dYdX (DYDX) token buyback program announced, boosting price by over 10%

Decentralized finance (DeFi) trading platform dYdX announced its first-ever token buyback program on March 24, aiming to reinvest in its ecosystem

Decentralized finance (DeFi) trading platform dYdX has announced its first-ever token buyback program, beginning in April, as part of a broader initiative to reinvest in its ecosystem and enhance security and governance.

The platform will dedicate 25% of its protocol’s net fees to monthly buybacks of its native dYdY (DYDX) token on the open market, according to an announcement on Friday.

Following the announcement, DYDX surged over 10% and was trading at approximately $0.731 at the time of writing, according to CoinGecko. The token has gained more than 21% over the past two weeks.

New dYdX distribution model

Previously, dYdX distributed 100% of its platform revenue to ecosystem participants.

The new allocation model will see 25% used for token buybacks, another 25% funding its USDC liquidity provision program, MegaVault, 10% going to its treasury, and the remaining 40% continuing as staking rewards.

dYdX noted that the current allocation of 25% to token buybacks could increase, with ongoing community discussions potentially pushing this percentage to as high as 100% over time.

The platform currently holds a total value locked (TVL) of $279 million, according to DefiLlama. It generated $1.29 million in revenue from fees in February and $1.09 million so far in March.

‘DeFi festival’ waits for summer to end

The DeFi industry commonly references the DeFi summer of 2020 as a benchmark, characterized by rapid user growth driven by yield farming and decentralized applications.

In a recent interview with Cointelegraph, dYdX Foundation CEO Charles d’Haussy predicted that the next significant DeFi boom would occur shortly after summer, potentially beginning as early as September and lasting “months and months.”

dYdX existed in mid-2020 primarily as a DeFi platform for spot trading, lending, borrowing, and margin trading. Its popularity popped in 2021 following the launch of its layer-2 perpetual futures exchange and the introduction of its native DYDX token.

In its 2024 ecosystem report, dYdX projected that the decentralized derivatives market would expand to $3.48 trillion by 2025, up from $1.5 trillion in derivatives volume processed by decentralized exchanges (DEXs) in 2024.