Hey there. I want to discuss anyways we can make GMX a less inflationary token and slowly but surely transform into a net deflationary token in the long-run. What if the esGMX allocations were converted to grants/airdrops/partnership or added to protocol liquidity, and instead we could buyback actual GMX tokens from the market using a small or medium proportin of the platform fees and burn the GMX bought. This is just an idea off the top of my head. Would like to hear any interesting ideas any of you might have.
Buyback and burn schemes have a slightly negative connotation in crypto, imho. As an artificial way to create scarcity and push up price, and nothing more.
GMX inflation is also fundamentally limited. Supply is small, and vesting a longterm process. Reducing supply further would have negative consequences, which shouldn’t be overlooked.
Instead of artificially creating token scarcity in an attempt to raise prices, we should focus on the product itself.
opportunistic buybacks not a terrible idea. but agree with you that programmatic token buyback sweeps are pretty ineffective
It would be very cool if GM really becomes a deflationary asset!
I am not a fan of simple buybacks. As others have said, there are many other things that could be done. However, I wouldn’t be against a certain type of buyback, and my thoughts are these sorts of scenarios:
Buybacks of esGMX at reduced prices: some people may have esGMX that are not liquid and perhaps the holder is incapable of buying back to vest the esGMX or they don’t want to dedicate themselves to that. In that case, GMX could buyback these esGMX at a nicely reduced cost. This would give the holder of the esGMX some liquidity and would reduce staked esGMX. In turn, GMX would then have more esGMX to use as incentives for deployment on new chains.
Buyback GMX itself: this one isn’t as nice, but is okay in some circumstances perhaps. Buyback GMX itself to turn it into esGMX and, like my first suggestion, use it as esGMX to incentivise the deployment of GMX on other chains.
esGMX is running out and deployment on other chains need to be incentivised. Just my thoughts.
I don’t really like the idea of buying back esGMX, the entire point is to punish mercenary capital, I would much prefer offering a 10:1 burn of esGMX if they want to cash it out, costs the protocol nothing and achieves the goal of punishing mercenary capital.
Not a bad idea actually. It would need to be a reasonable discount, given a portion of the esGMX is unlikely to ever hit circulating supply via vesting.
I do think there are likely better uses of funds such as product/hiring.
Buybacks should be the last thing on the list in terms of capital allocation, at least for the near-term
This has been suggested in the past, I floated a 90/10 split (GMX gets 90%) as the entire function of vesting GMX is to reduce mercenary capital and keep the platform stable
Sorry I’m confused, what exactly is GMX getting 90% of? And by “GMX” do you mean the treasury, the contributors, or the tokenholders?