Recently, dYdX made an announcement that it would be delaying its token unlock until 3 December. The token unlock was designed to benefit early investors and founders, but its delay has brought other issues of the protocol to the forefront.
One of the issues was dydx’s declining revenue.
Despite a growing volume, dYdX is accruing less revenue for token holders than GMX, according to data from Messari.
If the disparity between the revenue of the two protocols grows, it could lead to dydx having a disadvantage in the DEX space.
In fact, the token unlock could negatively impact the revenue of dydx even further.
Consider this- If the token unlock occurs soon, dydx would face increased selling pressure.
Notably, a large portion of the tokens would be going to long-term investors and contributors after the token unlock.
The tokens given to these entities would make up a large part of the overall supply of the dydx token. Well, simply put, if these stakeholders choose to sell their tokens, it could create significant selling pressure on dYdX.
The delay in the token unlock would give the protocol some time to determine the best way to unlock the tokens without negatively impacting the price.
However, there are also other concerns for dYdX. For example, activity on the network has declined over the past 30 days. This decline in activity also impacted the Total Value Locked (TVL) on the protocol, which fell from 414.725 million to 402.426 million in recent days.
Despite these factors, whales continued to show interest in the token. The concentration of dYdX held by large addresses increased over the last week.
Along with the increasing interest from whales, the token’s velocity also grew. This implied that there was a lot of activity observed from addresses holding dYdX.
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However, interest from new addresses was decreasing as network growth slowed down. A decline in network growth implied that the number of times new addresses transferred dYdX, decreased.
Overall, the delay in the dYdX token unlock has shed light on several challenges faced by the protocol. While some investors and contributors may be disappointed, it is crucial for the protocol to address these issues in order to ensure long-term success and growth.