dYdX Launches Buyback Program to Strengthen $DYDX Token and Align Community Incentives
A major development in the DeFi ecosystem is that dYdX has officially launched the dYdX Buyback Program.
This strategic initiative will see 25% of the protocol’s net fees used for monthly buybacks of the $DYDX tokens. What this means is that the protocol is using a portion of its profits to acquire the tokens on the open market. This is meant to “support the token’s value” and reminds us all that if the dYdX protocol is raking in profits, it is good for holders of the $DYDX token.
This share repurchase effort is the latest development in the governance and tokenomics of dYdX. It is an added toggle in the project widely recognized as taking the lead in the buyback strategy. And it is also a move being watched closely by those in the DeFi space eager to see how a buyback program might impact the HDX token price.
Strengthening the dYdX Ecosystem: Buybacks, Sustainability, and Community Rewards
In the past year, dYdX has followed a model that emphasizes the community redistribution of protocol revenue. Following its commitment to a decentralized ethos, 100% of the protocol’s net revenue has been directed back to ecosystem participants through staking rewards and other incentives. The introduction of the Buyback Program builds upon this foundational approach, adding a more structured mechanism for pushing the token’s value in the open market.
Under the newly launched program, dYdX’s net protocol revenue allocation is as follows.
– 10% going to the Treasury, SubDAO of Votem, which supports initiatives to ensure the financial sustainability of the protocol.
– 10% allocated to the Treasury SubDAO, aimed at supporting financial sustainability initiatives to ensure long-term growth and stability of the protocol.
– 25% going to the MegaVault, a critical part of the ecosystem’s funding, aimed at further expanding the protocol’s capacity and influence in the wider DeFi market.
– 25% earmarked for the Buyback Program, assuring that some of the funds generated will serve to bolster the $DYDX token as it is systematically acquired on the open market.
– 40% set aside for staking rewards, which means that the project continues to reward those who help it secure the network.
This distribution structure ensures that the users of dYdX, its token holders, and its investors have interests closely aligned with the protocol’s successful functioning—making the entire ecosystem a lot more sustainable and much more resilient.
The newly launched Buyback Program intends to create fresh demand for the $DYDX token by actively slashing its circulating supply. The initiative seeks to create upward price movement by purchasing tokens on the open market, which is token holder-friendly and also makes staking seem much more attractive to potential participants.
dYdX joins the buyback wave, dedicating 25% of net protocol revenue to monthly $DYDX purchases. This follows AAVE’s $1M/week program and Hyperliquid’s $1.5–2.5M daily repurchases.
While $DYDX saw a +10% price bump, sustainability remains an important question
— IntoTheBlock (@intotheblock) March 30, 2025
The Buyback Program performs a clear service for any and all $DYDX token holders. It is additionally beneficial for any and all Buyback Program participants who stake. The Program is a strong Buy that presently seems to be adding value to $DYDX.
Positive Price Movement and Sustainability Concerns
After the Buyback Program was announced and set into action, $DYDX’s price shot up 10%. This price increase indicates positive movement in the market around the protocol’s newest change. It shows that market participants are generally responding well to the Buyback Program and are viewing it as a potentially effective way to drive long-term value to the token. Yet, while this price movement is good, it’s also a price movement that raises some doubts.
Developing financial sustainability at dYdX has always been a top priority. To that end, a part of its revenue now goes to a Treasury SubDAO, which has been established to build a resilience reserve. This reserve is meant to be used to support dYdX and its ecosystem during market downturns and other unforeseen challenges. To be sure, dYdX has a long way to go in this regard, but the establishment of the Treasury SubDAO and the resilience reserve is a step in the right direction.
In addition, the ongoing assignment of 40% of protocol revenue to staking rewards is also a vitally important part of the long-term health of the ecosystem. It rewards token holders for locking up their $DYDX, which not only secures the network but also helps contract the circulating supply.
Yet, even with these promising developments, long-term sustainability is questionable. The cryptocurrency and DeFi spaces are incredibly volatile, and while the buyback program and staking rewards are providing immediate benefits, the protocol needs to prove—in a space known for its ups and downs—that it can generate sufficient revenue over an extended period to support and maintain these exactly-the-kind-of-initiatives-that-make-buying-a-repay-token worthwhile. More than anything, the dYdX platform needs to keep growing.
Looking Ahead: A Balanced Approach to Growth
dYdX has made it clear; they are committed to their token, the $DYDX, and the growth of its ecosystem. To that end, they have started to buy back their token, and in a recent Medium post, they outline what is going on, why it matters, and how it fits into a larger narrative that they are serving up as a revenue distribution model. Here is what they said in their own words, and a few comments following that.
The initiative’s design aims to strike a balance between short-term and long-term price support. It operates under the assumption that most of the time, when a token’s price is going up for a sustained length of time, that phenomenon is actually a bad thing for the dYdX community as a whole and a bad thing for $DYDX holders, because it means that there’s something out of whack with the math that governs how tokens should be priced.
Currently, everyone’s attention will be focused on the progress of the Buyback Program and the ongoing advancements in the dYdX ecosystem. Should the program find success, it could rewrite the playbook for DeFi protocols, showing how, even in unsustainable market conditions, buybacks can be baked into the tokenomics of a project to create long-term value and generate short-term market interest.
Disclosure: This is not trading or investment advice. Always do your research before buying any Metaverse crypto coins.
