The dYdX community approved on April 6 a proposal to stake 20 million DYDX tokens on liquid staking protocol Stride, valued at over $60 million at the time of writing. Riley Edmunds, Stride’s co-founder, explained on an X post that the USD Coin (USDC) rewards from staking will be auto-compounded into DYDX, and the tokens will be distributed over a validator set to bolster network security.
2/7 Every time you liquid stake DYDX, the Stride chain:
• Issues stDYDX to your wallet instantly ⚡
• Stakes your tokens with qualified validators 🛡️
• Auto-compounds USDC rewards into more staked DYDX ➰
All of this is done in 1 click 💥
— Riley | Stride (@interchainriley) April 7, 2024
Stride’s system issues a DYDX liquid staking token, the stDYDX, to the user’s wallet, stakes the original tokens with reputable validators, and auto-compounds USDC rewards into more staked DYDX. This auto-compound means that Stride will add DYDX to its treasury.
Moreover, this entire operation is automated and occurs every six hours, and doesn’t demand interactions from users.
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Stride’s Interchain Accounts (ICA) play a crucial role by claiming staking rewards on the dYdX chain and converting USDC into DYDX through a series of transactions, which will involve asset issuance blockchain Noble and decentralized exchange Osmosis.
The staking mechanism also promotes decentralization by delegating stakes evenly across a set of validators, excluding the top 33% of vote power to improve stake distribution. To users, the process of staking and unstaking remains the same.
