Good questions.
To add to (2): what portion of fees constitute “significant” for the buyback? Thanks
The complete fee distribution mechanism will be disclosed after the audit is completed. Please stay tuned and thank you for your continued attention.
From GMSOL_Support:
Dear community members, we’ve received some information about applying for admin both in proposals and DMs. Here’s the situation: our current admins are members with long-standing good reputations in the GMX community.
We warmly welcome more active community members to apply, but you may need to stay active here for a while and start helping other community members.
Admin does not represent GMSOL, nor does it represent any privilege or offer any additional information or rewards. In fact, as a decentralized open-source protocol, any user can see all relevant information and progress on X or GitHub.
Let’s make GMSOL better together. Thanks for your support.
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Hi thanks a lot for this product. What is a rough ETA for production; including audits etc.
Weeks? Months? cheers.
Hi, the progress will be updated simultaneously on the Telegram group and Twitter. If you are interested, please keep following for further updates.
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It is a great move and more than happy to see the team’s effort behind. Looking forward to see more details about buyback and points design.
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respect! rather than engaging in the act of constantly adjusting MP and slicing the cake, we would prefer to see the community continuously expanding the cake. Thank you. It would be even better if GMX could provide liquidity in one place and enable trading across multiple chains in the future
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Why after the audit? You are asking the community to pay for the project’s audit, so it seems reasomable that prior to giving GMsol money, GMsol should reveal how it plans to pay back GMX so that the community can make an informed cost/reward decision, andnot just pay upfront with a promise.
There have been too many projects (treasury swaps) promising “substantial” returns flowing to GMX in the form of traders and volume tha thave never materialized. So just be upfront with the plan.
Hey! This is a great proposal. Thank you.
A couple notes:
You declare a lot of trading markets, 50+. Tbh, even the 25 markets on your screenshot look scary, because this will cause massive liquidity fragmentation.
I think this approach will lead to:
— frustration of LPs: too many markets to chose for LPing. There are too many actions to perform in order to obtain a diversified LP basket.
— frustration of users: there are a lot of markets, but most of them are illiquid.
— again, frustration of LPs, because the liquidity fragmentation will lead to much lesser asset utilization and therefore less APR
I think it is vital for GMSOL success to split the liquidity into 4 pools only:
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SOL/USD pool, backed solely by SOL
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BTC/USD pool, backed by WBTC or TBTC
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ETH/USD pool, backed by WETH
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universal pool (all other pairs), backed by SOL
You can set a separate OI limit for every pair, limiting the risk. For example, the OI limit could be 1% of the daily perp CEX volume for that pair
——————-
You may ask, why is the SOL/USD pool backed by SOL and not SOL-USD 50/50?
Because
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It increases LP effectiveness and performance during the bull market. And GMSOL will only succeed if it proves itself to be highly effective, because GMSOL doesn’t have the luxury of giving its users inflationary rewards in its own token.
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It is more convenient to use as the DeFi LEGO brick. As collateral for borrowing, for example.
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Hi Cryptoptera, thank you very much for raising valuable questions. I agree with your point of view that trust should not be placed on anyone’s promise. GMSOL should indeed disclose the fee distribution before initiating the proposal.
GMSOL Points will be distributed to traders and LPs in the corresponding GM Pool.
GMSOL Treasury, composed of GMX tokens, plays a pivotal role in the GMSOL ecosystem. By continuously buying back GMX using allocated fees, the Treasury supports the ecosystem’s financial stability, persistently reduces the circulating supply of GMX, and maximizes capital utilization efficiency. All actions of the GMSOL Treasury will be under the supervision of the GMX DAO and every community member.
GMSOL Fee Distribution will be a transparent and equitable model that rewards various participants based on their contributions to the ecosystem.
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60% of the generated fees are allocated for continuous buyback of GMX and continuous injection into the GMSOL Treasury, which plays a crucial role in backing the value of GMSOL Points and stabilizing the ecosystem.
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30% of the generated fees are allocated to GM LP to provide real yield incentives.
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10% of the generated fees are allocated to GMSOL Team for ongoing technical development and platform maintenance to ensure the platform’s continuous improvement, innovation, and smooth operation. This allocation serves multiple purposes:
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Technical Development: A portion of the allocated funds is directed towards the continuous development of the platform, enabling the implementation of new features, upgrades, and optimizations to enhance user experience and platform functionality.
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Bug Bounty Program: To ensure the platform’s security and stability, a bug bounty program is established using a part of the allocated funds. This program rewards individuals who identify and report critical bugs or vulnerabilities, helping to maintain a secure environment for all users.
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Platform Operations: A share of the allocated funds is used to cover the operational costs of the platform, including server maintenance, customer support, and other essential services that keep the platform running smoothly.
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Legal and Compliance: As the platform operates in a regulated environment, some of the allocated funds are used to ensure compliance with legal requirements, such as obtaining necessary licenses, conducting further audits, and seeking legal advice when needed.
Through GMSOL Fee Distribution, GMSOL Treasury, and GMSOL Points system, GMSOL should have great potential to empower users, attract liquidity, and cultivate a thriving community of contributors without issuing any new tokens, requiring any VC investment, or having any pre-sale or pre-mint.
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Welcome back Fatefall.
The buyback mechanism corresponding to the fee distribution has already been disclosed above. As for the GMSOL Point Program, I can provide some additional explanations.
For GMSOL, its essence is a main program with complete functionality, and the fee distribution mechanism is one of its core parameters, which is why we are disclosing it now. Programs are independent from each other, meaning that even if the GMSOL Point Program and other upper programs do not exist, the GMSOL program can still operate normally. You can directly understand the operating effect as the current GMX V2 running on the Solana network, which is also a great product.
However, we have to admit that since GMSOL has not raised funds and has not applied for any form of incentives from GMX (the reason being that most of the remaining esGMX in the GMX Treasury will be used to compensate MP, and GMSOL does not want to create additional burdens for GMX), it will certainly not be simple at the beginning. It’s not that we must set up some fancy point system, but we believe that having a point system may better promote initial and long-term adoption.
Of course, we can continue to stack other programs, so GMX V2 will be the starting point and cornerstone of GMSOL. The highest principle of our architecture design is to break all limitations on scalability. That is, GMSOL does not want to directly fork the already successful GMX V2, but has a higher mission to explore some potential innovation possibilities for GMX in different directions.
Overall, the GMSOL Points System has been designed, but the GMSOL Points Program and other programs are still under development. Like GMX, GMSOL tends to disclose the core mechanism of points only after development is complete.
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Thank you for your support. I also agree with this point of view. However, at present, we may tend to focus on building the current infrastructure first. For these innovations that require a lot of infrastructures, we can have more thorough discussions in the future based on the architecture that has been realized. Keep in touch!
I agree, and that’s also why: Add single BTC pool and single ETH pool to boost TVL 10x
On this issue, my opinion may differ from yours:
First, we need to clarify a question, which is the mission of GMSOL. GMSOL’s mission is to realize more markets and liquidity pools, provide traders and LPs with as many choices as possible, while ensuring the security of contracts, the smoothness of user experience, and the stable operation of products as much as possible. In other words, GMSOL maintains neutrality.
For different trading markets, especially when the number of markets is large enough, there will definitely be cases of price manipulation attacks in some markets. Both LPs and traders may face all losses, which is not decided by GMSOL, and it is not something that GMSOL can help users avoid. What GMSOL can do is provide comprehensive risk warnings. GMSOL won’t represent the interests of either LPs or traders, nor will it have any conflicts of interest with any party. GMSOL remains neutral.
For GMSOL itself, what we can do is ensure that GMSOL itself has no theoretical possibility of acting maliciously. If you can think of any way that GMSOL has the opportunity to act maliciously or do things that harm users, please discuss it in the GMSOL group. If there is a solution, then our highest priority is to implement that solution. If there is no solution, then our highest priority is to come up with that solution.
Regarding the issue of liquidity dispersion, it obviously exists. Except for BTC, ETH, and SOL, other assets can be considered as long-tail assets based on market capitalization ranking, and their liquidity is imperfect anywhere. We certainly need to make some efforts and try to attract liquidity with reasonable mechanisms, such as allowing GMSOL LPs to simultaneously obtain real yield and points. This is the biggest thing we can do, but it is already independent of GMSOL’s mission as an infrastructure. We are very accepting of the fact that there may be some pools with zero liquidity, which is bound to happen. If there is no trading demand for this asset, naturally there will be no need to provide liquidity; if an asset has a very strong trading demand, assuming that the trading infrastructure we provide is excellent enough, it is impossible to have no liquidity provided.
In summary, GMSOL’s pursuit of perfection will only be reflected in the pursuit of product details, permissionlessness, and decentralization. We do not pursue imposing GMSOL’s standards on every user. We cannot and do not seek to achieve perfect liquidity and perfect risk for every market and every pool, which is impossible. We also believe that the market and users have sufficient ability to make reasonable choices.
I agree with you on this point. This is actually the mechanism of GMX V1. Perhaps we can also implement GMX V1 in GMSOL, such as building GLP_MEME, GLP_DEFI, etc.
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sir, thank you for the forthcoming response. I wish you much luck.
My only concern is that 30% to LPs will not provide a sufficient incentive to attract substantial liquidity. GMsol’s 60/30 fee share is basically the inverse of GMX’s, which gives the lion’s share to LPs.
GMSOL points are also valuable. They are included in the nominal APR of LPs based on the buyback price or the average price of the last 7 days. If you want to draw an analogy, you can refer to the early composition of GLP’s yield, which included esGMX in addition to the real yield.
In GMX. - Staker : LP = 30 : 60
In GMSOL - Trader : LP = 30 : ( 30 + 30 )
So 10% goes to the team. Where will the fees from GMsol’s staked GMX (purchased regularly with 60% of GMsol fees) go? How will they be used?
GMX’s token sees 10s of millions in onchain and CEX volume everyday. So, unless the fees from GMsol’s staked GMX also contribute in some way to GMX’s success in the form or volume, traders, or revenue, then the relatively small amount in positive buy pressure generated by GMsol’s periodic regular purchasing of GMX may never fully compensate the DAO for the cost of auditing this project.
I believe the GMX in the GMSOL treasury should not be staked, especially if it holds a large amount of GMX, for the following reasons:
- There is no need to dilute the current GMX stakers’ rewards.
- The GMX in the GMSOL treasury has many other functions, such as providing initial liquidity for small GM markets to promote adoption, etc.
Moreover, the audit fees are actually quite low, likely around 200k-400k USD. Considering the potential impact GMSOL could have on GMX, this cost is almost negligible, which is why I initially proposed to pay for it personally, as I just wanted to move forward as quickly as possible. On this point, I am very grateful for X’s kindness and generosity in suggesting that I submit a proposal to the GMX DAO to see if the community would approve the DAO covering the audit fees.
But your consideration for GMX makes me greatly respect your fairness and selflessness. If necessary, once GMSOL officially launches and generates revenue, I would be very happy to prioritize reimbursing the GMX DAO for these audit fees from the 10% allocation.
Thank you again for raising very valuable questions and truly considering things from GMX’s perspective. I appreciate it.
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Why would you use GMX to back smaller GM pools?
What material benefit does GMsol actually provide for GMX, besides promised recurring onchain purchases. Or is that the principal benefit as you see it?
$200k-400k for the audit is not “quite low”. For reference, in 3 months, GMX has produced about $8M in fees for GMX stakers. $400k is 5% of that. So, again, how does GMsol actually plan to compensate for this not insignificant endowment (which presumably would come from the GMX treasury, which makes even less in fees than the share allotted to stakers — 10% of v2 fees)?
You say you would prioritize reimbursing the DAO with the 10% of GMsol fees that goes to its treasury. So you’d need to generate $4M in fees (10% of that being $400k), if you gave all if the treasury’s allotment back to the GMX DAO. This could take years, frankly. And I don’t think you’d give all the 10% allocation back to GMX, as you have other needs for it in GMsol’s treasury as you have mentioned.
This is all sounding a lot like other projects that the GMX has footed the bill for on promises that “it will pay huge dividends” only for those dividends never to materialize. I commend you on the progress you have made on your projec. I think it is in the DAO’s best interest to be more certain of material returns on its investment before moving forward.
If you are willing to pay for the audit (and presumbaly individually will benefit from the 10% fee allocation), perhaps it is best to just go forward with that. The DAO gains nothing beyond what is already being proposed by GMsol (ie GMX purchases with fees), whether it pays for the audit or not, correct? So what’s in it for the DAO?
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I think it may be more appropriate for me to answer your question now as a member of the GMX DAO:
If GMSOL is successful, due to its high buyback ratio, the GMSOL Treasury may hold millions of GMX tokens. Keep in mind that currently, there are only 1.78 million GMX in circulation. The boost to GMX would be enormous. If GMSOL fails, based on the current proposal, the GMX DAO would only lose the so-called audit fees.
The GMX model has achieved success on Arbitrum and Avalanche, generating $200 billion USD in volume and $300 million USD in fee distribution. Expanding to more chains will only be a net gain. As one of the most active networks currently, Solana is undoubtedly one of the best choices. Moreover, due to its ultra-high performance, we can implement many interesting features on it.
I don’t agree with your view that “I think it is in the DAO’s best interest to be more certain of material returns on its investment before moving forward.” The way to maximize benefits for the DAO is also the way to maximize benefits for GMX, which is to promote GMX’s development and support projects that can expand GMX’s possibilities, rather than focusing on the small, definite returns in the short term. Many other projects are also promoting GMX’s development, and GMSOL is one of them.
Personally, as one of the largest GMX holders currently, my interests are deeply tied to GMX. Speaking solely as a delegate of the GMX DAO, I would support the development of GMSOL, and my attitude is openly and explicitly in favor of voting yes. If any community member believes GMSOL is not worth the $200k-400k USD audit fee, please vote against the upcoming GMSOL proposal. If you have already delegated your voting rights to me, you can cancel and vote against it yourself.
I can clearly state the outcome of this proposal: if it passes, the audit fee will be paid by the GMX DAO; if it does not pass, I will personally pay for the audit fee. If GMSOL is further prohibited from using GMX’s technical architecture, GMSOL can be suspended immediately and directly canceled. These choices can all be left to the DAO.
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Liquidity is crucial. If there are 50 markets, but a lot of them have zero liquidity, it will lead to frusration.
I respect your concerns about manipulation risk on exotic markets, but I believe there is a way to provide liquidity with minimal risk.
If you look at GMX competitors, leading Arbitrum exchanges, they implemented ways to provide liquidity to exotic markets. Hyperliquid, Gains, even MUX with the recently featured DegenLP — they all have it.
I think the key is to limit OI for each pair. You can even limit it very strictly at the beginning, to 100k max in the least liquid pairs.
Also, if you implement the proper price impact formula, the Universal LP pool will act more like CEX orderbook, but more predictable. In that case, the risks of manipulation are mostly mitigated.
Of course, liquidity providers in Universal Pool will bear more risk, but I believe the reward will be appropriate due to the high utilization.
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