# dYdX V3 Token incentives Methodology

## 1. Overview

Token incentives measures the value of native tokens that dYdX V3 pays out to its supply-side and demand-side users, including traders, liquidity providers, and safety module stakers. These incentives are primarily used to compensate stakeholders for contributing to protocol security and liquidity. The metric reflects the protocol's stock-based compensation by tracking reward claims and disbursements from the community treasury.

## 2. Data sources

- **Blockchain events**: `ClaimedRewards` events from `LiquidityStaking` and `SafetyModuleV2` contracts, `RewardsClaimed` events from `MerkleDistributor` contracts on Ethereum, and `coin_spent` events from system contracts on dYdX Chain
- **External data**: End-of-day price feeds for native assets

## 3. Step-by-step calculation

### Component A: Staking and safety module rewards

- **Purpose**: Captures incentives distributed to users who provide liquidity or stake assets in the safety module.
- **Logic**: `ClaimedRewards` events are parsed from `LiquidityStaking` and `SafetyModuleV2` contracts on Ethereum. The claimed reward amount is extracted from each event to represent the distribution of assets to participants.
- **Key fields**: `block_timestamp` (timing), `amount` (reward quantities)

### Component B: Merkle distributor reward claims

- **Purpose**: Tracks trading rewards and other retroactive distributions claimed by users via the Merkle distributor.
- **Logic**: `RewardsClaimed` events are parsed from `MerkleDistributor` contracts on Ethereum. Claims associated with the community treasury address are excluded to ensure only user-facing distributions are captured.
- **Key fields**: `block_timestamp` (timing), `amount` (reward quantities), `account` (recipient identification)

### Component C: Community treasury disbursements

- **Purpose**: Captures programmatic distributions and token spend from the community treasury on dYdX Chain.
- **Logic**: `coin_spent` events are parsed from the dYdX Chain ledger. These events are filtered for the specific community treasury spender address. The asset amounts are extracted using regular expression matching to isolate numerical values from the native asset suffix.
- **Key fields**: `block_timestamp` (timing), `amount` (disbursement quantities), `spender` (treasury address)

### Component D: USD conversion and aggregation

- **Purpose**: Normalizes all captured incentive distributions into a uniform USD value.
- **Logic**: Asset amounts are normalized by decimal precision and multiplied by end-of-day price feeds. All components are aggregated by date to provide a total daily token incentives value. Daily granularity is maintained using UTC day boundaries.

*This methodology was automatically generated by Token Terminal's methodology analyzer.*

Value of native tokens distributed as incentives.

Token incentives

Exchanges (DEX)

Market makers offer trades through order book & make money on bid-ask spreads (supply-side fees).

dYdX is a non-custodial trading and derivatives protocol initially built on Ethereum and later expanded to their own blcokchain built on top of the Cosmos SDK. dYdX was founded by Antonio Juliano and launched in 2017.

DYDX tokenholders own and govern the protocol. dYdX Trading Inc. currently takes all of the total trading fees paid by traders (revenue). dYdX’s investors include a16z, Polychain, The Spartan Group, etc.

dYdX V3

Token incentives

Token incentives

Chain breakdown