based on materials from the site - By dYdX
Since the launch of the dYdX chain in October 2023, the DYDX token has undergone a profound transformation—transitioning from an asset intended solely for governance to a primary coordination mechanism for securing infrastructure, funding the protocol, and decentralized decision-making.
Today, DYDX is not just a symbol of participation in governance. It is an active component of the protocol's scalable operations.
From governance token to level 1 utility
DYDX was initially launched on the Ethereum platform under the name ethDYDX, governing a version of the level 2 protocol (dYdX v3). In 2023, after a governance vote conducted by the entire community, DYDX was adopted as the native token of the new dYdX chain—a standalone level 1 network built using the Cosmos SDK and secured by a Proof-of-Stake consensus. This migration opened new use cases—DYDX transformed from a voting token to an operational asset whose responsibilities are directly linked to the functioning of the protocol.
Securing the network through staking
At the core of the dYdX chain is a group of validators—operators responsible for block creation, maintaining an in-memory order book, and processing transactions. DYDX token holders can stake (delegate) their tokens to validators, playing an active role in securing the network.
Unlike traditional inflationary models, staking rewards in the dYdX chain are entirely dependent on protocol activity. Trading and gas fees are distributed among validators and delegators in USDC, creating a value creation cycle based on usage rather than issuance.
As of mid-2025:
Over 300 million DYDX are staked
More than 17,700 addresses are actively participating in staking
Cumulative USDC protocol rewards have exceeded $52 million
This architecture encourages long-term participation while avoiding the dilution risks characteristic of inflation-based staking reward systems.
Decentralized governance
DYDX also continues to fulfill its original function: decentralized governance. Token holders can propose protocol changes and vote on them, delegate their voting rights, and participate in decision-making, from exchange listings to network parameters.
Each vote is conducted on the blockchain. There are no intermediaries or off-chain controllers—only code governed by community consensus.
This model has already brought significant changes at the protocol level, including the adoption of the dYdX buyback program, the launch of Surge reward seasons, and much more.
Capital distribution through SubDAO
Another aspect of DYDX utility is capital distribution.
Token holders can vote on funding and empowering SubDAOs—community-mandated operational groups that implement strategic initiatives on behalf of the DAO. This includes:
SubDAO Treasury: buybacks, staking programs, and financial sustainability
SubDAO Grants: funding for the ecosystem, tools, and developer support
SubDAO Operations: analytics, dashboards, infrastructure operations
Such a structure ensures alignment of capital flows with governance outcomes and ecosystem priorities.
Token coordinating the entire ecosystem
A distinctive feature of DYDX today is the extent to which its utility is integrated into the economic and technical structure of the protocol. DYDX secures the chain, manages its development, and mobilizes capital to fund its future.
As the dYdX ecosystem continues to evolve—with the emergence of spot trading, EVM compatibility, and broader institutional participation on the horizon—the role of the DYDX token will further increase. DYDX is not a governance token with added utility functions. It is the infrastructure itself.
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