Retail Investors Trap: dYdX’s Bridge Closure Locks $25M in Liquidity

dYdX has encountered significant backlash from its community after it permanently shut down the bridge for ethDYDX tokens on June 13, 2025. The bridge, which was used to migrate ERC-20 DYDX tokens from Ethereum to the native dYdX Chain, has left approximately 45,000 holders unable to convert more than $25 million worth of tokens. The closure was approved in a December 2024 community vote, which ended support for the wethDYDX smart contract, followed by a six-month transition period. The decision has been criticized as a barrier to liquidity and a source of financial loss for many retail investors, with one community member noting that “thousands of retail investors suddenly found themselves holding assets they can’t use or trade. In our group alone, people lost more than $200,000 in value”.

The bridge’s closure has had a direct impact on the supply of DYDX tokens. According to official figures, more than 41.6 million ethDYDX tokens were left unmigrated at the time of closure, excluding them from both the total and circulating supply. This adjustment reduced the total DYDX supply to 958.3 million and brought the circulating supply to 750.2 million. The dYdX Foundation confirmed that the 41.7 million ethDYDX tokens left unbridged had become obsolete with the shutdown of dYdX v3 and the bridge. These tokens are no longer functional on either centralized or decentralized exchanges, and any attempt to use the old bridge now results in permanently locked tokens.

Community responses have ranged from frustration to outright condemnation. One user expressed the sentiment of many by stating, “The company’s activity of terminating support for the legitimate transfer from one network to another can be confidently classified as a SCAM.” Another echoed this, noting that “many holders and I were not informed about the conversion”. These complaints highlight a broader concern: the lack of communication and transparency surrounding the migration process. The dYdX community is now advocating for a solution, with one proposal being discussed on the governance forum to reopen migration for ERC-20 DYDX holders. Activist groups on Telegram are also coordinating efforts to lobby for a resolution.

The token bridge shutdown has also had a visible impact on the market. In the 24 hours following the bridge’s closure, the price of DYDX dropped by 8.2%, trading at $1.35 on major exchanges like Binance and Coinbase. The price fell below the 50-day moving average, and the RSI dipped into the 38 range, indicating a potential oversold condition. Meanwhile, wallet activity on Ethereum declined by 25%, suggesting a loss of confidence among token holders. In the broader market, the move also had spillover effects, with related assets like Coinbase shares falling 1.5%. This reaction underscores the interconnectedness of the DeFi ecosystem and the ripple effects that such decisions can have.

The dYdX Foundation, which oversees the dYdX protocol, has emphasized its commitment to enabling community-led growth and sustainability. However, the bridge’s shutdown has raised questions about the balance between decentralization and user protection. Critics argue that the decision to end support for the ERC-20 standard without a clear migration path has created a liquidity trap for a significant portion of the user base. The situation has also reignited discussions about the broader risks of cross-chain bridges. Previous incidents, such as the Ronin and Wormhole exploits, have demonstrated how vulnerabilities in bridge infrastructure can lead to massive losses, and the dYdX bridge closure has further highlighted the importance of secure, transparent migration processes.