dYdX V4: A Cushion for Heavy Unlocks
The launch of dYdX V4’s complete source code marks the start of a fully decentralized perpetual trading platform. Their latest V4 iteration was launched as a Cosmos-based appchain, representing a migration from being an Ethereum L2.
However, the upcoming $DYDX unlocks throw a wrench in the celebrations. More than 45% of $DYDX circulating supply worth $360.0M is set to be unlocked, with investors receiving the largest allocation at 25% of circulating supply worth $199.7M.
As there are limited information regarding the funding raised, we calculated investor token price by dividing the total funds raised with the total investor’s allocation. This places the initial token price at $0.3137 per $DYDX, which puts investors up by 665% from their initial investments.
To reduce the impact from the massive flooding of tokens on the market, the dYdX team has lined up multiple catalytic events to facilitate demand for their token. The most meaningful updates were the return of $DYDX staking and profit sharing for $DYDX stakers.
Our revenue sharing projections has indicated that stakers will earn decent yields. Assuming a 10% growth in annual protocol revenue and that all revenue is directed to stakers, a 30% $DYDX staking ratio could see returns of 35.5%.
In earlier versions of dYdX, all protocol revenue is accrued to the team; for V4, revenue will be directed to $DYDX stakers. A staker’s profitability will only increase with decreasing staking ratio and/or increasing protocol revenue. While staking is not as profitable for the team, they are still incentivized to encourage increased trading volume on the platform.
Across this year, the dYdX team has been intentional with their strategies, lining up announcements and events to coincide with the launch of V4. In an industry where the speculation of derivatives is rife, dYdX has proven itself as a strong competitor in the space. The team’s continued effort and dedication to create the best decentralized derivatives exchange should capture more market share with V4 going live.
It remains to be seen if dYdX’s revenue sharing strategy is a sufficiently compelling catalyst to induce net-buy pressure on the token; however, the prospect of $DYDX as a real-yield generating blue-chip asset appears to be a promising outlook at current prices.