On November 1st, the dYdX Foundation hosted a discussion on Discord regarding general updates, current governance proposals, and an Epoch 15 review. The discussion was followed by a community hangout and AMA with the dYdX Foundation team.

James (dYdX Foundation): Thanks everyone again for tuning in. We've got Corey here from the dYdX Trading Inc. team, David and Josh from the Foundation Team, and Carl from the dYdX grants team. We'll keep the format the same as the past Epoch Reviews. We're sharing the deck and slides that go out with all data and metrics, so I encourage everyone to read that prior to this or whilst this AMA is in progress. If there are any questions that you guys have, you can ask them at the end of this AMA.

After we get through the pre-populated questions, we will open the floor up for an AMA where you guys can ask any questions for the latter half of this AMA.

The new format of this AMA is shorter and we encourage everyone to ask questions. So, by all means, raise your hand up at the end of the AMA or post in the Trading-General channel in the Discord section.

We can get started. Corey, how's V4 progressing and how's the internal testnet going?

Corey (dYdX Trading): Things are progressing well. Milestone two is 95% complete, and that is good. We're starting work on milestone three imminently, and we're breaking milestone three up into three different sections. The first one is a tech deck reliability and essential feature section, and we're going to build what we are calling non-essential features. This is a private network launch. In terms of timelines, that first section, we're targeting for the end of 2022, so by the end of this year, we'll have that ready. To be a little bit more specific, that's just the implementation of ACBI++, the central limit order book, liquidations ticket, advanced orders, and funding. The other two sections, which I mentioned, will be in early 2023.

James (dYdX Foundation): Awesome. That’s really exciting. Thanks for sharing that. There've been a few questions about the onboarding process and what that might look like for users. Has that been decided yet, and what will the onboarding process look like?

Corey (dYdX Trading): Yeah, so it hasn't been built quite yet, but the goal here, and we're confident that we can get there, is the onboarding process will be similar to what it looks like today on the exchange. So, you won't have to download any other wallets. If you have a MetaMask wallet or something like that, you'll be able to just onboard with that. We’ll build out some tech here to enable you to migrate. Let's say you have $USDC on Ethereum, we'll let you migrate that pretty easily to the dYdX Chain, hopefully in one click or two. We are definitely learning more about what is technically possible and what's not. The goal here and we're confident that we can get there is that it will look very similar to what it looks like today.

James (dYdX Foundation): Awesome. That sounds great. Moving on to the last couple of questions. We saw that the recent Messari report came out and they were talking about opportunities to reset tokenomics, etc. Is this something that dYdX Trading Inc. is thinking about, or is this more a governance decision long term?

Corey (dYdX Trading): Yeah, it's a good question. We're definitely thinking about proposing some things. Ultimately, I think it'll be up to governance and everyone else to actually agree and implement it. These are things that we're certainly thinking about as we're launching the network on V4. It is TBD exactly what might change. I’ll leave it at that, but there is an opportunity here to update the tokenomics, and it's something that we're looking into.

James (dYdX Foundation): Finally, dYdX Trading Inc. completed the recent Banxa integration. What were the results there? Any updates?

Corey (dYdX Trading): The Banxa integration was a marginal feature that we added to the exchange to test out, and a lot of potential users were not onboarding to the exchange because maybe they didn't have ETH in their wallets or something like that. It's been generally good. It's not a huge feature on the exchange by any stretch of the imagination, but roughly 1% of our deposits are using this feature at the moment.

James (dYdX Foundation): Awesome. Thanks, Corey. That's all the pre-populated questions, but if anyone has any questions for Corey or any of the dYdX Trading Inc. team, then by all means post in the Discord channel. We can try and ask at the end as well. Okay, this is more for the dYdX Foundation team. David, could you touch on the recent CEO announcement for the dYdX Foundation?

David (dYdX Foundation): Yes, the dYdX Foundation announced earlier this month that we hired Charles d’Haussy to join the dYdX Foundation as our newly appointed CEO. For those of you who don't know Charles, he joins the dYdX Foundation from Consensus, which is one of the big software development companies behind Ethereum and is responsible for MetaMask, Infura, and other tools within the ecosystem. During his time at Consensus, Charles ran Asia Pacific growth efforts, and global business development, and has a ton of experience working with the Hong Kong government to set up a fintech practice. He is a former entrepreneur with an exit and has been in the crypto industry with a focus on broader protocol and ecosystem and infrastructure. So from my standpoint, Charles is a great addition to the dYdX Foundation team. He's just a little bit more than a month into the new job and really hit the ground running with a bunch of contacts.

So, I think with the broader ecosystem moving towards V4 and the protocol really thinking about a broader ecosystem play around the dYdX chain, Charles and the dYdX Foundation team around him will continue to be really helpful in continuing to drive growth and decentralization of the protocol at large. We are excited to have him on board! Unfortunately, he wasn't able to join today's call due to some scheduling conflicts, but the goal is to have him join in the future and then make himself available to the community and continue to represent the dYdX Foundation at large in public forums.

James (dYdX Foundation): Thanks for that, David. Yeah, equally excited to have him on board, and I know Charles wants to come on and do an AMA himself just to introduce himself, so we'll keep you posted on when that will be. I guess the next question is about the recent governance proposal changes, I guess probably for Josh, any impact on traders here? Is there anything that has come out from a proposal standpoint that you can talk about?

Josh (dYdX Foundation): Happy to jump in. I think that there are three interesting proposals that are in the mix right now that are all quite different. The first one, which most recently passed a Snapshot vote submitted by Xenophon Labs was the Snapshot vote to wind down the safety module. Essentially, Xenophon Labs was proposing to set staking rewards in the safety module to zero for two main reasons: one, that the safety module has what Xenophon Labs defined in their research paper as low insurance power because the safety pool is denominated in $DYDX. Xenophon Labs argued that the safety module has a weak ability to backstop the protocol.

The second part of the DRC was initially to spin up a separate $USDC pool, which Xenophon Labs has essentially split out into two separate proposals. The first is winding down the safety module. The separate $USDC pool to back the protocol is going to come later in V4. This just made sense in terms of engineering resources and bandwidth. In terms of winding down the safety module, and what the specific action items are going to look like, though the implementation hasn't fully been drafted yet, the proposal is likely going to involve setting staking rewards to zero - similar to what happened with the liquidity module - and then the blackout window is going to shrink down to three days. All of this being said, there is no on-chain proposal yet.

This change specifically requires an on-chain vote falling under the short timelock. Individuals who are still holding $stkDYDX are still receiving rewards for staking and will do so until the pool is wound down. Now, top of mind is we want to ensure a consistent experience in the dYdX ecosystem for all traders and stakers. So, I think part of the Foundation's role here is to make sure that things similar to what happened with trading rewards being changed mid-epoch don't happen again - parameter changes without sufficient warning. People who are using dYdX are expecting a consistent user experience and it is important to provide people with adequate notice so that they can make arrangements to request to withdraw $stkDYDX and withdraw in the following epoch, and so on.

I would advise the dYdX community to keep an eye out for announcements from the dYdX Foundation about whether the safety module is going to be wound down in the upcoming epoch. Currently, the blackout window is fourteen days. In the proposal, I believe the blackout window is going to be shrunk to three days to accommodate people withdrawing stkDYDX after the pool is wound down. Given the timing, the proposal cannot be executed unless the proposal is executable outside of a blackout wind.

Moving on to the TrueFi proposal. There was recently some activity on that thread with one of the members from the TrueFi, I guess you'd call it PM, or the group of individuals that are planning to become part of the multi-sig, and essentially administrate the TrueFi proposal, has submitted a revised proposal with a revised request for approximately,217K $DYDX for the initial four-month trial, which I think just in terms of establishing a product-market fit, proof of concept, and getting market makers involved, seems directionally like a good move. I Would strongly encourage the dYdX community to check out that thread and add any comments that you have on the new structure of the TrueFi borrowing pool. I'm super excited about that proposal. I think it's a great opportunity for a good partnership with the TrueFi team who has shown that they are quite solid and good at what they do.

Finally, the last proposal that has been in the mix that has recently quieted down a little bit is the proposal from Anchorage to obtain $DYDX from the dYdX community treasury and then to lend it to borrowers for the purpose of obtaining a lower fee tier. Recently, we had an AMA with Chase and Peter from Anchorage, you can find the recording on our blog. Anchorage has decided to postpone the proposal until the safety module is wound down as there was some critique about arb opportunities between borrowed $DYDX, and then staking that borrowed $DYDX to the safety module and earning the yield.

So, the idea in the most recent proposal was to peg the amount that borrowers were going to be paying to the safety module yield. If the cost of capital is tied to the Safety Module yield, then as people withdraw - assuming the pool is wound down - the APR or yield is going to change quite a bit. To avoid the extra complexity,  Anchorage found it simpler to wait for one Epoch or two for the safety pool to potentially be wound down by the dYdX community.

I would advise the dYdX community to keep an eye out for that thread to activate once there is consensus about whether the safety module should be wound down.

I would say those are the three main governance proposals in the mix right now. Lots of interesting discussions going on in the Commonwealth forums. I would encourage the dYdX community to head over to Commonwealth, read the most active threads and let the dYdX community know what your thoughts are on these governance proposals.

James (dYdX Foundation): Thanks for that, Josh. For anyone who's here for a POAP, quickly head to the dYdX Trading Inc. general Discord channel and go and claim your POAP. It will be there for five minutes and then it'll be removed. Moving on to the next question. Any updates on the DAO formation and any kind of functional working groups?

Josh (dYdX Foundation): There has been a lot of really good progress on the DAO structuring side. The dYdX Foundation has the same viewpoint that there are a lot of DAOs out there that have not fully delivered and we're still not seeing DAOs that are capable of executing quickly and efficiently running the respective protocols that they are involved with. We have been doing a lot of work in terms of liaising with community members, having calls with DAO service providers, and really building out the pipelines for trying to ignite interest from active community members to put proposals forward, and to assist with starting to build core functional areas of the DAO.

Without saying too much more, the dYdX Foundation should be releasing a blog post in the near future about potential DAO structuring. Again, the composition, formation, structuring, and ultimately the creation of the dYdX DAO is totally in the hands of the dYdX community. Anything from the dYdX Foundation is going to be more to jumpstart the conversation and offer a potential way of doing things. In no way is it binding on the dYdX community. I will not say anything else about the dYdX DAO for now, but we are looking forward to that post going live.

James (dYdX Foundation): Thanks, Josh. The next question is about Governance and V4. Have there been any thoughts on how Governance will be structured in a V4 world?

David (dYdX Foundation): Happy to add context here around Governance. Ultimately, how governance pans out is up to the community. I think the dYdX Foundation is starting to spend more time really understanding what governance looks like in V4, and what options are available. Ultimately, all I can say right now is there is a standard module for governance in the Cosmos SDK that may or not make sense for the dYdX community to adopt.

In a lot of ways, there are features to governance that mimic what exists today, and then there are also new features or differences as well. So, we are still exploring what it looks like. But if you refer back to the blog posts that dYdX Trading Inc. released on the different milestones, really the build-out and evaluation of the governance implementation will happen over the course of Milestone four. We’re still in brainstorming mode around what's worked in governance to date, how we think about the next version of governance, and really trying to continue to innovate there. So again, if anyone has any ideas or thinks or knows a lot about governance on Cosmos, always feel free to reach out to me and others or post on the Commonwealth forums as well.

James (dYdX Foundation): Awesome. Thanks, guys for that. That's great. Let's move over to Carl then from the dYdX grants team. Carl, I guess as usual, are there any updates on all things grants V1.5?

Carl (dYdX Grants): Yeah, for sure. By the way, a quick note on the Gather Town. We can talk about that after the AMA, but I was talking to the Gather Town team about continuing to support the cost and everything over the next 6 months!

James (dYdX Foundation): Oh, brilliant, that's great to hear!

Carl (dYdX Grants): The dYdX community appeared fond of that, so we’re happy to keep maintaining it. We’re also big fans of it, and we'd love to host everything there and be able to support all the users. But anyways, we can talk about that offline. So yeah, our fourth round will be published tomorrow, which brings us now to 17 individual grants in a total of about over $600,000 in funding allocated in V1.5. If you look at the total across V1 and V1.5, we're at 15 rounds now with 79 different grants and around $2.7 million in funding. In terms of progress, ongoing grants approved in V1.5 are doing really well. We have lots of exciting updates coming from the merch team later this week. So, I would say make sure you attend the AMA on Thursday. I'm not going to front-run them any more than that. I'll let them give their update, but I know everybody's been excited and congrats to whomever the merch winner was on the poker tournament prior to this. Make sure you tell us about that.

The dYdX Academy page is also progressing really well. Shout out to Mo, James, and Alucard, who have been doing great there. We've now issued all the grants with regard to building the actual dYdX Academy page. So now, we're moving on to the content contribution side of things. We'll be looking for editor roles, translation roles, and things like that so that we can start to generate a consistent stream of high-quality content that can be populated. The research pieces are also showing progress and hopefully, we can see some of these completed reports by the end of the next few weeks to further original timelines.

So looking ahead now, we took a step back and looked at the original budget allocation that was approved in the community for V1.5, and we see that we've spent 0% on DAO preparation and only 13% on international growth. So, we're really trying to focus our efforts on identifying productive projects in these categories. Unfortunately, growth efforts are much more difficult in a bear market like the one that we're in today. The impact is typically diluted with overly negative news surrounding the general market. So, even if you publish something really cool and productive, it'll just immediately be followed by the headline on market price or people just generally are just not very happy about it. So, the impact is not always as great.

We're being really careful with what we are funding. What you'll probably see is first, we negotiate a very small proof of concept type grant before committing to the larger effort, and that was something that we learned from V1 as well: see some numbers before committing to a larger initiative. We do have a few projects in process right now that should be getting approved in the next couple of weeks, so look out for those. As previously mentioned, we are working on a bunch of transparency efforts. Those will be out this week as well. We're sharing epoch updates and going forward we'll be doing these updates just to keep a more consistent set of information flow from the grants team as well so that everybody's more in line with our activity.

James (dYdX Foundation): Nice. Exciting. Thanks, Carl. If anyone wants to potentially apply for the educational written content grant and things you were talking about, do they apply just as a normal grant? Is this on a bounty board? Where do they go for that?

Carl (dYdX Grants): Yeah, good question. We're approaching it in a few different ways. Initially, we might put out a couple of RFPs around potential longer-term roles, and then we're looking at using deWork or some other bounty board type setup in order to allow more general contributions from community members that would then have to go through this type of peer review system on behalf of existing grantees to make sure that the content is in line with expectations and in line with the quality that we will hold ourselves to with regards to the dYdX Academy. I think it's going to be a combination of small bounties for things like ‘create a post on staking in Cosmos’ or something like that. For something longer term, we're looking for a peer reviewer or somebody who can consistently translate content into Spanish, Japanese, etc.

James (dYdX Foundation): Nice. Awesome. Finally, there's been a weekly stream currently of grants AMAs. Is this something that's going to continue, I guess throughout the rest of the year and season?

Carl (dYdX Grants): Yeah, for sure. So part of what we're doing now is all of our approved grantees must give an AMA to the community, and be more open to sharing everything in a public setting. Grantees should make themselves available to the community so that we get more engagement and the grantee is held more accountable by the community members in terms of the quality that they're produced, not just the grants team. This also helps promote the product and whatever it is that they are building, just so that we get more eyes on it from community members. So far, we have had one AMA, we have another coming up next week, and we have the merch one this week.

James (dYdX Foundation): Fantastic. Thanks, Carl. Appreciate that update. That's every question for the teams up here. I guess for anyone in the audience if you want to ask something, by all means, raise your hand and we can pull you up on stage. We've got about 10 minutes left, so feel free to ask anything and we'll try and answer your questions. I'll give it a couple of minutes anyway and if anyone's got anything, we'll bring you up.

No questions.

Thanks, everyone for tuning in. We really appreciate you guys posting these pre-populated questions, and love to see the interaction recently on Discord, providing feedback on Commonwealth. It's great to see the number of comments that are really detailed continue to increase. This is something that is really valuable in the dYdX community and something that we really pay attention to as well.

This, as usual, will be deciphered and posted as soon as we can. I'll try and post it on YouTube later today. From a transcription perspective, this takes a little bit of time. It'll probably take a week before we can actually get this up on our blog, but we'll keep you updated as soon as the blog is up and ready. So thanks Carl, Josh, David, and Corey for coming on as usual. Thanks, everyone for being in the audience, listening in, and asking your questions. We'll end on that note and I guess we'll catch you in the next Epoch Review.

Thanks, everyone!