On 17th February, the dYdX community hosted the first quarterly town hall discussion, including updates from the dYdX Foundation, dYdX Trading, dYdX Grants subDAO, dYdX Ops subDAO, community, and governance teams, as well as two recent grantees.

These town halls will be hosted quarterly, with an AMA session at the end of subsequent sessions.

(Stay tuned for the video release)

A redacted transcript is shared below:

James Hallam (dYdX Foundation): Hello, everyone. We appreciate you all coming on here. We're trying something different now on a semi-frequent basis. We'll aim to do this every couple of months or every quarter, where we'll run through an agenda by every dYdX stakeholder. So thanks for coming to the first one that we're starting.

Firstly, let’s give a bit of background on the people who are on the call today. We've got Charles, the CEO of the dYdX Foundation, who will run through everything dYdX Foundation-related. We've got Xiaomeng, the Engineering Manager for dYdX Trading, who will touch on V4 of the protocol, which is exciting. We have Carl from the dYdX Grants and the Ops subDAO team, which is fantastic. We've also got Karan, who will talk through everything go-to-market (GTM) and the dYdX community, and Clifton, who will run through governance. We've got James and Colin here, who will also run through some recent grants they've been working on.

So to give you an idea of the timing, this will last only around 40 minutes. We'll run through things pretty sharply, and each person will run through their section every five minutes. Lastly, this is an iterative process. We usually do the regular epoch reviews and AMAs, but we're looking for feedback on how these are run and how we can make these better each time. And ideally, as the ecosystem progresses, this will turn into subDAOs that give feedback and talk through priorities for each quarter, etc.

Cool. And last little bit, a few bits of housekeeping, if everyone would be okay with keeping their mics on mute. We'll do our best to stick to the timing; each presenter can come on, introduce themself, and talk through their respective section. All right, let's get started. First up is Charles d'Haussy, the CEO of the dYdX Foundation. Over to you, Charles.

Charles d'Haussy (CEO, dYdX Foundation): Thanks for having me. My name is Charles, and I'm the CEO of the dYdX Foundation. I came from ConsenSys as Head of Asia and Global Head of Business Development. I'm super excited and firing on all cylinders with the team to grow the dYdX ecosystem.

We will share a quick update at the dYdX Foundation during this first update. In Q1 2023, we supported many activities within the ecosystem. Our team is also active in governance. We are doing a lot of research on many different governance initiatives which happened during V3 of the protocol. I expect some blog posts and research to be released over time. We also issued the ecosystem report for 2022 for the dYdX ecosystem. This was a significant milestone. We wanted to bring together all the different initiatives and make it easier for newcomers in the space to map all the great things we are doing within the dYdX ecosystem.

We'll keep working on the awareness around the dYdX V3 and V4. So we are outreaching the broader community via social media and traditional media. We also have a new marketing champion working with the dYdX Foundation. As you know, we're doing a lot of resource planning toward the V4 launch. And as it'll be covered later in the call, some test notes are coming up at launch later this year. We put things in order so that we can support the launch.

A short reminder regarding the dYdX Foundation: our mission is to support the growth of the dYdX protocol ecosystem, enabling the communities, the developers, and decentralized governance. We are focusing on these three main ecosystem components here. We will support, as many of you will, the launch of V4 and a Testnet bringing us to V4. And we are also active members of governance, having conversations with many of you to keep evolving and growing the ecosystem.

Some external affairs, as I mentioned earlier, we've been issuing this first dYdX ecosystem report for 2022, and we plan to keep doing this in the coming years. We also went through the Token unlock extension. We are preparing the governance version three report and sharing our learnings with the community to prepare version four of the governance together.

We recently hired a Marketing and Comms Lead. We are also hiring a technical person at the dYdX Foundation to help with many technical matters. And we keep going as the Foundation team with a set of full-time and part-time colleagues, covering as much ground and supporting the ecosystem in general as possible.

We'll be joining different events during the year. Cosmoverse in Istanbul, we look forward to this one. A few of us will be at the Paris Blockchain week in March. Keep following us on social media, with plenty of international community events and supporting events in general. So we’re excited to connect with you today through this community call.

James Hallam (dYdX Foundation): Thanks for sharing, Charles. That was great. Moving on. Xiaomeng, I saw you joined the call. Could you unmute yourself?

Xiaomeng Chen (Engineering Manager, dYdX Trading): Thanks, guys. A quick introduction of myself. I'm Xiaomeng, the Engineering Manager for dYdX Trading, to support the engineering computing team towards the V4 protocol. So I want to give quick updates on the V4 side. Here is a quick recap on the V4 status. We already have the test net running internally, which employees have actively tested. We see this internal version of V4. We can post a limit order to match the order in the field, and you can see the position updates. And so, think about this as an MVP type of the core trading workflow, which employees are actively testing. We already did a few rounds of back-scratching, fixing all those P0 and P1 boxes. We now have a stable version of the internal test running.

So a few key upcoming events. So, first of all, the finishing of milestone three, as we previously communicated. So the end of milestone three will be marked as the private test at launch. The private test now supports core trading workflows with the selected external validators. And so, the core trading workflow is already done at this moment. The team is working on setting up the infrastructure and the playbook for the private test, such as validator documentation. The next big step after the launch of the private test net is the public test net. In addition to the core trading workflow, the public test net will include a set of functions. It's more like other functions, such as the USDC, onboarding, governance, and so on, in addition to the core trading workflow. And so, by the end of the public test net launch, we will have a version of the V4 with the complete set of functions, which is very close to the main launch. That's captured the current status for V4.

James Hallam (dYdX Foundation): Xiaomeng, thank you very much. You'll be a much-welcomed addition to this call going forward. So it was beneficial to have an update from you there. Okay, moving on. Carl, over to you, sir.

Carl Bergman (dYdX Grants, and dYdX Ops sub-DAO): I'll start with the dYdX Grants subDAO. As a reminder, the dYdX Grants Program (DGP) was launched just over a year ago with a mission to promote the development of dYdX through community funding initiatives. This has been our primary goal in running the DGP for a year now. Since launching, we've approved 94 grants with just over $2.9 million in funding. Through these grants, 76 unique contributors, either individuals or teams, have joined the dYdX ecosystem in one way or another. Of the grants approved, 71 have been completed, 20 are still ongoing, and 3 have been archived. As an FYI, this typically means the grantee has had to withdraw their grant post-approval for several reasons. It could be conflicting schedules or family issues, whatever it might be. Thankfully we have yet to lose any funds on archived grants.

The DGP was recently renewed for another six months with roughly $3.7 million in budget spread out across DYDX and USDC. So we have a sizable runway and budget to keep the program going for another six months. We've revised the scope to focus on a few different funding objectives involving brand and user growth in a global setting through our international growth category, which we were doing before. We will keep pushing the V1.5 renewal to keep expanding the brand globally. We're moving to research and tooling projects revolving around risk parameters for dYdX, especially as we lead up to dYdX V4. We're doing community initiatives like the academy, which we just launched, and the merch program, which launched earlier this year. We'll be exploring other options that the community can lead as projects.

We're beginning to onboard contributors for work on the new chain, which we plan to explore with the test net that’s being launched. That'll be infrastructure, contributors, developers, and anybody who can play a role in building on top of dYdX V4 in a test net environment leading up to the main net launch. If you have any ideas for projects, are interested in contributing to the growth of dYdX, would like to explore grant options, or would like to chat about a potential grant, please DM me or visit our website, dydxgrants.com and submit an application.

We can move on to the ops subDAO now.

The operations subDAO, or ‘DOT’ as we call it, was launched in December of last year with the primary goal of publishing a dYdX DAO playbook to provide the community with a guideline for launching new subDAOs. Our other deliverables include establishing a bank account and managing communication channels that may host community discussions. That could be a Slack, could be a Discord, it could be a change of forms, that sort of thing. Through these goals, DOT is on a mission to enable the growth of a community-run dYdX subDAO, which we think will be critical to the protocol's success in the V4 setting.

Since launching, the team has been working on initial operational setups while putting our heads down and compiling the dYdX-style playbook. We're getting close to wrapping up the playbook draft now, at which point we'll be circling it around internally with most of the people on this call, and then we plan to publish a more finalized version by early March. It will still be partially completed as we'll gather community feedback. We’re very open to suggestions on how we can improve this. Generally speaking, it'll be a very iterative document.

We've also found a banking partner willing to onboard the trust, so we're just jumping through the traditional banking hoops to get us set up there. We've been working on initial implementations of new communication channels for the DAO to help improve engagement and overall comms across all stakeholders. So keep an eye out for our playbook in the next month or so, and we should provide an update on some of these additional communication changes that might be implemented earlier.

We are looking forward to feedback from everybody as we start to publicize these things.

James Hallam (dYdX Foundation): Fantastic, thanks, Carl. Moving on to the next slide, please, Tristan. We've got Karan, welcome.

Karan Ambwani (India Lead, dYdX Foundation): Hey. On the community and ecosystem side, some of the critical north star metrics for the team are establishing a strong brand with media educational content, collaborating with KOLs, and organizing events in different regions. We are looking at building a dedicated community of traders, governance participants, and ecosystem players. A key metric for us is improving product market fit, which is done through user interviews and customer support.

On the go-to-market (GTM) side, there are a few focus markets for the dYdX Foundation team; Japan, India, France, and a couple more markets which have contributed to almost one-third of the total page views on dYdX in the last quarter, which went up nearly 20% in Q3. The GTM team has done over 100 user interviews in the previous three months, which has helped the product team. It has suggested new ideas for improving the product, making it a very similar experience to some centralized exchanges.

The dYdX Foundation team has also supported the dYdX Academy for the last year. James is already on the call, and he'll be going more in-depth on it, but at a high level, the average monthly views on the academy have gone up by almost 5X in the last three months. Since the revamped academy, things are looking very positive on that side. On the events and attendees side, we have hosted over 120 events digitally and in real life over the last three months, attended by over 3000 people combined. There have been more than 45 media applications, and 25 blogs, all translated into four languages. We have also seen tremendous interest in POAPs since inception, and almost 1500 people have completed Quests on dYdX.

One of the challenges of fast growth is determining and finding high-quality community contributors. On the social media side, these are some channels you see on the right (refer to presentation), which the dYdX Foundation is currently managing. More significant channels like dYdX Discord and dYdX Foundation Twitter have grown 5 to 10% in the last three months. Regional media has seen anywhere between 50-150% growth. We have started some new channels for dedicated regional communities, which have over 3000 people now actively contributing.

As we move closer to V4, there is a lot more focus on partnership ecosystem building, bringing more grantees, which will be valuable for the dYdX exchange. We always seek contributors who can internationalize some content and spread the word on some of our initiatives. That's it from the community ecosystem side.

James Hallam (dYdX Foundation): Nice. Thanks, Karan. Appreciate that update. That was helpful. Okay, Cliff, over to you with governance.

Cliffton Lee (Governance, dYdX Foundation): Let's review some active discussions and proposals. So we've had the DGP version 1.5 renewal successfully pass. The DGP v1.5 will continue for the next six months, and the number of trustees will be reduced from eight to five. The second pending DRC we expect to see go up on our forums pretty soon is to increase the max funding rate cap. This aims to prevent dYdX from being the cheapest or the most expensive venue to long or short, because that's bad for the protocol in general. It opens up the protocol for Oracle drift attacks.

A community member has noted that they want to increase the max funding rate cap to align a bit closer to the industry standards. We’re looking forward to that proposal hitting the forums. Callen from Wintermute posted a pretty in-depth proposal termed Wintermute V4 Vanguard. For this discussion, six different recommendations were posted. We currently have the first recommendation: to reduce the trading rewards by 45%. This is now up for a snapshot vote. It ends on Saturday, so check that out and vote if you have not. He also created a snapshot to introduce a market maker rebate program.

We are also working on understanding the dYdX DAO's financial health. We plan to develop a PnL statement to understand revenues, costs, and emissions to better forecast and plan for the future. We are also working heavily on the research front, getting a deeper understanding of governance in Cosmos, and how active its participants are so that we can be prepared for V4 governance when V4 launches.

On the content side, we want to launch our learnings from the V3 governance report. This blog provides an overview of the key insights and reflections gained from our experiences and observations with governance on V3. Ultimately, we aim to synthesize all these learnings and provoke discussion in the community about potential improvements in governance. Keep a look out for that. We'll probably drop that mid to late next week. So yeah, that's it on the governance front.

James Hallam (dYdX Foundation): Thank you, Cliff. Brilliant. Okay. Next, Colin. I know you are in the audience somewhere.

Colin Chan (0xcChan, Community Member): Great. Hi everyone. I'm sharing more about our recent research published last month. So it was conducted with 0xCLR, who's another active community member. The research was on trading fee optimization, where we analyzed traders' behavioral changes to the three different fee holidays implemented in dYdX. Our findings can provide the community with a model to discuss fee-setting ideas more, especially before the end of the year.

So for the methodology, the data collected was trading volume for all the markets on dYdX. Of course, we excluded Luna and took it from Binance to normalize market sentiments. We deliberately included the dYdX price because it can incentivize behavior after the token rewards. So we did a market segmentation based on the volumes we saw on dYdX. Some of the observations we saw through our time series were how rewards contributed significantly to overall trading volume throughout much of post-Luna.

Fees also show many changes in the dynamics, especially pre and post-Luna. Before Luna, as you can see, the larger coin markets, ETH and BTC, showed a substantial difference for lower fees, much stronger than our mid-tier and smaller tiers.

After the Luna collapse, we discovered that the impact of fees didn't become statistically significant and was more of a rewards-driven behavior. Our top traders, who turned high volume, used trading rewards as a proxy to activate strong, loyal, and sticky behavior throughout all the epochs.

We want to push for less fee-driven trading behavior to more reward-driven trading behavior. As this is a fee paper, we wanted to experiment with lower fees for the larger coin markets, even BTC. That's what we have seen for other centralized exchanges to be more competitive and reduce the fee holiday to 50K per epoch to see how small volume trading is in our trading rewards. So you can always find out more about findings on the forums and scan a QR code for more information.

James Hallam (dYdX Foundation): Brilliant, thanks, Colin. Where can people find you and 0xCLR?

Colin Chan (0xcChan, Community Member): You can find us on Discord, under 0xcChan and 0xCLR, and on the forums where we try to comment on some of the latest discussions, which are cool and related to this research.

James Hallam (dYdX Foundation): Moving on to the next slide, we should have James from the academy and Alucard here.

James S (Community Member): Hi, everyone, I'm James. I'm the social media manager and the web developer for the newly relaunched dYdX academy. So dYdX Academy recently launched on the 14th of February, sharing the same mission as dYdX; democratizing access to financial opportunity. dYdX Academy aims to fill this gap with an easy-to-understand, free educational resource. So we want accurate content and on-brand website design to build trust within the crypto ecosystem. We've also added fun and interactive quizzes and POAPs to help drive engagement to the dYdX Academy and to help onboard more users onto DeFi.

Since the launch on the 14th of February, the preliminary data shows over 4,300 sign-ups since launch. We've also gained 50,000 page views as well. Within the first 18 hours, all the 2023 POAPs we had available for the first task were claimed. We've also achieved a 32% bounce rate and an average visit duration of six minutes, five minutes more than the industry standard, which is excellent. It shows that people are engaging with the videos, taking part in the quizzes, and onboarding onto dYdX afterward.

The future outlook for the dYdX Academy is to produce more evergreen topics with videos and articles ahead of the V4 launch to drive engagement, build the dYdX brand, and hopefully on more onboard more users into DeFi and dYdX exchange. So yeah, if you still need to sign up for the dYdX Academy, go to dYdX.academy, we also have a POAP for this call that Alucard should be posting a link in just now.

James Hallam (dYdX Foundation): Thanks, James. That's exciting and well done with the launch. Is there another Quest that's launching soon?

James S (Community Member): Yeah, so we've got new tasks launching every week. So the next one is on the 22nd of February at 9 CET. All the information is on the dYdX Academy website.

James Hallam (dYdX Foundation): Nice work. Well done. There's a feedback channel on Discord where people can also come in and ask questions.

James S (Community Member): There's a feedback channel, website feedback, and content request form on the dashboard. So we'll check if anyone has anything they want to give feedback on or requests any content we can do in the future.

James Hallam (dYdX Foundation): Nice work. Well done, James and team.

That is everyone speaking today. Next time, we'll get as many people contributing to the ecosystem into this community call. If you want to come on and showcase the work you've done for the dYdX ecosystem, that would be brilliant. Reach out to us on Discord, Twitter, or the forums.

At the end of the next call, I think we'll probably add a section for Q&A, just like we do on the epoch review, where we'll take questions, and you engage with anyone on the team if you've got anything related to D4 or the ecosystem more broadly.

Let's close this off here, and we'll keep you updated for the next one. Feel free to email ecosystem@dydx.foundation there if there's anything that you want to chat about.

Thanks for your time, everyone.