dYdX initiated the distribution of its long-awaited governance token on Wednesday.
The decentralized finance (DeFi) platform first announced it planned to launch a token last month with an accompanying governance plan. It included plans for a safety staking pool, with users who stake $DYDX receiving a yield in the same token.
Wednesday's kickoff wasn't without headache, however. The dYdx team uncovered an error in the deployment of the safety staking pool contract shortly after it went live.
Consequently, access to the pool was blocked as the team sought to create an open-source fix for the contract. Because of the new governance model, the upgrade containing the fix will have to pass a governance vote during the first epoch. In a tweet thread explaining the snag, the dYdX Foundation said no user funds were at risk and all will be recoverable in the coming days.
"The design of the Safety Staking Pool included deposits being locked for a minimum of 1 epoch (28 days). Assuming an upgrade proposal can be passed within the next week, no user impact will have occurred, & the few early stakers will still be able to withdraw their funds on time," it said.
This vote could include ways to additionally compensate early stakers for the rewards they should have received if the error had not occurred, according to dYdX. The issue is being debated in a thread on the dYdX community forum.
The governance model allocated 7.5% of the tokens to retroactive rewards and 25% to user trading rewards. Those who completed a single transaction on the platform in the past three years were eligible for the airdrop. The price of the token reached $12 upon release, according to CoinGecko. For this reason, some claimed to have walked away with tens of thousands of dollars worth of tokens as a result of the airdrop.
However, not everyone was able to reap the rewards, as geographic restrictions blocked some users from receiving the airdrop -- particularly those based in the United States.
Under U.S. securities laws, airdropped tokens are a type of security, and Securities and Exchange Commission (SEC) chair Gary Gensler has made it clear that DeFi won't get a pass under the agency's purview.
At the Aspen Security Counsel Forum he said last month:
"Make no mistake: It doesn’t matter whether it’s a stock token, a stable value token backed by securities, or any other virtual product that provides synthetic exposure to underlying securities. These products are subject to the securities laws and must work within our securities regime."
Some would-be participants took to Twitter to sarcastically commiserate that American regulators were "protecting" dYdX users from thousands of dollars.