the first 5 years since launch. After 5 years, a maximum inflation of 2% per year may be used by governance, starting on July 14th, 2026 at 15:00:00 UTC [3].

Token contracts are OpenZepellin ERC-20 contracts. The contracts don’t have any permissions that grant administrators unrestricted mint/burn capabilities. Inflation after July 14th, 2026 is capped at 2% and must be enacted via a governance proposal [3].

The top 15 contracts and addresses with the highest concentration of dYdX tokens are the dYdX rewards treasury, dYdX Community treasuries, team wallets used for the token distribution schedule, Binance wallet, and a wallet with 1.0618% of the distribution (Figure 1).


Figure 1 - Top 15 contract and addresses with highest concentration of dYdX tokens, taken from [4]

Project

dYdX is a decentralized exchange that currently supports perpetual, margin trading, and spot trading, as well as lending, and borrowing. dYdX runs on smart contracts on the Ethereum blockchain. Whitepaper can be found here.

dYdX Products

Perpetuals on Layer 2

  • Perpetuals trading with up to 25x leverage
  • Pairs offered: BTC-USD, ETH-USD, LINK-USD, complete list here.

dYdX also offers Layer 1 products, but these will be winding down as per team’s announcement:

We will be winding down our L1 product on November 1, 2021 at 18:00 UTC. Spot / margin trading and borrows will be disabled on November 1. Withdraws will be available indefinitely.

Spot / Margin Trading on Layer 1

  • Spot trading + Margin trading with up to 5x initial leverage (Pairs offered: ETH-DAI, ETH-USDC, and DAI-USDC)

Tokenomics

dYdX is a governance token that allows the dYdX community to govern the dYdX Layer 2 Protocol. By enabling shared control of the protocol, DYDX allows traders, liquidity providers, and partners of dYdX work collectively towards enhancing the Protocol.

dYdX enables a robust ecosystem around governance, rewards, and staking — each designed to drive future growth and decentralization of dYdX.

Wallets holding dYdX get trading fee rewards, as per Figure 2. Wallets staked in Bancor don’t benefit from this advantage.


Figure 2 - Trading fee discounts for dYdX holders.

dYdX offers liquidity provider rewards for staking USDC in their platform (Figure 3). Currently at 0.02dYdX/day/$1k. At 1 dYdX = $20, this represents a 14.6% APY.

image
Figure 3 - Liquidity mining rewards for USDC stakers in dYdX.

Token distribution

Taken from [3]:

50.00% ( 500,000,000 DYDX ) to the community as follows:

25.00% ( 250,000,000 DYDX ) to users who trade on the dYdX Layer 2 Protocol based on a combination of fees paid and open interest ( Trading Rewards )

7.50% ( 75,000,000 DYDX ) to past users who complete certain trading milestones on the dYdX Layer 2 Protocol ( Retroactive Mining Rewards )

7.50% ( 75,000,000 DYDX ) to liquidity providers based on a formula rewarding a combination of uptime, two-sided depth, bid-ask spreads, and the number of markets supported ( Liquidity Provider Rewards )

5.00% ( 50,000,000 DYDX ) to a community treasury ( Treasury )

2.50% ( 25,000,000 DYDX ) to users staking USDC to a liquidity staking pool ( Liquidity Module )

2.50% ( 25,000,000 DYDX ) to users staking DYDX to a safety staking pool ( Safety Module )

27.73% ( 277,295,070 DYDX ) to past investors

15.27% ( 152,704,930 DYDX ) to founders, employees, advisors, and consultants of dYdX Trading or the Foundation

7.00% ( 70,000,000 DYDX ) to future employees and consultants of dYdX Trading or the dYdX Foundation

Community and Communication

dYdX is active on Discord and Reddit. The team maintains a Twitter account. Github shows consistent activity.

Available Audits

dYdX has been recently audited. Audits can be found here.

Market and Trading Data

  • dYdX’s price at the time of writing is $19.56.
  • All-time high: $27.26 (30th Sep, 2021).
  • All-time low: $9.43 (13th Sep, 2021).
  • Price 30 days ago: $12.74
  • 56,810,254 tokens in circulation.
  • The current market capitalization is $1,108,966,505.
  • The dYdX token is only available on Binance, Gate.io, Huobi, Wootrade, Kraken, FTX, SushiSwap, and Uniswap.
  • The 24-hour volume of the Uniswap v3 dYdX/ETH pool is $8.82m. The APY of the pool extrapolated using the 24-hr fees accrued is 43.44%. [5]
  • The 24-hour volume of the SushiSwap ID/ETH pool is $684,927.99. The APY of the pool extrapolated using the 24-hr fees accrued is 17.27%. [6]

[1] Uniswap Info
[2] DYDX-WETH | SushiSwap Analytics
[3] Allocations - dYdX
[4] $14.97 | dYdX (DYDX) Token Tracker | Etherscan
[5] Uniswap Info
[6] $14.93 | DYDX | SushiSwap Analytics

1 Like

Thanks @tfns for bringing up this proposal. We should start this with a higher co-investment given the liquidity in other DEXes and since this is also a token with a relatively large market cap (1B+)

image

The platform is reputable and has over 1B in TVL as well. I think the DAO will vote in favor of whitelisting this token for the above reasons and also because it has a large community that could be introduced to Bancor.

Definitely agree, I’ve updated the proposal to a 1m BNT coinvestment.

1 Like