Article by DragonStake, validator of DyDx https://www.mintscan.io/dydx/validators/dydxvaloper1he9yn4jhuq50vtf95ncv9rvplnqug8w9yw8dwc

Staking dYdX has delivered 25 million USDCs to its stakers, which is quite unusual for DeFi protocol tokens. Most protocols issue their own tokens with various types of incentives aimed at ultimately creating value for the project but do not deliver stablecoins.

These native tokens are often issued to users who have the most capital and activity. This type of strategy was implemented in 2020 for DeFi protocols with success beyond expectations, generating a level of activity and adoption in these protocols that was later called DeFi Summer. It is one of the great innovations of Crypto for project financing.

dYdX also continues to implement token incentive strategies on its platform, but the possibility of staking arose with the project's move to Cosmos with the development of its own chain. A decision that generated significant debate around application architectures, delving into the idea of appchains.

The dYdX chain needed to have a sufficiently large group of validators, and staking comes to remunerate this necessary activity for the project's decentralization.

However, the project's remuneration is done in USDC since the project's maturity positions it at a point where it does not need financing. Therefore, dYdX staking has fundamentally become a way to remunerate tokenholders. This has allowed for the delivery of over 25 million dollars to stakers, who are those holders that decide to stake their tokens, usually delegating them to a validator, as validating directly is complex and restricted to a number of 60 possible validators.

The profitability of staking is directly linked to the project's operational volumes. These remain currently stable, partly due to the high competition experienced in the sector.

Derivatives data indeed show strong growth in DeFi, but the project is not capitalizing on part of that growth.

Although dYdX has typically led this category and often continues to be the leader on many days, it currently faces significant competitors on different networks.

However, in an important metric such as TVL, which, while not directly related to profit, is more difficult to distort, dYdX is in the top positions. This is a significant metric because in this type of activity, it is important to know the capital that can support derivatives activities.

The current profitability of the project is around 10% to 20%. This is an extraordinary return and will put buying pressure on the asset.

If the activity remains stable, this amount is ultimately divided among all the staked capital. Therefore, a price drop could multiply this profitability. The 12% return makes this project what we could call a defensive project within the space, as it wouldn't be factoring in any growth.

One explanation for this significant discount is probably these growth issues and the regulatory uncertainties that such financial activity implies. The first part of the explanation would pertain to the project's own dynamics, and the second would be a risk associated with the entire sector in general.

Assuming growth and without these uncertainties, the price should be much higher than it is currently. We are looking at one of the most profitable sectors in DeFi. The delivery of USDCs attests to this fact.

Version 5.0 and the ability to incorporate futures assets without the need for governance is one of the project's major bets. This will allow for a long tail of futures and demand for the token. It will be a significant advantage in terms of the agility in creating these markets, which could be decisive in starting to grow within the category.

The latest update has multiplied the possible markets, which should generate a higher trading volume, although we will have to see the liquidity each of them achieves, as the capital has been isolated in them.

We are looking at one of those projects that could be called Crypto Value, as these are profitable projects that have entered a new phase. The main challenge at this moment is regulatory, followed by the challenge of competitiveness within the sector.

However, with a profitability of around 10-20% in USDC, it provides a significant price floor.