Although the decision was framed and executed through decentralized governance, the dYdX community’s move to allocate 75% of net protocol fees to DYDX token buybacks marks a substantive recalibration of the protocol’s economic policy, shifting from the prior 25% buyback allocation that had been in place since March 2025. The governance proposal, passed on November 13, 2025 with a 59.38% majority on the forum, directs a clear and immediate flow of fee-derived capital into systematic repurchases on open markets. Those repurchases are automated and transparent, designed to reduce circulating supply, create consistent buy pressure, and reinforce scarcity dynamics that underpin long-term value assumptions for holders. This approach aligns with established tokenomics strategies that aim to create artificial scarcity through buybacks. Under the new allocation structure, 75% of net protocol fees now purchase DYDX, while 5% is earmarked for the Treasury SubDAO to support ecosystem development, another 5% flows to the MegaVault for staking incentives, and the remaining 15% funds broader ecosystem initiatives. The allocation remains subject to ongoing governance review, reflecting the protocol’s modular approach to monetary policy and the community’s prerogative to recalibrate incentives as market conditions and development needs evolve. This redistribution contrasts with the initial March 1, 2025 framework, which allocated 25% to buybacks, 40% to staking rewards, 10% to the Treasury SubDAO, and 25% to MegaVault. From a tokenomics perspective, the threefold increase in buyback ratio introduces a continuous demand component tied directly to platform activity, amplifying the effect of scheduled emission reductions that began in June 2025 and halve emissions. With 85% of tokens already released as of March 2025 and all releases set to conclude by June 2026, the buyback program operates against a backdrop of declining supply additions, potentially intensifying scarcity if trading volumes sustain fee generation. Market participants are likely to interpret the move as a commitment to pro-holder economics, aligning incentive structures with platform performance. Nevertheless, uncertainties persist: fee flow volatility, governance dynamics, and macro market shifts will determine the program’s efficacy. The decision positions dYdX as a notable case study in programmable monetary policy within DeFi, combining transparent execution with community-driven oversight. The vote result also establishes a governance precedent for future protocol monetary decisions. Additionally, the buybacks are set to be staked to enhance network security and validator incentives.
