To bolster its network security, the multichain liquid staking protocol Stride is urging the dYdX community to stake 20 million DYDX (equivalent to $67 million) from its community pool using Stride 2. This innovative step aims to enhance the economic security of dYdX community members by redistributing stake weight and chains among suitable validators.

The proposal by Stride highlights that the dYdX chain recently acquired 115 million DYDX, valued at $388 million. Meanwhile, the quantity of liquid supply tokens is estimated to exceed 320 million DYDX, with a value of $1.08 billion. Currently, it is estimated that the total value locked (TVL) or deposits on the dYdX chain amount to $140 million, with the market value of 114 million DYDX tokens being $486 million.

This proposal offers visible advantages, such as empowering the dYdX community to safeguard users' interests and enhance their economic stability by supporting dYdX's expansion. It also grants the community flexibility in resolving high-stakes issues associated with weight allocation to the most senior validators. Active validators can thus validate proactively with reduced voting power. Additionally, it diversifies the dYdX community treasury's holdings into USDC.

The majority of transaction and trading fees being denominated in USDC show that dYdX chain participation can simultaneously increase yields for holders. stDYDX is utilized in various DeFi use cases within Cosmos and provides a stable source of collateral assets with a non-inflationary yield. Despite DYDX token stakes remaining unchanged and the number of main chain deposits increasing, it was determined that malicious activities were likely to increase alongside the expanding community treasury.

Rewards for dYdX staking can be earned by paying user fees on the trading protocol, which accumulate as USDC stable coins. An auto-compounding rewards system established in staked DYDX predicts that the community treasury will accumulate over time. Stride's protocol fees have increased to 10% in consideration of liquid token staking incentives. This visible protocol reduces the charge by 2.5% to 7.5% based on stake positions. Stake payouts generate USDC inflows and end up in the community treasury, with 90% of incentives being auto-compounded in DYDX within the community treasury and 2.5% in USDC.

The dYdX chain operates as a proof-of-stake protocol utilizing CometBFT for consensus and maintains an active set of sixty validators. The L1 token of this blockchain, dYdX, is used for staking, facilitating network security, and regulating the dYdX chain.