A Strategic Fee Structure for GMX's Deployment on Botanix

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Title: A Strategic Fee Structure for GMX’s Deployment on Botanix

Author: @coinflipcanada
Date: June 11, 2025
Status: Discussion
Snapshot Vote: TBD

Abstract

To ensure a successful GMX launch on Botanix, this proposal advocates for a revised fee structure: 50% to LPs, 25% to GMX stakers, and a 25% allocation to the Treasury. Half of this Treasury allocation (12.5% of total fees) will be actively deployed for targeted Marketing and Growth Incentives on Botanix. This strategy is designed to accelerate adoption, deepen liquidity, and establish a framework for future GMX multichain expansions.

Motivation

As GMX executes its multichain strategy, starting with the native deployment on Botanix, a “one-size-fits-all” approach to fee distribution is insufficient for seeding new deployments and capturing market share. Newer ecosystems like Botanix present unique challenges and opportunities that require a more agile and aggressive growth strategy as will entering existing ecosystems where we have historically not been present. The current fee structure, while excellent for mature deployments, is not optimized for aggressive growth in new markets. It limits the DAO’s ability to directly fund the critical early-stage marketing and liquidity incentives needed to build momentum, risking a slower, less impactful launch.

This proposal aims to empower the GMX DAO with the resources to actively cultivate the Botanix ecosystem, rather than relying on a more passive distribution of fees.

Specification

We propose implementing the following fee distribution model for the GMX V2 deployment on the Botanix network:

Recipient Proposed Botanix Allocation Current Arbitrum/Avalanche (V2) Change
Liquidity Providers (LPs) 50% 63% ▼ 13%
GMX Stakers 25% 27% ▼ 2%
Treasury 25% 10% ▲ 15%

Furthermore, this proposal mandates that for the first year no less than 50% of all fees allocated to the GMX Treasury from the Botanix deployment be directed towards Marketing and Growth Incentives specific to the chain. The use of these funds includes but is not limited to:

  • Trading Competitions: To attract a critical mass of active traders.
  • Targeted LP Rewards: To incentivize long-term, stable liquidity in strategic markets.
  • Market Maker Incentives: To ensure deep, balanced pools and provide a superior trading experience.

Rationale

This proposal reallocates a portion of protocol revenue from passive distribution to active investment in ecosystem growth. The core rationale is that strategically deploying capital to foster adoption will grow the protocol’s overall revenue more effectively than the current fee structure, leading to greater absolute returns for all stakeholders over the long term.

A dedicated allocation for Marketing and Growth Incentives can:

  1. Accelerate Adoption: Directly incentivizing user activity can overcome the initial friction of a new deployment and build a strong user base quickly.
  2. Ensure Deep Liquidity: Attracting and retaining LPs and market makers is the most critical factor for success. This allocation allows for competitive, targeted incentives.
  3. Create a Flywheel Effect: Higher volume leads to more fees, which can be reinvested into more growth initiatives, creating a positive feedback loop.
  4. Establish a Multichain Playbook: The success of this targeted approach on Botanix can create a repeatable and adaptable framework for launching GMX on future chains, strengthening the entire GMX ecosystem.

This strategic investment in growth is projected to generate value that far outweighs the modest, upfront reduction in the direct fee share, ultimately benefiting the entire GMX ecosystem.

Next Steps

We believe this is a critical strategic decision for the future of GMX’s multichain presence. We invite the community to discuss, debate, and refine this proposal. Pending community feedback, the goal is to move this to a formal Snapshot vote on or before June 16, 2025.

Notes

Deployment of cross chain contracts for $GMX and fee distribution are still ongoing, and are not expected to align with the deployment date for GMX on Botanix. Fee distributions to stakers will accrue and be accumulated for distribution once implemented.

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Taking into account the rationale stated in the proposal, the fee structure seems well balanced to me. For GMX stakers, the reduction in fee share is only fractional. Current LPs can’t complain either because they won’t be directly impacted. The only question is whether we will get enough liquidity from future LP providers on Botanix. On the other hand, the new deployment targets BTC maxies, who are historically used to lower (but stable) yields.

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Very relevant points indeed

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Is everyone here nuts? Like legitimately bonkers?

Coinflipcanada has spent FOUR YEARS responding to people in the official telegram channel telling them to NOT deploy on speculative channels. After avax-chain, the floodgate were unleashed with “wen base” and “wen optimism” and “wen celer” or “wen starknet” or “wen sonic”. And every time, Coinflipcanada would caution that it’s unwise to chase chains or make speculative deployments, and that a more nuanced approach would be needed for protocol expansion (heck, look at everything that had to come to pass to get on solana).

And now, BECAUSE HE’S BET MONEY ON IT, he’s leveraged his position as a community manager at GMX to help boot-strap a forthcoming L2, rather than all of those OTHER promising L2’s of yesteryear. And a bitcoin L2 no less! As if ordinals wasn’t evidence enough of the flash-in-the-pan nature of such a thing.

Using your position at GMX to boot-strap your side-investment was wrong, Coinflipcanada. Like it’s morally wrong. At least in western culture. If this were an actual company you would be fired for abusing your position at GMX.

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In his defence, gmx is deploying on those said chains with the multichain expansion and the architecture of it solves liquidity fragmentation. Which was their main concern, thus he wasnt wrong with just deploying on every chain, look at avax liq and vol today.

Understandably that there is conflict of interest in this regard, but cfc has stated that he be refraining from the votes etc.

I do appreciate the marketing effort and botanix is indeed a new chain but the idealogy of being safe and refrain from trying new things is not good. I would still vote yes for botanix but understandable on the sentiments stated, wish GMX had moved and conducted marketing campaigns faster in recent years.

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Agree on the need for different fee structures etc, would propose GMX staking to 20% for botanix and give more to LP instead due to the need to bootstrap liquidity on a new chain given there is no multchain aspect of it yet.

Thus my suggested being:
55% LP
20% GMX
25% GMX treasury to fund initiatives as stated

Would see this as a additional buying pressure for GMX instead of staking so i do hope people see it as buy pressure instead of reduced staking rewards. Hope the incentives via treasury could also be given by buying back gmx and redistri but thats not for this proposal ig.

To reiterate only applicable to botanix for this structure.

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Given that the funds are now available they can be allocated to long term liquidity providers or if targetted campaigns don’t appear fruitful allocating back the 12.5% would take the distribution to 62.5% vs the 63.0% on Arbitrum / Avalanche.

The hope is that this provides optionality.

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First, I want to say that I respect you for holding contributors, myself included, accountable. It’s crucial to address community concerns, especially when a contributor could be perceived as taking advantage of their position. I appreciate the opportunity to respond.

The core of your concern seems to be a conflict of interest, so let me address that head-on. Yes, I am personally invested in Botanix and other Bitcoin L2s. I have been open about this. I believe unlocking Bitcoin’s native capital will be a major catalyst for DeFi, and after engaging with many teams over the past two years, I found the Botanix team has a plan and took the steps that give them a better chance of providing us the opportunity we are looking for.

Does my investment create the potential for a conflict of interest or cloud my judgment? Absolutely. No matter how objective I strive to be, that risk exists. This is precisely why these decisions are not mine to make alone. The proposal to deploy on Botanix had to convince GMX contributors and the DAO as a whole. The final decision rests with the DAO, providing a crucial check on any individual’s potential bias

https://snapshot.box/#/s:gmx.eth/proposal/0x13c7ed7662af458af664ce60553606ac4539ca2535e1f61a1ac62aa3d9aeca41

You also raised a fair point about my past caution regarding speculative deployments versus this new push. The question has never been if GMX should expand, but how to do so without degrading our product.

GMX’s architecture gives traders great execution by using oracles for price discovery, which is a departure from the traditional AMM model. Every time we deploy to a new chain, we potentially fragment our liquidity. For major assets like BTC and ETH, this isn’t a huge issue because the markets are massive. But for smaller tokens, splitting liquidity across many chains would hurt the quality of trade execution for everyone, including on our flagship Arbitrum deployment, through more conservative paramaters needed to exclude malicious traders.

This is why we’ve historically been cautious. A full deployment for every promising chain wasn’t feasible. Instead, we focused on developing GMX Multichain, a solution that aggregates liquidity to enhance, not compromise, the trader experience across many chains. The fruits of that effort will soon be available for us to see.

So, why a native deployment on Botanix now? Because it serves a very specific, long-standing goal: enabling the trading of Bitcoin on the Bitcoin network itself. After successful deployments on Ethereum’s top L2 (Arbitrum), Avalanche, and Solana, offering a native BTC perpetual market on its own network was the next logical frontier. This isn’t a speculative bet on a random chain; it’s a targeted move to capture a unique market.

To be clear: using my position at GMX to simply enrich a personal investment would be wrong. My advocacy for this deployment comes from a conviction that it aligns with GMX’s strategic interests to be the leading DEX everywhere, especially on the industry’s foundational chain.

However, the community and DAO are the ultimate arbiters and decided. The post above is specific to determining how we want to bootstrap our activity on a new chain that we have decided to deploy on, and potentially indicate an approach that we may want to consider longer term as GMX Multichain starts exposing us to more ecosystems.

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While not explicitely stated, I would believe that in many circumstances the 12.5% would be swapped back to GMX tokens and they be used in that fashion. For example LP and trader incentives could very naturally be delivered in GMX tokens, while marketing spend and pool balancing incentives may not work as well.

On average I would think this solution will lead to more tokens being bought back for distribution.

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Thanks @coinflipcanada for the reply, i still believe having a higher % towards LP is crucial for initial bootstrapping to achieve better price execution. Personally am a GMX staker instead of Lp and would rather sacrifice gmx staking share on botanix to achieve this goal.

Marginally 5% from gmx staking to LP makes a difference in APR wise alongside incentives. We could do a 3 months 55% LP and upon sufficient liquidity it be reduced to stated level of 50% be alright. Hope to gain first movers advantage in btc L2 perps thus my suggestion. Please do consider if possible to do a limited period for liquidity bootstrapping.

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I agree it makes sense to optimise for growth in Botanix’ nascent ecosystem. It should lead to better returns for all stakeholders over the long term.