An overview of Trading Rewards and the Rewards Module.
Overview
Trading Rewards are distributed to users who trade on dYdX Chain based on the Trading Rewards formula. The objective of Trading Rewards is to (1) incentivize all traders to use the dYdX Chain and (2) accelerate market liquidity and overall product usage.
In DIP 2 on the dYdX Chain, the dYdX community voted to credit the dYdX Chain Rewards Vester with 54,077,073 unvested DYDX tokens based on the remaining allocation for Trading Rewards from DIP 29 on dYdX v3.
Rewards Treasury
DYDX vests every second from the Rewards Treasury Vester to the Rewards Treasury. At the end of a given block vested DYDX (Trading Rewards) will be automatically distributed to a trader’s dYdX Chain account to maintain consistency and transparency.
Visual representation of the rewards distribution on dYdX
Trading Rewards Formula
More information on the trading rewards formula can be found here.
This page provides a comprehensive explanation of how the trading rewards formula differs between makers and takers.
FAQ
How does DYDX vest from the Rewards Vester to the Rewards Treasury?
The Vest Module allows the vesting process to happen on the dYdX Chain. The module is responsible for determining the rate of tokens that vest from Vester Accounts to other accounts such as a community_treasury and a rewards_treasury. The rate of token transfers is linear with respect to time. Thus, block timestamps are used to vest tokens.
The dYdX Community through a governance vote has the ability to create, update, or delete vest_entries through a governance vote.
Based on the start_time and end_time, DYDX will vest from the Rewards Vester to the Rewards Treasury at approximately ~0.64 DYDX per second.
How much DYDX will I earn in Trading Rewards?
Immediately following the execution of each trade, the dYdX Chain protocol calculates the projected amount of trading rewards related to such trade. The dydx.trade user interface displays the maximum potential rewards for a given trade size before the trade occurs. It's important to note that users can accumulate trading rewards from 0-100% of the net trading fees of a fill, paid in DYDX, but not exceeding this limit.
Can the dYdX community change the Trader Rewards formula?
Yes, the Trading Rewards formula can be modified by the dYdX community through a dYdX Chain Software Upgrade Proposal. If the dYdX community wishes to change any of the parameters outlined in the Parameters section above, e.g. the fee_multiplier_ppm, it can be done through a dYdX Chain Parameter Change Proposal.
How much Trading Rewards will be distributed?
In DIP 2 on the dYdX Chain, the dYdX community voted to credit the dYdX Chain Rewards Vester with 54,077,073 unvested DYDX tokens based on the remaining allocation for Trading Rewards from DIP 29 on dYdX v3.
The dYdX community could choose to transfer more vested DYDX from the dYdX Chain Community Treasury to the Rewards Vester through a Community Spend Proposal, e.g. to increase trading rewards in the future.
