Who proposed that proposal, are they an idiot?
I just want to ask, does the person who proposed it have millions of dollars worth of GM tracking profits in the pool? You should know, without fee supplementation, the value of GM gradually decreases. Only with fees does it increase. Now mixed together, everyone can’t see clearly, it’s all blurry and just passes by. Once separated, the fact that GM’s price gradually declines (which is mostly the case during bull markets) will be blatantly obvious to every user. This will shake the foundation of GMX, it’s completely shortsighted and a behavior that kills the goose that lays the golden eggs。
If you want to pump the GMX price to sell off, please sell to me via OTC, and then get out of the GMX community
yes，Your comment is very accurate, even discussing it is dangerous
You say GLP is presented as a representative for providing yields independently. However, in reality, GLP’s performance is far from excellent. Just look at GLP on AVAX. Bitcoin is now at 100k, but AVAX’s GLP hasn’t even returned to 1. If it weren’t for the need to unlock esGMX, I believe no one would be willing to provide GLP as liquidity on AVAX anymore. There’s a 10% weekly yield on AVAX’s GLP, and everyone thinks that’s what GLP deserves because GLP has long been exploited by traders for arbitrage, losing a lot of capital. GLP is already struggling, We don’t want GM to perform like this either。
I hope the leaders of the GMX community focus on making the pie bigger, rather than using their intelligence to merely slice it up."
Ive been with gmx since x on eth ive like many of the changes and like the feedback before changing we just changed lets wait and see after solana launch before tinkering with fees.
I’m a small fish GMX accumulator, LPor and sometimes Trador. I have extreme respect and admiration for all you do for GMX, both the project and the community. Thanks for all you are doing.
Yes token is undervalued. Market is wrong. But lot of holders like me believe it will change because we are focus on the right objective. There’s been high quality discussions going on lately towards maximizing long term value to GMX holders in a healthy and sustainable way.
Tano and others have been repeating this a lot lately: we will increase value to holders by generating more fees sustainably. We will do this by increasing trading volume on GMX. To get more trading we need more traders. To attract more traders we need:
- More liquidity
- Lower fees
- Expand to more chains
Ability to trade more, bigger size will attract more trader, more LPs, and generate more fees.
This is the plan I signed up for. This is what get me to buy more GMX, buy esGMX accounts.
Lot of platforms are trying to add boosts or extra APY in the form of protocol tokens or other mechanisms to get LPs to stick, trick them into locking. This is a double edge sword which often only work for small uneducated participants. Going that route would be a very slippery slope that can drive liquidity out long term rather than attracting more of it.
I would recommend continue the effort being made to build the best possible experience for traders, returns for LPs, which will eventually massively profit to holders.
based on dialogue so far
i believe it’s fair gmx stakers gets 40% of fees at the minimum upon reading Q’s writings
and look forward to the response on LP loss without fee supplementation above, autocompound is pretty special
and i don’t believe it’s dangerous to discuss this while i appreciate the caution, this is asking for engagement, any LPs removing capital increases LP yield, if this is the discussion that initiates withdrawals, bbd must not be working and it’s not a bull market, trust governance trust contracts onchain verifiably
yes, but its a lot of headache which is unnecessary. claim, swap, mint vs autocompound
Thank you to Q for tirelessly working on GMX. Fair to say Q has been the most vocal member driving both technical development and ideas on fixing GMX lackluster price. Hindsight is always 20/20 but GMX blew the huge perp dex lead in 2023 from being too complacent/conservative and from having a too stubborn belief that the iterated model was correct and that the market was wrong in judging GMX’s fundamentals.
If you chart GMX against SNX or most other perp dexes/defi tokens, GMX has been underperforming them for the last 18 months so despite the sector wide defi lull, the market has clearly showed that all of what GMX has been doing is insufficient. If you want even more sobering numbers look at price action last 30 days since BB&D started: GMX is still underperforming most other perp dex and defi. This is despite more GMX being net staked, which goes to show that the marginal buyer has been bb&d and not much else.
At this point, if you are still think that GMX fundamentals are strong, LP model now is the best and the market will catch up to it then god help us all because GMX price will forever be stuck in purgatory hell while you dance and campfire around your increasing OI numbers and growing TVL: these are more a function of the overall market cap of listed assets increasing rather than GMX doing well.
On to the technical merit of extending BB&D to LPs, Q has covered all the points excellently. Q’s analysis on how LPs may react is also reasonable and sound. The counterarguments are mostly along the lines of doom posting about LPs and/or letting price catch up to GMX fundamentals. Please check back to the initial BB&D governance posting for GMX stakers and see that dissenters had the same exact line of argument. In the end, BB&D ended up being the marginal buyer and GMX would still be $20 if it wasn’t enacted.
If this post was offensive then I apologise in advance. Just bringing another perspective as I think there’s a rather pervasive thinking among the more vocal members of the community that GMX poor price action is a sector wide issue rather than a GMX issue to which I will just reply with this image and hope they can glean an alternate perspective and make GMX great again.
Please put this issue to a snapshot.
Not a fan of this, as said before I believe the auto-compounding, auto-increasing OI and TVL by this in GMX v2 is perfect as it is. GMX V2 was built exactly for this reasoning, simplify everything in terms of risk management for LPs/traders.
I think the feeGM is a good idea, but just is again more work for our developers just to solve an issue that we shouldn’t have in the first place. I personally also think the GMX being bought back would be immensely less sticky than the BB&D program, for obvious reasons, as most of the LPs don’t care about GMX and the price and just wants to make profits being an LP. So I personally don’t think it’s worth the effort knowing we want to focus on cross-collateral, cross-chain and more in the future.
However, I agree with Option B more personally, but then again, we would need to research with ChaosLabs how to increase revenue for our LPs, with more liquidity efficient parameters, so that we can drop their revenue without LPs taking a hit and leaving the platform. I see this as a way to scale the platform when it’s ACTUALLY scaling more and generating more revenue.
I think this is ultimately the goal we should go for, option B and let the platform improvements/UX/UI do it’s thing.
Increase volumes, OI and revenue, and start changing the split between LPs/GMX/Treasury.
Again, this is a discussion that can be retaken imo in a few months after all the UX changes for traders we have planned and when GMX is fully running without any training wheels as it currently is.
Nonetheless, don’t get me wrong, we need GMX price go up, but this imo is too drastic and that’s why I prefer Option B, but at a later stage.
And again, I like this discussions and I appreciate you bringing this proposal to open discussions in the community.
To echo others’ sentiments: Too much is happening all at once. Large-scale gmx & gm holders (including VC’s and incorporated entities) want to see stability alongside growth activity.
Examples of growth activities while maintaining stability: Gmx-Solana, new pairs, BB&D
Not an examples of growth activity & stability: Tinkering with the tokenomics every two months
So two points:
-
The juice isn’t worth the squeeze. Adjusting the % to LP providers could absolutely be catastrophic to the protocol. Getting GMX to $90 again isn’t worth risking the entire future of the platform. Right now things are going really well, and we should consider other ways of adding value to GMX, but not at the expense of LP’s moving on to greener pastures.
-
I absolutely hate when an idea is introduced for vote (or suggested in this case), it’s given as anything more than a binary choice. Whether intentional or not, it’s manipulative in order to put the thumb on the scales by splitting the status quo vote.
Rather than:
- Option 1: Keep the fee distribution to GMX:GM LP at 27:63 unchanged, expanding BB&D’s fee coverage from 27% to 90%.
- Option 2: Adjust the fee distribution to GMX:GM LP from 27:63 to 40:50, adjust BB&D’s fee coverage to corresponding 40%.
- Option 3: Oppose both options above.
it should just be:
- Option 1: Change the LP distribution
- Option 2: No change to status quo
If option 1 were to win, then you would move into an additional vote on the fee ratio or BB&D choices.
So I have a few thoughts here Q, the first is that there is no need for this change now. You mentioned that GMX holders own the protocol, but this isn’t really true. We have a say in governance, but have no claim on the protocol assets in any legal sense, GMX tokens are not an ownership stake. GMX can run without token holders, it can’t run without LPs. As GMX holders we took a risk and funded the protocol to give it resources to launch and get a stake of all future rewards for this, and if I’m being honest I think we are getting enough as it is. This change would have MASSIVE tax implications for LPs and I can’t see a huge number of them being happy with it. Auto compounding is a huge draw for LPs, changing the structure is going to provide them with rewards in a token they have either chosen to buy separately or not, LPs can just buy GMX if they want exposure.
LPs current structure provides great opportunities to build offsetting exposure to assets and its a significant draw, this eliminates that draw.
I’m not in favor of this, why don’t we wait and see how 6 months of the current buyback program affect demand and price? we might see a spike in sales as GMX price grows, and we might not.
I think if this is to be considered a few things are required:
1 - No change in fee ratio
2 - it needs to be an opt-in option for LPs, not automatic, if we see most LPs going for the option that could be reconsidered
I think development focused on expanding pairs / OI / fees is a more worthwhile focus of development capital at the moment.
I’ve agreed with most of your suggestions in the past, I wrote about the danger of the MPs at least a year before you did, many of us did, the buyback program was a good idea, I just don’t agree here. It’s too much, too fast and for the sole purpose of pumping the price of a pure governance token at the cost of reducing the rewards for those that enable the platform to function.
I strongly disagree with this proposal, but I understand the motivation behind it. That’s why I want to present an alternative solution that hasn’t been discussed yet.
Rationale
There is currently a lack of alignment between GMX holders and LPs.
- GMX holders: While GMX is used for governance and fee-sharing, it lacks a deeper utility.
- LPs: Beyond yield, LPs have limited incentives to contribute to the long-term success of the protocol.
Main Ideas
- Create a new use case for staked GMX by allowing it to boost LP yields.
- Introduce a mechanism for LPs to automatically convert fees into staked GMX (optionnal, I’ll explain later).
How It Works
Boost Mechanism for Staked GMX
Users stake GMX tokens in the same module currently used for staking. This allows them to continue benefiting from governance and yield but now also enables them to boost LP rewards.
The boost would be calculated similarly to the old MP (Multiplier Points) model, but with key improvements:
Problem with the Old MP Model:
MPs were treated as staked GMX for distribution calculations, but they were essentially “printed” out of thin air. This caused artificial inflation of GMX yields and discouraged new users from joining the staking module.
Proposed System:
Staked GMX would directly factor into the reward distribution for LPs, but only with real, liquid GMX. The limited supply of GMX will protect the system from any artificial inflation.
Example Calculation
If you provide $100 of GM liquidity and have $100 of staked GMX, your rewards could be calculated as if you had $150 of liquidity, effectively giving you a 50% boost.
The boost ratio (e.g., $1 of staked GMX equates to $0.50 of additional virtual liquidity) would need careful calibration.
Why It Matters:
The ratio must remain low enough to ensure LPs without staked GMX still receive acceptable yields.
However, it should be high enough to incentivize users to buy and stake GMX.
This ratio could be established by analyzing the current overlap between GMX stakers and LPs to find an optimal balance.
Optional Auto-Conversion Mechanism
LPs could have the option to toggle a feature that automatically uses their earned fees to buy and stake GMX (BB&S).
Pros: This aligns with the BB&D concept without forcing LPs to participate.
Cons: Potential future complications for GM and GLP pools might arise, so this feature should be evaluated carefully.
Personally, I prefer the option without this toggle: LPs without staked GMX would still have an incentive to buy GMX from the market to increase their performance. This would create a natural buying pressure on GMX, similar to the BB&D mechanism, while preserving the current fee allocation within the pool. Thus we can be able to give more value to GMX without touching the LP fees.
Long-Term Potential
In the long run, this system could evolve to include an external marketplace where GMX holders can lend their tokens to LPs.
For GMX Holders: This creates an additional yield opportunity by renting out their GMX.
For LPs: Renting GMX would allow them to access boosted yields without requiring an upfront purchase.
For the Protocol: This further drives demand for GMX while fostering a collaborative ecosystem between stakers and LPs.
Conclusion
This alternative solution introduces a new use case for GMX holders while better aligning the interests of GMX stakers and LPs over the long term. It achieves this without significantly altering the current fee system, preserving flexibility for future innovations.
This idea is still in its early stages, and I welcome any input, whether in favor or against. Suggestions for improvements or complementary ideas are highly encouraged. Let’s discuss and refine this together!
That’s an ambitious proposal, but it touches on a critical point: liquidity providers are the backbone of the GMX ecosystem’s stability. Turning rewards into GMX could discourage larger LPs for some of the reasons brought up in this debate. It might also impact other projects that play a significant role in GMX’s liquidity by building on top of the GM Pools.
Without a concrete test, it’s hard to tell if such a change would actually work. But testing something like this on a project that’s already running smoothly is both complex and risky.
It’s like trying to add a turbo to an already high performing car, it might boost speed, but if it makes the ride unstable, the risk becomes too high. Strengthening $GMX value is crucial, but it’s important to make sure it doesn’t shake the solid foundations the project relies on.
Ultimately, it’s all about the risk tolerance of each participant, and a further complication is the need to consider the numerous participants involved. I think once GMX progresses further on its roadmap, Option 2 could make more sense. For now, it seems wiser to stay the course and focus on the current priorities.
Really like this discussions that push us to think critically and explore new perspectives.
I also strongly disagree with that proposal.
Thanks for taking the time to write it though and it sparked a great discussion. The current system for GM pools is already great and not broken: If it ain’t broken, don’t fix it. Myself and other GM investors I know would consider moving if such a proposal would be adopted. We all also own GMX and are very happy about the GMX BB&D changes (where it makes a lot of sense).
I get that your proposal came out as frustration regarding the very undervalued GMX token. The new GMX staking tokenomics, combined with the record protocol activity will for sure bring ATH values for GMX in the future. No need to rush it: Several DeFi projects are undervalued but it will get better. The protocol should mainly focus on growth and taking the lion share of the PERP market, and not be too distracted by the token value imho.
Thank you so much for the proposal and I think it brings some really interesting considerations to the table. It makes GMX become beyond a governance token or staking token of the protocol to expand to a system of reward. This to me expands its use case and I wonder how we could experiment with this as a try before you buy.
Hi Q.
Thank you for your continued support of GMX and your continuing push to advance GMX as a protocol.
Just fyi I come from the point of a holder and less so of an LP. And I appreciate all the comments above are maybe more qualified to speak on it than me if they are LPs.
I am in support of this proposal and believe that it would be net beneficial for the GMX platform. Driving upwards pressure on token price drives eyeballs to any platform. Which in turn would drive increased volume. But obviously larger LPs and down stream integrations would need to be spoken to first.
We have seen over the last few years that GMX can sustainably generate fees even before v2 was introduced. With many of this largest fee weeks being on v1. With GMX being able to convince hundreds of millions of dollars to LP before auto compounding.
GMX’s push to lower fees and massively increase accessibility has been absolutely the right thing to do and now we are at the point where the flywheel can really be activated.
An increasingly growing flywheel towards the gmx token may also encourage large LPs to increasingly grow and hold their GMX holdings because of the constant purchase pressure and will allow them to gain a foothold in GMX and therefore having an increased DAO presence.
Is it possible to trial this with gmx-solana to understand how it works and if LPs can still be attracted?
In terms of the tax issue that autocompound alleviates, would giving rewards in SS GMX rather than GMX make a difference? Could the SS GMX pool be auto compounded with purchased GMX? And LPs given SS GMX that does not need to be claimed? This would also create an incredibly deep liquidity of GMX as SS GMX would be where ~60% of purchased GMX initially goes.
Please ignore that last paragraph if it is not feasible/ doesn’t make sense in tax terms. Just thinking out loud.
Cheers Q and good to see some good thoughts from everyone.
SparkyG
LPs(e.g. tano) have already expressed their opposition, and I think the negative impact of this change on LPs is obvious. I don’t think I need to explain too much. I can’t convince you if you don’t agree with that.
appreciate all you did for the community. i believe most of them(SS pools, BB&D) are great for gmx, i support them. Even though the proposal of ending MP was not positive, it didn’t hurt gmx either, it just… didn’t make any difference. In fact, we did not see a gmx price pump after ending MP.
As for expanding BB&D, I think it will hurt gmx, which, as mentioned earlier, has serious problems.
Unfortunately, I don’t think we have the ability to fight the market, which has its rhythms and preferences, and narratives move.
Remember a few months ago, we blamed the following for our problems:
- MP, but ending MP didn’t impact price.
- too few listings, we have accelerated listings and received certain results.
- Too few chains deployments.
But in truth, none of this matters as much as the rhythm of the market. Now the bull market is here, and we are growing fast and gmx price is pumping.
What can we do to gain this power that only a bull market has?
Nothing.
Not changing tokenomics.
The only thing we can do is to do a good job of business and pursue solid growth.
Totally unrelated to the thread-topic, but it is amazing to see someone make the “Hey, the Emperor isn’t wearing any clothes” statement. I figured the entire community had all made an unspoken agreement to just not acknowledge that we now have months & months of data that demonstrate that mp’s were never a barrier for getting new buyers and stripping the token of this inherent value-additive did not result in an increase in value (shocker!).
Nietzsche famously observed that pride and self-regard have no difficulty in overcoming memory.
Just wasn’t something any of us were expecting to see here or in the chat.
With that said, I do agree with most of your post, hermit. But I think Q and everyone deserves a more fleshed out answer.
Liquidity providers have a massive number of platforms on arbitrum, mainnet, and solana in which they can provide their services, all for “relatively” similar APR’s when adjusted for risk & the various hoops they may have to jump through (ie, lock up periods). GM and GLV provide a niche that isn’t widely available: For virtually every country, one can stake liquidity on GM & GLV and get interest on that stake via autocompounding and not incure a taxable event.
If liquidity providers didn’t want to stake their funds in liquidity pools that autocompound, then they simply wouldn’t have (given the wide range of dividend-paying options out there, including GLP). Many people were skeptical at first when we discovered “as a surprise” that GM was autocompounding. But the truth is that at this point GM and GLV “found” their audience and that audience chooses to stake in this tax-deferring method of liquidity pooling.
At the end of the day, the price of GMX just isn’t that important relative to the risk of alienating our current liquidity providers. Like someone else posted above - the platform can survive without the GMX token. It can’t survive without a strong base of liquidity providers, most of whom have embraced this unique service that is autocompounding. If we’re not unique then we can’t compete - there’s just too many other platforms out there in the defi space.
There is quite a discussion on taxes but users are worldwide. If this is such a concern why can’t we go to a tax firm to get some advice.