Currently, centralized exchanges (CEXs) have lower fees than decentralized exchanges (DEXs), which poses a challenge for the growth of platforms like GMX. To flip this dynamic, GMX needs to offer the lowest fees in the market, incentivizing traders to migrate and creating strong network effects.
However, there is an inherent tension between lowering fees for users and ensuring liquidity from liquidity providers (LPs). LPs need sufficient returns to keep their capital in the platform, or they will move elsewhere.
A potential solution is to introduce a tiered reward system for LPs. In this system, LPs who provide increasingly larger amounts of liquidity receive emissions of esGMX tokens. These emissions could compensate for lower immediate annual percentage returns (APRs) that result from reduced fees designed to compete with CEXs. This structure ensures both parties benefit:
• Users: Enjoy lower fees, making GMX the most cost-effective place to trade.
• LPs: Gain exposure to esGMX, which acts as a proxy for equity, similar to how investors receive warrants or equity in a growing company. As GMX’s user base and trading volume increase, the value of GMX tokens should rise, providing significant upside for LPs.
This strategy creates a win-win scenario. Users benefit from the lowest trading fees, attracting more activity to the platform. LPs benefit from the potential appreciation of GMX tokens, which compensates for the lower immediate returns on their provided liquidity.
While GMX holders might face some dilution, the overall increase in the platform’s value and user base can far outweigh this effect. By becoming the number one platform for trading efficiency, GMX can achieve a dominant position in the market, ultimately benefiting all stakeholders.
Based on pool utilisation rates i dont think the issue for now is liquidity size, imo having more trading competitions or narratives play (points rn) would boost for more traders if we have sufficient traders then we could consider lowering fees
In my experience, to win in business, you need to do two things very well:
1/Lowest price/fees (this is true for all new entrant/large scale businesses, at least until they get a monopoly - and imo that is how GMX should be thinking)
2/Superior experience (GMX has this, DeFi / self custody etc).
Tinkering with competitions and the like is window dressing. Bring the hammer – GMX is lowest fees with best experience.
And when I say lowest fees, I mean priced 10% under the top 3 CEX’s - and this being the primary marketing message. The rest is noise.
Juice LP’s however you need to to make this happen - I don’t know the detail on that - but do know that offering esGMX as an incentive should work. GMX never did VC backing, great. But that doesn’t mean you can’t now incentive LP’s to allow you to lower fees to make 1 and 2 true.
My proposal is for GMX devs to compare fee structures between GMX and the top 3 CEX’s (for perps) and quantify where GMX sits in the strata. Assuming it is not as competitive, map out what it would take to offer superior fees (ie: less cost to users) and what incentives LP’s would need to make it happen. Then promote GMX as the lowest cost Perp. This should drive user switching leading to a vastly bigger user base, with more revenue comes more distribution to stakers even through fees are technically a little less. Everyone wins.
I do get the idea, absolutely. But it assumes that tens of thousands of users will automatically flock to GMX once fees are much lower. I don’t think trading fees are the single deciding factor that this proposal assumes they are. Traders’ behaviour and preferences depend on more than that.
Off the head, ballpark figures, pricing GMX trading fees lower than the top 3 CEX’s would require GMX to reduce trading fees by maybe about 75%.
It’s hard to see how you could incentivise LPs to stomach that revenue reduction, or mint enough esGMX to offset the shortfall.
had the idea that we reduce the trading fees to this CEX level specifically for the gmx GM pool
then incentivize trading and depositing to GMX gmPool and perhaps a ss gmx gm pool…
the trade of gmx token, increasing volume for GMX increases volume across the platform
just an idea to meet halfway here around this proposal, but i understand this might become an attempt to pump gmx price here. when really i just want volume for the platform to soar.