On August 8th, the dYdX Foundation hosted a discussion on Discord regarding general updates, current governance proposals, and an Epoch 12 review. The discussion was followed by a community hangout and AMA with the dYdX Foundation team.

James (dYdX Foundation):

Cool. I guess we can get started. Thanks, everyone. Morning, afternoon, evening, wherever you are, and thanks for tuning in. This is the Epoch 12 Review and AMA session. Both the dYdX Foundation and dYdX Trading are  becoming more transparent and open with their thoughts on everything related to dYdX, V4, and the DAO. So hopefully both organizations can provide more information and context to you all within the next few weeks and months.

We're looking to keep the same format as the last Epoch Review. I know the deck has been shared in the Discord announcements channel, so I encourage all of you to read through that in detail to understand the metrics, key data points, and everything interesting in Epoch 12. As usual, please keep the questions you’d like to ask posted in Discord, and after these questions, we'll open up the stage for the AMA.

For all of you who didn't attend the last Epoch, essentially how we're working now is we just go straight into the questions. The data points that David used to talk through get posted in the deck and the YouTube video in the Discord announcements channel which you can watch in your own time, so it frees up more time for questions during this session.

So with that being said, today you can see that Josh, David, and myself are from the Foundation, and the dYdX trading team will address some trading-related questions. And then, finally, it will be great to hear your thoughts on the change of Epoch's structure, like what we've done here in the AMA, your likes and/or dislikes, and if you've got any suggestions, we're more than happy to hear them in the comments and/or at the end of this. I guess we can get started with the questions. . I guess for you, it might just be worth starting with this. Anything that's new at dYdX? Is there anything exciting that's happening recently, that you can inform the audience about?

Corey (dYdX Trading):

Cool. Yeah, great to be here. And there's always a lot going on at dYdX. It's definitely a little bit of a slower time in the market, I would say. Looking at daily trading volumes, general users and crypto - there has been a bit of a bounce since the bottom, I would say, a month or so ago. Generally, we're pretty much heads down building a lot of different things. A vast majority, or a very large percentage of the team, on the engineering side of things, is focusing on V4 at the moment.

So, as it relates to product development on V3, things are a little bit slower I would say generally, to get out the door. Having said that, there's always some stuff going on. I'd say a big thing for us is figuring out ways in which we can kind of grow the user base on V3, and so, right now, maybe we're sitting at... call it 7000 monthly active users. If we want to achieve our goals and be one of the largest exchanges in crypto, how do we really achieve exponential growth here? I think that is the question. A lot of that is product-dependent, so we're trying to build better features and more things on the protocol. We are always experimenting with other kinds of growth campaigns and such. Whether it be data policy campaigns, volume-driven campaigns, campaigns in country-specific geographies. So, those are the types of things that we're thinking about right now, over the next 6 months on V3, and then on V4, it's really all about building out the protocol to get it on the release timeframe that we've publicly communicated.

James (dYdX Foundation):

Awesome. Thanks, Corey. And then, touching on V4, then, is there any more information that can be publicly released about the dYdX chain in V4?

Corey (dYdX Trading):

Yeah. It's a good question. I think we'll potentially start releasing more regular updates in the coming months. But one thing I can share is that we did hit our first internal milestone, so we released an internal dev testnet: super, super basic, not really ready to be reviewed by anyone else, outside of the internal engineers on the team. But it is just a really good first milestone to hit, that we have something. We have orders on the chain that we created, and it lives or can live, in some minimal state. And so there are a few more milestones that we do have to hit internally before we would release a public testnet. But, yeah, just to give you a general sense of how things are going, we hit our first major milestone, and things still remain on track towards the end of the year here.

James (dYdX Foundation):

Awesome. That's great to hear. And I noticed recently, on the dYdX blog, that you recently announced free trading. I guess, can you just expand on what this actually means for users and traders specifically?

Corey (dYdX Trading):

Yeah, absolutely. So, yeah. So, we announced free trading. This is for any users, or all users, that have up to $100,000 in volume per month. And so it's kind of a first step here, but really trying to think about different ways in which we could differentiate ourselves in the market. And so, a lot of users, they certainly think about fees when they trade. The experiment here is maybe free trading will incentivize more users to onboard to the exchange. And so, yeah. We're still digesting and seeing how this is playing out. But, yeah, any user, new or old, gets free trading, up to $100,000 in volume per month.

James (dYdX Foundation):

That's awesome and exciting. And then, in tandem with this, are there any of the trading competitions coming up that any of the community can look forward to?

Corey (dYdX Trading):

Yeah. That's probably, at this moment, all new. We have the trading leagues, which is the trading competition, every single week. There is always a competition to participate in every single week. But I think you're likely referring to bespoke trading competitions with various KoLs or Twitter celebrities or what not? Yeah, we're thinking about doing some more of these. We might do one in Japan, for instance, as an experiment, for a country-specific campaign. But, yeah, generally if we have enough interest from what I would describe as super-high-quality influencers for the next one, we may roll that out. But, yeah, TBD still.

James (dYdX Foundation):

Nice. Great. And then another one on Cosmos that came in. And I'm not sure if you can answer. But what are the requirements to run a validator on Cosmos? Has there been any news or information regarding this? Or is this all TBC?

Corey (dYdX Trading):

Yeah, we haven't released anything. It's still up in the air, I would say, so we don't even know quite yet. But, yeah, generally, if you run a validator on other proof-of-stake blockchains, I'd say the requirements are gonna be fairly similar. If you are interested, and you are already running validators on other chains, certainly feel free to reach out to us via Discord, or DMs on Twitter, Telegram, or wherever it may be. And we can get you in touch with the right people to talk to here.

James (dYdX Foundation):

That's brilliant. And then, finally: there's been a number of users mentioning BitMex's recent announcement for forex perpetuals. Are there any plans in the future for dYdX to do similar?

Corey (dYdX Trading):

Yeah. Generally, adding new markets is a community-driven thing at this point. So the dYdX internal team, we don't really have the ability to singularly add new markets anymore. So, if this is something that the community really wanted to do, I would definitely support people and encourage people to start talking about this on the forums. Make a proposal (DIP) and whatnot, and get this on the smart contracts. I can't actually say for sure whether or not we would be able to launch these on the front end, on the protocol. But, even if it was voted through smart contracts, that's a real question that, I agree, we'd have to do some underwriting on. But, yeah, generally, to get the ball rolling, people can certainly start talking about this on the forums, and do the Snapshot, and so on and so forth.

James (dYdX Foundation):

Brilliant. Thanks for that, Corey. Cool. I guess we can move on to the Foundation team. More so for David and Josh on this question. How would the Foundation look into improving governance participation, say, over the next 3, 6, 12 months or so?

David (dYdX Foundation):

Yeah. Everything. Maybe I can give a little context, and then, Josh, you can talk a little bit more about the specifics. I think that a high-level voter turnout, across DAOs, is always a challenge, and getting active participants and governance is something that a lot of DAOs, including our community, is focused on. I think if you actually look at the data, both between off-chain and on-chain, participation in our community is actually relatively high, I would say, compared to your average benchmarks. It's relatively still single-digit, but a high single-digit. But I think there's definitely room for improvement, and ultimately, at the Foundation, we're spending a lot of time thinking about how we can really measure governance/participation, both from a quantitative and qualitative standpoint, and really try to deploy more resources to try to improve that turnout. I think this is probably a long-term goal of ours. It's definitely not going to happen overnight, but I think generally we've been trending in the right direction, and we are generally encouraged by the level of turnout over the 20 or so DRCs and DIPs that we've had over the last 12 months. In terms of specifics, Josh, do you want to maybe share some of the thinking around some of the OKRs that you've been working on?

Josh (dYdX Foundation):

Yeah, for sure. Happy to share. Yeah, so, improving governance and participation, I guess, in terms of a long-term goal, it's definitely a multi-prong approach. So there is no single lever that you can pull, I think, to just improve participation overall, but with some of the things that we've got going on, I would say, first off, just looking at the base of people who are actually contributing. Identifying active community members, active ETH addresses, in the DRCs, off-chain DIPs and on-chain DIPs. And I guess step one is identifying, one, that users who are engaging in governance, like they're voting, but they're not posting on the forums and sharing their opinions - I think this is one group of people who it's interesting to kind of reach out to, try to connect with, encourage them to be more active, just in sharing their thoughts because, obviously, they are involved - they are taking the time to vote, and review proposals, I would assume.

On the flip side of that, I think one of the things that we're prioritizing in the next 3 to 6 months is really to increase the number of active traders who are qualified for trading rewards, and who are also participating in governance. I would say that if you picture a venn diagram, that's a sweet spot of contributors who we are particularly looking for a lot of feedback from, just because, I think I've harped on this in the past, but, again, the ability for dYdX to become the biggest crypto exchange is heavily dependent on getting active and quality feedback from its user base, in terms of governance participation.

Some other things that are going on, is just doubling DAOn, I think, on the delegation program, and Cliffton has been spearheading a number of initiatives in terms of looking at an analysis of people who are holding dYdX, but not actively voting and not actively delegating, and we have been having conversations with people about the importance of our delegation program, and all of the different delegates that have onboarded, and the potential to contribute to improved decision-making, and higher levels of governance and participation on the platform. So, like I said, no short answer, and it is definitely a multi-prong approach. It's definitely something that we are actively working on, and I would say something that we're going to be actually measuring, in terms of success, in the next 6 months.

David (dYdX Foundation):

One other datapoint that I would share is, we definitely see a difference in participation between Snapshot votes, which don't require gas fees, and then on-chain DIPs, that require people to send on-chain transactions. I'm really encouraged to see one grant that was funded by dYdX Grants v1.0 successfully launched, and was actually tested in the most recent DIP, so, we have a website called dydx.vote, which allows for voting by signatures, and allows community members to vote for on-chain DIPs without having to send transactions on chain, and therefore not having to pay any gas for on-chain votes.

dydx.vote was used in testing for the most recent vote, and it seems like the tests were successful. So I think, future votes, every single on-chain vote will be completely gas-free, and hopefully that will also help drive greater participation for on-chain DIPs as well. So, I'm looking forward to seeing the official announcement from the dydx.vote team. I think that's another example of how grants, and the community at large, can really help drive some of these metrics going forward.

Josh (dYdX Foundation):

Yeah. A huge unlock, and I'm super excited to read the full, I guess, public announcement about that. But just to follow up, there's also a delegation component of dydx.vote, which I'm personally super excited about. Which allows people to delegate their voting power and proposing power through dydx.vote, gas-less as well. Super exciting for that.

James (dYdX Foundation):

Awesome. And shoutout to all the ambassadors, as well, who have been working on increasing endorsed delegates, doing the ‘Meet the Delegates’ series, and really helping us level up our governance as well. Sweet. I guess the next question, then, is touching on endorsed delegates. We've seen an increasing number of them from the community recently - how do we plan to incentivize these to stick around for the long term?

David (dYdX Foundation):

Yeah, again, I'm happy to take this, and Josh, feel free to jump in. But, yeah, I think the endorsed delegate program was launched early this year. I think in the last 6 months or so, we've gradually reached out and worked with a number of endorsed delegates who filled out the required documentation and posted that on Commonwealth. I think, from my standpoint, it's been really encouraging to see the amount of interest and the engagement from these endorsed delegates, who take the time to complete information for the community to review, and then generally are very active in the forums and participating in governance. We've spent some time putting together public trackers on Dune, to really help highlight and elevate these delegates, so that people get more context about them. It includes some history about the endorsed delegates through their voting track record, as well as how many tokens that they have to propose or vote with.

I think, generally speaking, we view the endorsed delegate program as a really important factor for driving governance going forward. We currently have 13-14 endorsed delegates. I think our internal metric is to try to work with community members to drive that closer to 25, as a first step. And then really with the goal of trying to increase visibility around that. So, I noticed some of the ambassadors have been working on a ‘Meet-the-Delegate' series, and trying to do AMAs with various delegates to provide more information to community members which is really encouraging. But I think we're still in the early days of really formalizing this program, and certainly it's up to the community on how to incentivize and grow this over time.

From my standpoint, if you look at, again, just DAOs more broadly, there's definitely been a lot of debate around whether delegates should get paid or not, or some funding from the community treasury. We haven't really seen that discussion pop up quite yet in our forums, but I think it's definitely an interesting idea that has both good and less good trade-offs that are worth debating. But I think if you look at traditional politics, I think there's merits to the argument, but ultimately it's up to the community to decide how funds in the treasury get split. A portion of that could be used to drive endorsed delegate growth, or governance participation more broadly. I do think there's also some benefits to thinking about non-cash rewards. So, things like POAPs, or access to the team, or kind of a smaller community for endorsed delegates to really get to know each other a little bit. We're thinking on a more holistic basis, beyond just a financial reward. Josh, I don't know if you have anything to add to that.

Josh (dYdX Foundation):

No, it was great, I'll agree with you. And, totally, I agree with everything you said. A few points I have, for me - we've definitely seen the amount of delegates that are onboarding ramp up recently, due to a lot of great efforts from the ambassador burrows like the ‘Meet-the-Delegates’ series and getting the word out there. I think as David was saying, there isn't really a critical mass; we just have internal targets. But I think the difference between an endorsed delegate that onboards and then active endorsed delegates, that is two different things to me. The latter is an endorsed delegate that is heavily involved in governance, and is actively sharing their positions on various proposals. I think one good example is the LP rewards formula discussion. We often see, I think, that's a conversation heavily dominated by market-makers, I think due to the subject matter. We would love to see more active participation from the community, just because LP rewards formula changes are changes that do affect the dYdX protocol overall, and I think an active delegation program is a delegation program that involves, I guess, delegates getting involved in all aspects of the protocol.

I think I went on a bit of a tangent there, but just in terms of overall participation, I think the number that we're striving for, or that delegates should be striving for is outlined in the code of conduct, but there are no enforced metrics. It is designed as a free market. So actively participating delegates should be receiving the majority of delegated voting and proposing power, but would love to see just higher participation rates, upwards of 90%, I believe, is what's in the code of conduct. And I think it's just really early still, in terms of when the majority of delegates have onboarded to track that performance.

Definitely exciting to see people getting involved and interested, and looking forward to, I guess, seeing all the quality discussion that comes from all the new delegates.

James (dYdX Foundation):

Nice, awesome. And just quickly, if anyone wants to collect the POAP for today's Epoch 12 review and AMA, head into the hedgie-general or the dYdX general channel. Alucard just posted a form in there, for users to collect your POAP. So, yeah, by all means, go and collect your POAP, sign that form, and we'll get it sent out to you within the week.

Cool. I guess the last couple of questions for the Foundation side. There was a question brought up about stages for DAO implementation? Are there any updates on this? How does one become part of the DAO? I don't know if David or Josh want to take that one.

David (dYdX Foundation):

Yeah, I'm happy to start. Again, I think the DAO already exists. In a lot of ways, the DAO is the existing community. It is a combination of a lot of the initiatives that are already in production - whether that's the ambassador program, the dYdX grants team, a lot of the grantees and contributors - all of those different pieces all factor into this overall concept of the dYdX DAO. I think the Foundation team has been spending a lot of time thinking about trying to formalize more of these structures, and trying to work with community members to drive a lot of this forward.

In terms of timing, I would say this is definitely a big focus, and should be a big focus, for the community over the next 6 months. I'm certainly assuming V4 launches at the end of this year, I think a big part of that responsibility is for, really, the DAO to become much more mature than where it is today. At that point, the community should decide whether to have the $DYDX token as the main token within V4 and Cosmos. The DAO will really have full control over virtually all aspects of the protocol, and so, I think for that to be successful, the community really needs to mobilize itself to be able to really be effective in terms of decision-making and control. And so we have been spending a lot of time internally thinking through how to push that thinking forward. But I do think this is going to be a big focus for the Foundation team and several community members over the next few weeks and months. Josh, I don't know if you have more that you'd like to share?

Josh (dYdX Foundation):

Yeah, for sure. I think that you've touched on it perfectly, David. Just a member of the DAO, it's a tough thing to define, but you can define it as dYdX community members, dYdX stakeholders; I generally take a broader view of the stakeholder, just because there are different people who come in and contribute to dYdX. I would say, definitely, would encourage everybody listening, and everybody who's listening in at later dates - getting involved with the DAO is not like there's going to be an application process for the dYdX DAO. No. There are many ways of actively contributing today - getting involved in governance forums, governance posts, telling people why you're voting a certain way, providing product feedback about the exchange also extends to. 2 great ways of getting involved are to be in the grants program and the ambassador program where you can start working more closely with the dYdX teams. So yeah, there's multiple ways, I think, to get involved.

David (dYdX Foundation):

There's also the bounty board that the ambassadors have been working on, that have one-off tasks that we're looking for community members to get involved with. So, again, I think there's a lot of different ways to get involved, as Josh laid out, but we're hoping to be able to provide a clearer picture of onboarding and all the different ways to get involved, again, over the next few weeks and months.

James (dYdX Foundation):

Awesome. And I know we've got Carl here from the grants team. So, Carl, sorry for putting you on the spot and inviting you up like this. I just wondered if you wanted to talk about the recent success for dYdX grants v1.5.

Carl (Reverie):

Of course. No need to apologize for that. I'm happy to be here. Thank you for having me. Yeah. So here we are. Super excited that the grant V1.5 proposal was approved by the community. Really appreciate everybody participating in the forum discussions, in the Snapshot vote, and in the on-chain vote. Just, generally, everybody giving us feedback and being a part of this process was great, and it was fantastic to see. Just kind of generally overwhelming, for the relaunch of grants. We've been eagerly anticipating this relaunch, and we have a lot of catching up to do, on applications that submitted, and who have been very patient with us as we've worked towards this goal of getting back up and going. To everybody that has been waiting, and who has worked with us throughout this process of getting some additional funding, thank you for that, and we'll be getting in touch with everybody who was put on hold, in terms of next steps.

So, basically, right now, this week, we're getting right back up to speed. We have a few updates that we're going to share throughout the week, of some new RFQs that we're setting up, some new goals, some new designs and strategies that we're hoping to implement in v1.5 to make it even more effective than v1. So we're really going to apply the lessons that we learned, with the more generalized and open structure that we had with v1. That was great, as an initial direct for grants, and we all learned a lot from it, and we saw a lot of success from it, but we definitely learned a lot from it as well. And so now we have a much more focused and concentrated version of grants, compared to v1. To anybody who didn't get a chance to read it, if you go to dydxgrants.com on the blog, the latest post outlines some of this, initially, with the targets that we're aiming for in grants v1.5.

And so, now, you can see that we have a few general goals already that we've started to look at, that we're going to be focusing our attention on those. But, yeah. Expect to see more updates from us this week, and then we're hoping to get our first round of grants approved by next week. And we have a few changes on the trustee side, which hopefully won't take too long. We just need to change the multi-sig signers and stuff like that. Just some housekeeping operational work to be done before we can really kick things off. Shouldn't take too long. Happy to answer any questions about grants while I'm here, if anybody has any.

James (dYdX Foundation):

Awesome. Thanks, Carl. That's really exciting. Really looking forward to seeing the impact that that has. I guess, based on that, we can start to open the floor for some questions. Anyone wants to ask anything to the foundation, trading, or grants team, then, by all means, raise your hand.

Nico (Community Member):

Hi. So, one of my questions was, I observed that some people who actually were not active before, started to make some actions, or, and they are also applied for delegates. I want to ask, are you sure that each person who actually applied the delegate form can really be a delegate? Because, in my opinion, some only want to get some advances from being a delegate. If you'd only be earning some rewards for a first point, and, after several times, they do just disappear somewhere, and so on.

Josh (dYdX Foundation):

Happy to jump in there. Yeah. Thanks for the question. Just in terms of the amount of delegates that have onboarded, I just want to be super clear that the Foundation does not gatekeep or monitor the delegates that onboard. Basically, those onboarding steps are just a way to provide the community with more information about the delegate, to understand where they're coming from when they approach specific questions on the protocol, like what their background is, what they believe in. We are not vetting the delegates, in terms of participation rates, and the reasons why they're onboarding. Again, the Foundation is just the objective third party that's in place to ensure community self-sustainability, right? So, our goal with building that onboarding program was to provide the community with more information.

If you have specific requests in regards to the motivations of a delegate, I would suggest just reaching out to them directly on the community forums. Alternatively, onboarding is one step, but receiving delegated proposing power and delegated voting power is a completely separate step, in addition to onboarding. I could almost say wholly confidently that just by virtue of onboarding, delegates do not receive any voting power or proposing power. They actually do need to be actively contributing, and people with $DYDX tokens that want to delegate, need to recognize said individual who is a delegate, and then want to delegate their tokens because they either agree with the way that the delegate approaches certain situations.

Nico (Community Member):

In my opinion, it's very important what this one person contributes to the community, and also how long he has been and stays as a delegate. Because you know that, for some people, you can just make a good impression, make some small actions, and later, disappear. Guys who were before, and have made good contributions for a community, also assisting, helping, and so on - they can make better delegates than anyone who just applied. I don't want to point fingers, but in my opinion, there should be some requirements on becoming a delegate, like how long you have been in the community, what you must do to become a delegate, getting some education on how to become a delegate, and so on.

Josh (dYdX Foundation):

Yeah. For sure. I think, yeah, those are good points. If you, for example, want to add something to the onboarding steps, or the code of conduct that is currently posted, I strongly encourage you to provide feedback on the forums, and see what other people think. Those are living documents. They are not set in stone.

In terms of going back to something, previously, that you said, just in terms of education, the ambassadors have put out a very nice course, in terms of onboarding to become an endorsed delegate. This would perfectly fit in to understand the requirements like how long you’d have to be in the community, or hit certain contribution/participation rates to maintain your status. But again, just to reiterate, totally community-driven on the requirements, and holding the endorsed delegates accountable.

James (dYdX Foundation):

Thanks, Nico. Anyone else? Anyone else got any questions to bring up? We've got a little while to go, so we can bring you on stage.

No? Right. Well, actually, cool. All right. Well, we'll call that early. Thanks, Carl, David, Josh, and Corey, for coming on. Thanks, everyone in the audience, for listening. As usual, we'll decipher this, send this off to be transcribed, and then post it out onto YouTube. If there's any questions, or any feedback on these AMAs, then by all means leave them in the channels on Discord, and we can reach out into the DMs and chat about it. Cool. All right. Well, we'll close this off, and we'll catch you all next time. Thanks, everyone.