Since the referral program just launched, it may be preferable to adjust the emissions starting from June 2022.
To continue incentivising liquidity while having a sustainable schedule, we propose the following emission schedule:
Starting from June 2022, esGMX emissions for GLP can be changed to be dynamic instead of fixed, the amount emitted would be to target a certain APR (ETH / AVAX + esGMX) for GLP. The target APR can be 35% for June 2022, and 25% starting from August 2022. The above emissions for GLP from June 2022 to December 2022 would be the max emissions allowed.
The esGMX allocated for rewards distribution will be fully distributed towards the end of May 2022, to implement this emission schedule we propose to utilize 1 million esGMX from the floor price fund. The floor price fund was allocated 2 million GMX, around 50,000 GMX has been utilised so far through GMX bonds on Olympus.
I think this is a decent option with zero dev time required, a huge bonus for anything on this project as dev time is so limited.
I like the idea of the discounted accelerated payout for esGMX as well, say 10/90 split for a 1 week or instant vesting with the 90% not paid out being returned to the esGMX rewards pool (or perhaps some of it burned, some returned to the pool). Obviously much more difficult to implement, but something to look at for after X4.
Combined APR for GLP is “only” ~25% for past two weeks, but GLP supply holds steady at ATH. GLP is way underutilized now so targeting 25% APR is too high by my opinion. 15-20% target will be enough and we still will be competitive. There is difficult to find >10% APR for stablecoins or BTC, EHT elsewhere nowadays.
I think the recycling mechanism makes sense, but it should be considered after the emission changes, cos a reduction in emissions combined with an easy mechanism to exit may affect liquidity too abruptly
Don’t forget that the fees share for GLP has been increased from 50% to 70% in the past and we are not even considering bringing them back. ETH APR for GLP increased to ~35% when the volume on platform was good. So let’s cut esGMX rewards for GLP to minimum and let market to balance GLP size/utilization/apr. Btw I am not opposed to reduce esGMX rewards for GMX holders too. Let’s limit supply as much as possible because the current loose esGMX issuance really don’t help the GMX price dynamics.
Generally in favor of this proposal, which will ensure protocol stability and LP stickiness despite potential slowdowns due to market conditions. However, I think the APR nevertheless should continue to be responsive to market conditions and remain proportional to total GLP levels and respond downwards / upwards assuming a lot of minting / burning. That way the self regulation of eth APRs is matched and reflected in the pool levels. Perhaps a range of AUM and proportional target liquidity could be established and then implemented. Ie. If AUM > x then emissions go down, if AUM < y emissions go up / reach max level.
I agree that if we consider that market conditions are likely to continue tightening and returns appear to be coming down across other markets/platforms, the overall targets levels may be quite high. Also without a dynamic mechanism, a mega whale could theoretically maximize glp emissions by temporarily minting a ton of GLP even while a large portion of AUM remains underutilized, which would serve no function but to drain esGMX allocated. Similarly, if gmx price drops because of outside factors, like a potential final dump / capitulation of BTC, then emissions would spike significantly.
Lastly, the fact that target APR is the same across both chains would result in higher emissions on Avalanche, which is likely to be perceived as unfair by longer-term / loyal Arbi- GLPers and vice versa. Therefore, if the concern is that Avalanche AUM will drop more rapidly than Arbi, and the objective is to prevent this or further stimulate glp growth and adoption on Avalanche then I recognize the need for a less balanced approach. However, if liquidity levels remain adequate with proportional APRs then perhaps limiting the esGMX emissions to a multiple of eth rewards on any particular chain would be a more balanced approach.
