dydx Community Set To Vote On 45% Reduction In Trading Rewards

• The dydx community will begin voting on a proposal by Wintermute later today.
• The governance proposal seeks to reduce trading rewards for $DYDX trading by 45%.
• Wintermute’s proposal is part of a 6-point plan ahead of dydx’s V4 launch.

The dydx community is set to begin voting on a major proposal posted on the layer 2 protocol’s governance forum. The proposal was introduced by Callen Van Den Elst, the DeFi Envoy for crypto market maker Wintermute. Voting will start on February 14, at 22:34 UTC.

Wintermute has proposed to reduce the trading rewards by 45% from 2.9 million DYDX to 1.6 million DYDX per epoch. As of now, the trading rewards are 44% of all emissions per epoch. According to the proposal, cutting down on excessive trading rewards will help tackle the protocol’s yearly token inflation amidst a market-wide downturn.

The excess DYDX tokens would be retained in the community treasury. The retained tokens would serve as capital available to the decentralized autonomous organization (DAO) to spend on necessities including subDAOs and grants, and to fund initiatives related to the protocol’s upcoming V4 launch.

According to the dydx Foundation, if approved, this proposal will provide 3 million DYDX cumulatively to the DAO. The fate of this proposal will be determined on February 19, when the voting concludes. Following approval, the reduction in trading rewards will proceed to an on-chain vote.

This rewards reduction vote is part of a 6-point proposal introduced by Wintermute last week. This includes several sub-proposals like adjusting the Maker & Taker fees, introducing a market maker rebate program, and implementing a yearly reduction in DYDX emissions, among several others. Each of these proposals will have a separate snapshot vote to determine its viability. So far, the community discussion regarding Wintermute’s proposal has been arguably positive.