🔁Distribution

An overview of the Distribution Module.

Overview

The distribution module enables a simple collection and distribution mechanism to passively distribute rewards between validators and delegators.

Summary

• Staking Rewards

• How rewards are distributed on dYdX Chain

• How staking rewards are calculated

Key Concepts and Definitions

• Community Pool: a pool of tokens funded by a portion of staking rewards (community_tax) that the dYdX community could use to fund contributor grants, community initiatives, liquidity mining, and other initiatives.

• Distribution ModuleAccount Account: an account that collects and distributes trading and transaction fees among validators, delegators, and the community pool.

• Staking Rewards: the total portion of the Fee Pool that a DYDX staker can claim at a given block.

• Fee Pool: fee pool from maker trading fees (USDC), taker trading fees (USDC), DYDX-denominated gas fees from transactions, and USDC-denominated gas fees from transactions for a given block.

• Staking Rewards Withdrawal: a DYDX staker may claim their portion of the Fee Pool for each block. If a DYDX staker does not claim staking rewards, their respective rewards will accrue in the Distribution ModuleAccount Account.

• Total Bonded Power: the sum of all tokens that are currently staked by validators to themselves and tokens staked to validators by DYDX holders.

• Block Rewards: fees distributed to validators and delegators for successfully proposing and validating a new block on the blockchain.

x/distribution | Explore the SDK

Parameters

The dYdX Community may adjust these parameters with an on-chain governance proposal.

Title	Value	Description
community_tax	0	A tax that directs a percentage of the fee pool to the community pool.
base_proposer_reward	0	Part of the block reward reserved for the validator that proposes a given block.
bonus_proposer_reward	0	Bonus incentive for block proposers based on the number of transactions included in a given block.
withdraw_addr_enabled	True	Whether a delegator can set a different withdrawal address (other than their delegator address) for their rewards.

Staking Rewards

On the dYdX Chain, all transaction fees (trading fees denominated in USDC, DYDX-denominated gas fees from transactions, and USDC-denominated gas fees from transactions) collected by the protocol will be distributed to validators and DYDX holders that stake to dYdX Chain validators.

The Cosmos x/distribution module is a simple mechanism to allocate rewards earned by Validators and Stakers. For a detailed understanding of the Cosmos rewards mechanism, read here.

How rewards are distributed on dYdX Chain

DYDX holders who stake to (a) validator(s) are entitled to a portion of the following fees:

• DYDX-denominated gas fees from transactions,

• USDC-denominated gas fees from transactions,

• USDC maker trading fees, and

• USDC taker trading fees.

Fees will accrue in the Distribution ModuleAccount Account each block. Each block a DYDX staker may claim their portion of Staking Rewards. If a DYDX staker does not claim Staking Rewards, their respective rewards will accrue in the Distribution ModuleAccount Account.

Note, Staking Rewards are not automatically staked to a dYdX Chain validator. Any DYDX earned by a staker as Staking Rewards will need to be claimed from the Distribution ModuleAccount Account and staked to a dYdX Chain validator to contribute to the security of the network and qualify to earn staking rewards.

How staking rewards are calculated

• Fee Pool = fee pool from maker trading fees (USDC), taker trading fees (USDC), DYDX-denominated gas fees from transactions, and USDC-denominated gas fees from transactions for a given block.

• Number of DYDX staked by DYDX holder = total DYDX tokens that a dYdX Chain address has staked to (a) validator(s) at a given block.

• Total bonded power = the sum of all DYDX that are currently staked by validators to themselves and DYDX staked to validators by DYDX holders.

• Staking Rewards = the total portion of the Fee Pool that a DYDX staker can claim at a given block.

• Community tax = A tax that directs a percentage of the fee pool to the community pool.

• Validator commission rate = commission set by each validator and applied to the staking rewards of each delegator. Validators are required to follow the min_commission_rate parameter but are otherwise free to set their own commission rates.