dYdX Allocates 25% of Fees for Token Buyback

On March 24, the decentralized cryptocurrency derivatives exchange dYdX initiated a buyback program for its native token, DYDX, dedicating 25% of its monthly commission revenue to this effort.

The first-ever $DYDX Buyback Program is here ?

Starting today, 25% of dYdX net protocol fees will be used to buy back DYDX tokens from the open market every month—reinforcing long-term commitment to the ecosystem.

More products. More growth. More value. pic.twitter.com/1XsD1uyb34

— dYdX (@dYdX) March 24, 2025

The team aims to “strengthen long-term commitment to the ecosystem.” 

According to data from DeFi expert Route 2 FI, dYdX’s annual commission revenue amounts to $17.5 million. Thus, at least $4.3 million will be allocated for the buyback.

“The community is discussing the possibility of increasing the buyback allocation to 100% of net unlocked DYDX tokens with a 50% emission reduction from June 2025, making it one of the most mature Perp DEX in the space,” he noted.

Following the announcement, the price of DYDX rose by 7.9%. At the time of writing, the coin is trading at $0.726, according to CoinGecko.

However, the model of token buybacks funded by protocol revenues cannot prevent price declines and is generally detrimental. This conclusion was reached by Messari analysts in a recent report. 

The bear case for token buybacks https://t.co/ojg3twTtFf pic.twitter.com/3Ig0r57IML

— Messari (@MessariCrypto) March 20, 2025

Temporary buyer pressure cannot conceal weak fundamentals, and growth metrics and narrative formation remain fundamental, they concluded. Moreover, excess capital ultimately turns into unrealized losses, requiring the sale of coins at unfavourable prices.

As examples, analysts cited projects such as Raydium (RAY), GMX (GMX), Gains Network (GNS), and Synthetix (SNX). Despite spending millions on buying back their tokens, their values plummeted. SNX fell by 77%, GNS by 76%, GMX by 34%, and RAY by 26%. 

RAY, GMX, GNS and SNX have programmatically bought back millions in tokens which are now worth way below cost.

This is the programmatic token buyback fallacy:

1. Irrelevant to price action which is driven by revenue growth and narrative formation.

2. When revenues are strong… https://t.co/c16eICFJPL pic.twitter.com/4G6wBFHcgF

— MONK (@defi_monk) March 20, 2025

As an alternative to capital allocation, Messari suggested either “growth at any cost” or distributing real value to holders in the form of stablecoins or top assets, as seen with veAERO or BananaGun.

Pantera Capital junior partner Mason Nystrom agreed with the analysts’ conclusions. He sees the main negative effect in that instead of buying back tokens at inflated prices, protocols could direct this capital to stimulate fundamental growth.

Nystrom recommended companies focus on the long term, favouring strategic rather than programmatic buybacks. According to him, this would create greater value for token holders.

Previously, ForkLog provided an in-depth analysis of the fee switch concept, which includes more active buyback and burning of coins.