Ethereum-based DYDX ($ethDYDX) is a governance token that allows the dYdX community to truly govern the dYdX Layer 2 Protocol built on Ethereum ("dYdX v3"). ethDYDX is currently undergoing a migration from Ethereum to the dYdX Chain. More information is available here. If you want to migrate ethDYDX to dYdX Chain DYDX, to enable staking, security and governance of the dYdX Chain you can follow the how-to-bridge guide here.
If you want to read about the new token utility for dYdX Chain DYDX you can read the blog here
ethDYDX (dYdX) is the governance token for the layer 2 protocol built on Ethereum. By enabling shared control of dYdX v3, ethDYDX allows traders, liquidity providers, and partners of dYdX to work collectively towards an enhanced dYdX v3.
Built on StarkWare’s StarkEx scalability engine, layer 2 is used for trading of cross-margined perpetuals on the platform. The scaling solution allows dYdX to increase transaction speed, eliminate gas costs, reduce trading fees and lower minimum trade sizes on the protocol.
A total of 1,000,000,000 ethDYDX have been minted, and started to become accessible over five (5) years, on August 3rd, 2021, at 15:00:00 UTC.
## Migration to the dYdX Chain
On June 22, 2022, dYdX Trading Inc.(“dYdX Trading”) announced the next iteration of the dYdX protocol - the dYdX Chain Open Source Software. The dYdX Chain is a proof-of-stake blockchain network and, as such, it requires a Layer 1 (“L1”) protocol token for staking to validators in order to secure the chain and for stakers of the L1 token to govern the network. Holders of the L1 token can use their L1 tokens to run a validator or stake their tokens to a validator in order to participate in securing and governing the network.
The wethDYDX Smart Contract enables the migration of ethDYDX from Ethereum to the dYdX Chain.
When interacted with, the wethDYDX Smart Contract would carry out the following functions in a fully permissionless and automated manner:
Receive and permanently lock the ethDYDX tokens sent by the user to the wethDYDX Smart Contract;
Send a wrapped version of the Ethereum-based DYDX token (“wethDYDX”) to the user on a 1-1 proportional basis on Ethereum; and
dYdX Chain validators can also read and ingest the information in the wethDYDX Smart Contract such that corresponding DYDX can be distributed to users by validators on the dYdX Chain once there is confirmation that Step 1 above is complete and the ethDYDX is permanently locked in the wethDYDX Smart Contract.
More information about the migration of ethDYDX from Ethereum to dYdX Chain is available here.
## Who Are the Founders of dYdX?
Antonio Juliano — an experienced programmer with a background in blockchain technology is the founder and CEO of dYdX Trading Inc. He first entered the crypto space in 2015 upon getting a job as a software engineer at Coinbase — a cryptocurrency exchange platform. As a Princeton University graduate with a degree in computer science, Antonio Juliano embarked on his entrepreneurial journey and founded dYdX in early 2017 .
## What Makes dYdX Unique?
dYdX Layer 2 increases scalability of the network through use of a form of zero-knowledge rollup — zkSTARKS. The technology receives proofs, while validating a batch of transactions off-chain. These proofs are then sent back to the blockchain, where they are verified by a smart contract. zkSTARKS makes it possible to remove expensive computations from the mainnet with no sacrifices in decentralization.
## What is the allocation of ethDYDX?
A total of 1,000,000,000 ethDYDX have been minted, and started to become accessible over five (5) years, on August 3rd, 2021, at 15:00:00 UTC.
The five-year allocation of the total supply of ethDYDX was initially as follows:
- 27.7% is allocated to Investors
- 14.5% is allocated to User Trading Rewards
- 15.3% is allocated to Employees and Consultants of dYdX Trading or Foundation
- 5.0% is allocated to Retroactive Rewards
- 5.2% is allocated to Liquidity Provider Rewards
- 7.0% is allocated to Future Employees & Consultants of dYdX
- 24.2% is allocated to Community Treasury
- 0.6% is allocated to Liquidity Staking Pool
- 0.5% is allocated to Safety Staking Pool
Since the launch of ethDYDX, several governance proposals have resulted in changes to the initial allocation. The updated allocation as of the start of Epoch 31 (December 19, 2023) is reflected in the pie chart below.
The updated allocation of ethDYDX tokens as of the start of Epoch 31 (December 31, 2023) is as follows:
**- 27.7% (277,295,070 $ethDYDX) to past investors of dYdX Trading Inc.**
**- 15.3% (152,704,930 $ethDYDX) to founders, employees, advisors, and consultants of dYdX Trading Inc. or dYdX Foundation**
**- 7.0% (70,000,000 $ethDYDX) to future employees and consultants of dYdX Trading Inc. or the dYdX Foundation**
**- 14.5% (144,693,506 $ethDYDX) based on the Trading Rewards Formula**
- In DIP 16 and DIP 20, the dYdX community voted to reduce trading rewardsby a total of 2.3M $ethDYDX. (958,904 $ethDYDX from DIP 16 and 1,294,520 $ethDYDX from DIP 20). The 2.3M $ethDYDX will accrue in the Rewards Treasury and can be used by the dYdX community with a governance vote.
- In DIP 29, the dYdX community voted to reduce trading rewards by ⅓ from Epoch 30-32 on dYdX v3 to the following values:
* Epoch 30: 1,054,795 $ethDYDX
* Epoch 31: 527,398 $ethDYDX
* Epoch 32: 0 $ethDYDX
**- 5.0% (50,309,197 $ethDYDX) is allocated to Retroactive Mining Rewards**
- After Epoch 0, 24,690,803 unclaimed $ethDYDX from the Retroactive Mining rewards program were transferred to the Community Treasury.
**- 3.2% (31,643,838 $ethDYDX) based on the Liquidity Provider Rewards Formula(s)**
- In DIP 24, the dYdX community voted to reduce Liquidity Provider Rewards by 50% from 1,150,685 $ethDYDX per epoch to 575,343 $ethDYDX per epoch. The excess 575,342 $ethDYDX per epoch will accrue in the Rewards Treasury and can be used by the dYdX community with a governance vote.
- In DIP 29, the dYdX community voted to reduce Liquidity Provider rewards by ⅓ from Epoch 30-32 on dYdX v3 to the following values:
* Epoch 30: 383,562 $ethDYDX
* Epoch 31: 191,781 $ethDYDX
* Epoch 32: 0 $ethDYDX
**- 26.1% (261,133,225 $ethDYDX) to the Community Treasury**
**- 0.6% (5,779,608 $ethDYDX) to users staking $USDC to a Liquidity Staking Pool**
- In DIP 14, the dYdX community voted to set the rewards associated with staking $USDC to 0. The 383,562 $ethDYDX previously distributed to $USDC stakers will accrue in the Rewards Treasury and can be used by the dYdX community with a governance vote.
**-0.5% (5,289,934 $ethDYDX) to users staking $ethDYDX to a Safety Staking Pool**
- In DIP 17, the dYdX community voted to set the rewards associated with staking $ethDYDX to 0. The 383,562 $ethDYDX previously distirbuted to $ethDYDX stakers will accrue in the Rewards Treasury and can be used by the dYdX community with a governance vote.
**Note:**
The token allocations for Investors, Employees and Consultants of dYdX Trading or Foundation are subject to transfer restrictions,
ethDYDX accruing in the Community and Rewards Treasury can be used by the dYdX community with a governance vote.
Out of the allocations stipulated above apprximately ~34% of total ethDYDX supply is currently in circulation.
## How Is the dYdX Network Secured?
DYDX is an ERC-20 token deployed on the Ethereum mainnet. dYdX’s layer 2 scaling solution is built on StarkWare’s ZK-STARKS technology and relies on Ethereum blockchain to verify transaction proofs.
**When Will DYDX Trading Begin?**
DYDX token first became available for purchase in September 2021.
## Where Can You Buy DYDX?
DYDX is currently available for purchase on the following exchanges: Binance, Huobi Global, KuCoin, Gate.io, Kraken, Poloniex, Uniswap (V3), OKEx, LBank, Sushiswap, Crypto.com Exchange, 0x Protocol, XT.COM, BitZ, WhiteBIT, 1inch Exchange, WOO Network, CoinDCX, Deepcoin, Cryptology, BKEX, DigiFinex, Pionex, BW.com, BitMart, AEX, ZBG, MEXC, BiONE, Bibox, Hoo, Hotbit, Decoin, Bitrue, HitBTC, Tokocrypto, Mandala Exchange, CoinW, BigONE, ZT, AOFEX, WBF Exchange, CoinBene and Bitget.
Cryptocurrency newbie? You can read more about how to enter the market and how to buy BTC, DYDX or any other token in CoinMarketCap education portal — Alexandria.
DYdX Chain adopts the Cosmos SDK and CometBFT consensus mechanism, becoming a proof-of-stake blockchain network. Through community governance, DYDX has become its first-layer (Layer 1) token. This facilitates the use of DYDX tokens for validator staking, ensuring the security of the chain and enabling holder governance. The utility of DYDX includes staking, enhancing security, and governance. Holders can either validate or delegate validation to others, thus reinforcing consensus. Increasing the amount of DYDX staked can improve the network's security against coordinated attacks. Additionally, DYDX holders have governance rights, allowing them to democratically propose and vote on network changes, including parameter adjustments, fund management, and node software updates.
How to Buy ETHDYDX
1. How to Buy ETHDYDX on Exchanges
Step 1: Choose a reputable exchange platform
Select a trustworthy platform from numerous exchanges to make your purchase. Some trusted platforms include Coinbase, Binance, OKX, among others.
Step 2: Register an account
Create an account on the chosen exchange platform. You may need to provide personal information (such as phone number, email) to complete the registration process.
Step 3: Complete identity verification
For security reasons, some platforms may require you to undergo identity verification. Follow the platform's instructions, providing necessary identity information (such as country/ID number) and undergo facial recognition if prompted. Once your identity is confirmed, you'll receive notification.
Step 4: Link your bank or payment method
Link your bank account or other payment methods to the exchange platform for making payments when purchasing ETHDYDX.
Step 5: Purchase ETHDYDX
Find the option to buy coins on the exchange platform, select the C2C buying process, then input the amount of cryptocurrency you wish to purchase. Typically, you'll choose to buy USDT first and then proceed with the purchase method. Simply place your order, make payment to the seller, and you'll receive the cryptocurrency. Once the payment is completed, you can use your exchange assets to buy ETHDYDX.
Step 6: Store your ETHDYDX
After purchase, you can choose to store ETHDYDX in the digital wallet provided by the exchange platform or transfer it to a hardware wallet under your control.
Step 7: Security Tips
To protect your exchange account and ETHDYDX assets, it's essential to use strong passwords and enable two-factor authentication.
How to Buy ETHDYDX via Over-the-Counter (OTC) Trading
Over-the-counter (OTC) ETHDYDX trading occurs directly between buyers and sellers, bypassing exchanges or other intermediaries. Here are the general steps for OTC ETHDYDX trading:
Step 1: Find an OTC trading channel
Start by finding a reliable OTC trading platform or service provider. These platforms typically offer online marketplaces or ways to connect with brokers for trading.
Step 2: Register an account
Sign up for an account on the chosen OTC trading platform. You may need to provide some personal information (phone/email) to complete the registration process.
Step 3: Complete identity verification
For security purposes, some platforms may require you to undergo identity verification. Follow the platform's instructions to provide necessary identity information (nationality/ID) and undergo facial recognition or other verification steps.
Step 4: Browse the trading list
After logging into your account, browse through the platform's trading list to find ETHDYDX trades that interest you. You can choose trades based on the trader's reputation rating, trade volume, price, and payment methods.
Step 5: Select a trading partner
Once you find a suitable trade, click to enter the trading page and carefully review the trader's terms and conditions. Ensure you understand and agree to the trader's requirements, such as trade amount, payment method, trade time, etc.
Step 6: Negotiate trade details
After reaching an agreement with the trader, you can negotiate trade details such as trade amount, payment method, trade time, and location.
Step 7: Make payment
According to the agreement reached with the trader, use the chosen payment method to pay the ETHDYDX purchase amount to the seller.
Step 8: Confirm receipt
Once the trader confirms receiving your payment, they will release ETHDYDX to the ETHDYDX address you provided. You can check your ETHDYDX wallet balance after the trade to confirm its success.
3. How to Buy ETHDYDX through Decentralized Exchanges (DEX)
Buying ETHDYDX on decentralized exchanges (DEX) differs from purchasing other cryptocurrencies on centralized exchanges. Here are the general steps for buying ETHDYDX on DEX:
Step 1: Choose a ETHDYDX-supporting wallet
Create a new wallet supporting ETHDYDX assets, then select a decentralized exchange that supports ETHDYDX.
Step 2: Connect your wallet
Before using the DEX, you need to connect a wallet supporting the ETHDYDX blockchain. You can connect your wallet to the selected DEX via browser extension or mobile application.
Step 3: Deposit funds
In your wallet, select deposit and choose the asset you want to deposit (such as stablecoins). Follow the wallet prompts to complete the deposit process.
Step 4: Find the trading pair
Search or browse for the ETHDYDX trading pair on the DEX. Typically, you can find a search box or a list of trading pairs on the exchange's homepage or trading interface.
Step 5: Place an order
Once you find the ETHDYDX trading pair, you can choose between market or limit orders and input the quantity you want to purchase. Ensure you input the correct price and quantity in the order, then confirm the order.
Step 6: Wait for the trade to execute
Your order will be submitted to the ETHDYDX blockchain and wait for confirmation and execution by miners. Once the order is executed, you will receive the purchased ETHDYDX, which you can view in your wallet balance.
Step 7: Withdraw funds
After completing the trade, you can choose to withdraw the purchased ETHDYDX to your wallet for safer storage of your digital assets.
4. Official Channels for ETHDYDX Project Team or Community
Sometimes, the ETHDYDX project team or community may launch official channels for direct ETHDYDX purchases. This may include private placements, presales, or other forms of direct sales.