The DYDX token is soaring after the Foundation supporting the decentralized exchange unveiled today the genesis creation of its proprietary blockchain and new functionality for the token.

The introduction of DYDX as the Layer 1 native token of the new dYdX Chain implies a fresh functionality for the token, as it will be now staked with validators to preserve network security and aid with the governance of the network.

“This is a significant change from ethDYDX, which is solely a governance token in dYdX v3, to DYDX, a native token powering the dYdX Chain, a standalone PoS blockchain network,” the Foundation wrote in a post on its website.

DYDX token jumped almost 6% to a five-month high of $2.5 on the news.

Fees Distributed in USDC

The dYdX Chain, which created its first block on Oct.26, operates as a proof-of-stake blockchain designed using the Cosmos SDK and the CometBFT consensus algorithm.

Unlike other PoS chains, all fees collected by the protocol, including trading fees and gas fees, will be distributed to validators and stakers in USDC, and not in the DYDX token. Fees are distributed every time a block is committed.

The decentralized exchange collected $137M in fees last year.

Governance

dYdX Chain uses the standard x/gov module within the Cosmos SDK. This newly adopted system enables any network participant to create a governance proposals, as long as they meet a minimum deposit.

Only staked DYDX tokens can participate in dYdX Chain governance, and validators inherit the voting weight of their Stakers unless a Staker elects to vote on a proposal themselves.