Altcoin
Can the hype around dYdX’s V4 prevent sell pressure on the token
Posted:
| Last updated: June 11th, 2024
Journalist
- dYdX launches V4, a fully decentralized perpetual trading platform on Cosmos.
- Despite an impending token unlock, dYdX’s token maintains a relatively high price.
Due to the recent bullish sentiment in the crypto sector, several protocols, including dYdX [DYDX], have garnered significant interest.
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Uncertainty lies ahead despite new developments
The launch of dYdX V4’s complete source code was a pivotal moment, marking the transition to a fully decentralized perpetual trading platform. Unlike its previous iterations, V4 operates as a Cosmos-based appchain, signaling a migration from its former Ethereum L2 foundation.
dYdX V4: A Cushion for Heavy Unlocks
The launch of dYdX V4’s complete source code marks the start of a fully decentralized perpetual trading platform. Their latest V4 iteration was launched as a Cosmos-based appchain, representing a migration from being an Ethereum L2.
However,… pic.twitter.com/6Dc89YdgnV— Thanefield Research (@ThanefieldRes) October 26, 2023
Despite the positive developments, there was a potential hurdle on the horizon, which was the upcoming tokenunlock.
Over 45% of the circulating DYDX supply, valued at $360.0 million, is set to become accessible, with investors receiving the largest allocation, accounting for 25% of the circulating supply, worth $199.7 million.
Source: Thanefield Capital
To mitigate the impact of a substantial influx of tokens into the market, the dYdX team orchestrated a series of events to boost token demand. Key among these is the reintroduction of DYDX staking and profit sharing for DYDX stakers.
Source: Thanefield Capital
Taking a look at revenue sharing
Projections for revenue sharing indicate that stakers can anticipate substantial yields. Under the assumption of a 10% annual protocol revenue growth and the allocation of all revenue to stakers, a 30% DYDX staking ratio could yield returns of 35.5%.
In previous iterations, all protocol revenue went to the team. However, with V4, revenue will be directed to DYDX stakers. Staker profitability is poised to increase with a decreasing staking ratio and/or rising protocol revenue.
The team, while potentially less profitable through staking, remains incentivized to drive higher trading volumes on the platform.
Throughout the year, the dYdX team strategically aligned announcements and events with the V4 launch. In an industry marked by rampant derivatives speculation, dYdX positioned itself as a formidable contender.
Realistic or not, here’s DYDX’s market cap in BTC terms
Profits on the rise
Even in the face of the impending token unlock, the price of token has remained relatively high, trading at $2.282 at the time of this report.
However, the MVRV ratio has seen substantial growth, suggesting a heightened potential for profit-taking and potential selling pressure in the future.
Source: Santiment
