Given the current mechanism, as a newcomer, I am indeed more inclined to purchase esGMX and MP, rather than buying new GMX.
At present, the total volume of MP is 7M. When the total volume of MP reaches 70M, the base APR of GMX will be roughly 1/10th of its current rate, virtually indistinguishable from zero.
So, for a newcomer, why would they want to purchase a token with an APR of zero? Are they hoping that others will burn their MP, gradually increasing their own actual APR? The infinite inflation of MP could potentially deter all new investors’ interest in MP. This raises a problem that needs to be addressed – curbing the infinite inflation of MP.
However, resolving this issue comes with many prerequisites. Primarily, the solution should not be established at the expense of loyal users, such as those accounts already boasting a 160% - 170% boost percentage. We can’t set a cap, for instance at 150%, which would strip these accounts of their existing rights and stifle their future growth.
Currently, the total MP staked stands at 7439809, with all the burned MP totaling 8151589. The ratio of MP staked to the total (MP staked + MP burned) is 53%. We could approach this issue by adjusting the Mutiplier Points APR: instead of having a uniform 100% for all accounts, when an account’s Boost APR is higher, their Mutiplier Points APR should be lower. This approach gives new users a chance to catch up, while preserving the advantages of the older users, continuing their growth.
To design an algorithm that curbs the inflation of MP, we could consider a reciprocal decay function to decrease the production speed of MP as the boost percentage increases. The function could be chosen according to actual needs, such as exponential decay, logarithmic decay, or other forms of decay functions.
Let’s denote boost percentage (abbreviated as BP) as BP = 100 * (Staked Multiplier Points) / (Staked GMX + Staked esGMX). Assuming the current value of BP is B, the decay functions could be:
- Exponential Decay: MP Generation Rate = Initial Rate * e^(-aB)
- Logarithmic Decay: MP Generation Rate = Initial Rate / (1 + a*log(1 + B))
- 1/B type Decay: MP Generation Rate = Initial Rate / (1 + aB)
Here, ‘a’ is a tuning parameter that can be adjusted based on actual conditions. Similar to the difficulty adjustment in Bitcoin’s network, ‘a’ could be a dynamically adjusting parameter, balanced according to the previous week’s data to equalize the overall MP production speed with the current MP burn rate. This parameter could be obtained through iterations or other optimization methods. In practice, some restrictions may need to be introduced into the decay function, such as setting a minimum MP production rate to prevent MP production from completely stopping.
This approach, while preserving the existing benefits of older users, provides greater advantages to new users, and addresses the issue of infinite inflation of Mutiplier Points, keeping its quantity roughly the same as today. This should also keep GMX’s Base APR at a reasonable level rather than infinitely decreasing.
As for whether to reduce the overall weight of Mutiplier Points, making MP only 50% of GMX and esGMX, I believe the specific proportion could be decided by vote but should ultimately benefit GMX itself. Lowering the weight of MP implies raising the weight of GMX, which would incentivize newcomers like me to choose GMX instead of trying to buy accounts with esGMX and MP at a lower price via the OTC market. As for future MP gains, they represent unrealized profits and can be dynamically adjusted. However, the staked MP represents the user’s existing property. If there’s a need to reduce the proportion of MP, it should apply equally to all, regardless of whether they are new or old users, ensuring absolute fairness.
In conclusion, the proposed solution provides a mechanism for new and old users to coexist harmoniously. It mitigates the inflation issue of Mutiplier Points, without causing harm to any current users’ benefits. This proposal maintains the APR of GMX at a reasonable level while enabling newcomers to actively choose GMX, improving the overall health and sustainability of the system. It provides a model that balances the needs of old and new users while ensuring fair treatment.