Trading Rewards are designed to incentivize traders to trade on dYdX and are mainly awarded based on fees paid. The primary goals of trading rewards are to encourage activity on the protocol while maintaining fairness and sustainability.
DYDX tokens are vested to the Rewards Treasury (T) and are available to be distributed to traders.
The number of DYDX trading rewards distributed to traders will vary based on activity. Let A represent the amount of rewards that are distributed from this T to traders in a given block.
Trading Rewards are automatically distributed every block to maintain consistency and transparency.
How are Trading Rewards calculated?
The calculation of Trading Rewards on dYdX is governed by a set of parameters each of which can be changed by dYdX governance.
total trading rewards =
trading reward from taker fee + trading reward from maker fee
Components of the Trading Rewards formula:
Taker and Maker Volume
Protocol Revenue Sharing
C Constant
Trading Rewards for Takers
For a taker, rewards in a given block are:
trading reward from taker fee =
taker volume X (taker fee rate - max maker rebate - max possible affiliate taker fee share) X C X (1 - protocol revenue share rate)
where max possible affiliate taker fee share will be:
If the taker 30d rolling volume is <= $50M, 50% X taker fee rate regardless of whether the taker is referred or who they are referred by.
If the taker 30d rolling volume is > $50M, 0 since the taker doesn’t generate affiliate revenue share.
Taker Fee Revenue Share is MegaVault revenue share + Treasury subDAO revenue share + Market Mapper revenue share. You can read more about the revenue share in the governance proposals on Megavault, Treasury subDAO and Market Mapper.
Trading Rewards for Makers
Similarly, maker rewards for a user are calculated as:
trading reward from maker fee =
maker volume (positive maker fees) X C X (1 - protocol revenue share rate)
Example
Below is an example using the given formula to calculate the trading reward based on specific inputs for taker volume, fee rates, and other parameters.
In this example, we assume the following values for a trader:
Taker Volume: totaling $1M in trailing volume in 30 days.
Taker Fee Rate: taker fee rate of 0.04% assuming they have been referred by a VIP Affiliate, starting at fee tier 3.
Max Maker Rebate: maximum rebate available for makers is 0.011%.
Max Possible Affiliate Taker Fee Share: as the trader is referred by a VIP affiliate, entitling the VIP affiliate to 50% of the trader’s taker fee rate.
Taker Fee Revenue Share: the taker fee revenue share is 60% or 0.6 including 50% to MegaVault and 10% to Treasury subDAO, as well as 0% to market mapper for a given market.
C: A constant multiplier that is currently set to 0.5 by the dYdX governance, but subject to change through dYdX governance.
Trading Reward from Taker Fee =
1,000,000 × (0.0004 − 0.00011 − 0.0002) × 0.5 × (1−0.6)
Trading Reward from Taker Fee = 1,000,000 × 0.00009 × 0.5 × 0.4 = 18
For this example, the Trading Reward would be equivalent to $18 in DYDX for an approximate Taker Fee of $400 paid by the user.
Disclaimer and Terms
This document may provide information with respect to the dYdX Chain software, and/or non-mandatory guidelines and suggestions that may help with using dYdX Chain software. dYdX Operations Services Ltd. does not run dYdX Chain validators nor operate or control the dYdX Chain network. dYdX Operations Services Ltd. is not responsible for any actions taken by other third parties who use dYdX Chain software. dYdX Operations Services Ltd. services and products are not available to persons or entities who reside in, are located in, are incorporated in, or have registered offices in the United States or Canada, or Restricted Persons (as defined in the Terms of Use). The content provided herein does not constitute, and should not be considered, or relied upon as, financial advice, legal advice, tax advice, investment advice or advice of any other nature, and you agree that you are responsible to conduct independent research, perform due diligence and engage a professional advisor prior to taking any financial, tax, legal or investment action related to the foregoing content. Stride and Keplr are independent from and unaffiliated with dYdX Operations Services Ltd., and dYdX Operations Services Ltd. is not responsible for any action taken by Stride, Keplr or any other third parties, including content set forth on any third-party websites, such as any links to such content in this document. The information contained herein, and any use of products or services provided by dYdX Operations Services Ltd., are subject to the Terms of Use.