Decentralization of Fee Distribution Process

Proposals
1

Summary

This proposal seeks to decentralize and automate the entire fee distribution process for the GMX ecosystem. Currently, fees are manually withdrawn from contracts, followed by a script-based distribution to GLP, keepers, reward distributors, and the treasury. The new process will transition to on-chain fee calculations and distributions using smart contracts, ensuring greater transparency, efficiency, and alignment.

Motivation

Currently, GMX fees are manually withdrawn from contracts, after which a script distributes them to GLP, keepers, reward distributors, and the treasury. Automating fee distribution through smart contracts will improve accuracy, security, and decentralization, ensuring that funds are allocated seamlessly and transparently.

Rationale

Current Process:

  • Fees are manually withdrawn from contracts.

  • A script is used to distribute fees to GLP, keepers, reward distributors, and the treasury.

New Process:

  • Fee calculations and distributions will be executed entirely on-chain using smart contracts.

  • This ensures real-time, trustless, and verifiable fee allocations.

Formalization of Handling of Keeper Costs:

  1. A maximum of 50% of GLP fees is allocated to cover v1 keeper costs. This covers Oracle price update costs. If the 50% threshold is exceeded, the treasury funds (from the 10% of v2 fees) cover the excess for v1.

  2. For v2, keeper costs are typically paid by users, but shortfalls may occur during periods of high volatility or gas prices.

This structure ensures that keeper costs are sustainably managed while maintaining sufficient funds for other critical ecosystem functions.

As of the past week between 2025-02-17 and 2025-02-10, the composition of V1 Keeper Fees was $56,281.10 and V2 was $71,074.29 for Arbitrum. For V1 Share this represents a 0.1% share, since V2 fees are at the expense of the user, there is no percentage share.

Data:https://dune.com/queries/4753429/7891340?sidebar=query-explorer&share_v1_n26d66=70&share_v2_n26d66=10

Conclusion

This proposal is a step toward decentralizing and automating GMX’s fee distribution process. By automating fee distribution and migrating to on-chain smart contracts, GMX will improve transparency, efficiency, and scalability.

5 Likes
3

Makes a lot of sense. It’s another small but worthwhile aspect of the protocol operations to further decentralise.

1 Like
4

all for better productivity so that devs can focus on building :smiley:

5

Can you please expand details about “keepers” thing? What is mechanism behind of that ? who is playing the keepers role ? And shouldnt there be smart contract audit of this new onchain pipeline before enacting it ?

6

In a nutshell: GMX uses a two-step process for transactions. Users submit a transaction, and the Keepers pick up those transactions, verify they’re correctly structured, and then execute the order.