The dYdX Foundation has confirmed a major change to the protocol’s revenue distribution. The community has officially voted to approve the proposal to allocate 75% of protocol revenue to DYDX buybacks.
The shift takes effect immediately, marking one of the largest redistributions since the chain’s launch.
The update moves the protocol from a 25% buyback model to a 75% model. In practice, this means three out of every four dollars earned through trading fees will now be used to purchase DYDX on the open market.
The change is designed to increase direct buying pressure, tighten token supply over time, and reinforce long-term value for holders.
The announcement was shared publicly by the dYdX Foundation and the protocol’s governance accounts. The team framed the upgrade as a data-driven correction to improve capital efficiency across the ecosystem.
A link to the official announcement:
The new revenue structure is simple.
The protocol earns fees from trading on dYdX Chain.
Now, 75% of those fees go straight to the open market to buy back DYDX.
Buybacks are one of the clearest ways to support a token’s value. They increase constant buy-side liquidity. They place steady pressure on supply. And they reward long-term holders with a stronger price floor.
At current revenue levels, this allocation gives the protocol the ability to repurchase up to ~5% of the total DYDX supply per year. That estimate makes buybacks one of the most material demand drivers in the token’s history.
For context, DYDX trades with a circulating supply in the hundreds of millions and remains one of the more liquid governance tokens in the market. The buyback program introduces continuous demand that scales directly with protocol performance.
One of the most notable changes in the proposal is the reduction of the MegaVault allocation from 25% to just 5%.
The MegaVault was designed to incentivize liquidity in the dYdX ecosystem. But participation has been weak. Total Value Locked in the MegaVault has dropped 72% since September, making it significantly less effective as a capital sink or liquidity tool.
The new allocation acknowledges the decline and shifts funding toward more efficient strategies. With buybacks showing stronger long-term value capture, the community opted to move resources away from the underperforming pool.
This marks a significant realignment of capital toward utility rather than incentive-heavy liquidity programs.
Staker rewards have also been reduced. Under the new structure, stakers receive 15% of protocol revenue, down from the previous share.
Interestingly, the reduction comes at a time when staking participation is rising. The protocol highlighted that even after prior reward cuts, the number of users locking up DYDX has increased. This suggests stakers are not highly sensitive to APR changes, a signal that governance alignment and long-term positioning remain the main motivators.
A lower allocation to stakers also helps redirect more revenue into buybacks without destabilizing participation. For the protocol, this balance is a win: governance stays strong while token value strategies receive more funding.
The Treasury SubDAO will now receive 5% of protocol revenue. The goal is to enforce spending discipline while keeping enough resources for ecosystem growth and future development.
The Treasury SubDAO plays a major role in funding builders, grants, campaigns, and ecosystem expansion. But the community determined that 5% is sufficient to maintain momentum while avoiding unnecessary spending.
The cut pushes the treasury toward a leaner operating model at a time when many protocols are moving toward sustainability-first budgets.
The new revenue structure is not permanent, at least not yet. The community approved a three-month trial period to track the impact of the changes.
Over the next quarter, governance contributors and the dYdX Foundation will monitor:
If the new model proves effective, the community may extend or lock in the allocation permanently. If any segment underperforms, governance may adjust the distribution again.
This trial-based approach reflects dYdX’s broader governance philosophy: test, measure, adapt, and improve.
This proposal represents a shift toward fundamentals-first tokenomics. Buybacks directly benefit holders. They are transparent. They scale with activity. And they avoid the dilution or emissions-based mechanics that many protocols still rely on.
By concentrating 75% of revenue into buybacks, the protocol aligns incentives around:
The reduced allocations to MegaVault, stakers, and the treasury reflect a tightening of the entire system. Funds move where they generate the most measurable impact.
The decision to triple the buyback allocation marks a major step in the evolution of the dYdX ecosystem. It reflects a community that is more data-driven, more disciplined, and more focused on direct value capture.
With 75% of revenue now flowing back to help support DYDX on the open market, the protocol enters a new era where performance and token value are tightly linked.
The next three months will reveal how effective the shift is. But for now, the message is clear: the dYdX community wants a stronger, more sustainable token economy, and this proposal delivers a decisive step toward that goal.
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.
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