GMX <> Solv Proposal

Proposals
1

Background Summary:

Solv Protocol is a native yield platform that leverages decentralized asset management infrastructure to tokenize and aggregate high-quality yields from various sources within the industry. As a unified liquidity gateway, Solv, with its core assets such as SolvBTC, SolvUSD, and SolvETH, serves as a crucial layer for liquidity allocation across ecosystems.

In a recent milestone, SolvBTC, the first yield-bearing BTC asset in the market introduced by Solv, made its debut on Arbitrum. This launch addresses the significant gap in the Bitcoin ecosystem by providing a native yield solution. SolvBTC, in collaboration with Arbitrum, fosters an inclusive and efficient BTCFi ecosystem, offering Bitcoin holders unprecedented opportunities for growth and participation.

Solv has won the support from key players like Binance Labs, Blockchain Capital, Jump, Nomura, UOB, Mirana, gumi, Spartan and many more. It has forged connections with over 60 fund managers and 40 investment institutions with $123,905,951 in TVL across 25 vaults and is live on Arbitrum, Mantle, Ethereum and BNB Chain.

Proposal:

We propose a token swap of ($100,000 or $200,000) as outlined in point (2) below.

Swap Terms:

  1. Token swap of esGMX for future vested Solv tokens
  2. The value of esGMX will be taken as the 30-day average price of GMX in the 30 days prior to the approval of the governance proposal, using daily closes on Coingecko.
  3. If the proposal passes, The swap terms will be executed at a valuation of $80 million for Solv tokens, aligning with the valuation established during the preceding fundraising round, as a show of good-will between Solv Protocol and GMX communities, and to demonstrate intentions to cultivate productive and long term collaboration.
  4. The Solv tokens will go through a 1 year lock up followed by 2 years vesting starting from token generation event (TGE)

Action:

An OTC swap of between the GMX and Solv treasuries in the dollar amount of $100,000 or $200,000.

Community votes to approve/disapprove the proposal

If approved, the swap will be conducted on the valuation for Solv tokens as outlined in Point (2) and (3) of the aforementioned Swap Terms

2 Likes
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If I may be crude, but why?

3 Likes
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GMX has used token swaps on prior occasions to align with strong builders for the long term. This reinforces GMX’s strengths: composability, community orientation, and an ecosystem DeFi approach that reinforces GMX’s moat. Those token swaps have also been net positive in dollar terms, on average.

In the case of Solv: they are one of the biggest liquidity providers to GMX’s GM pools. They are diligent builders, delivering fast, with a strong vision. And they are highly professional and well-connected. Excellent reasons to align incentives for the long term.

1 Like
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Agree. I like Solv Product

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For clarity I wanted to put some numbers on your claim. You are right - we have been able to significantly profit from these partnership deals.

For example, the total below takes Rage Trade and Gamma Swap, which are tokenless, as 100% loss and we are still very profitable.

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While this is certainly an argument for going forward, I would like to challenge these type of proposals with a question: beside intangibles like alignment what do we gain in effective terms?

These partnership deals imply that we would never sell these allocations while GMX or esGMX could be used in many different forms for further development of GMX.

4 Likes
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@Jonezee what do you think of this?

And the claim “[these] token swaps have also been net positive in dollar terms, on average” — all this value accrues to the treasury and just sits there, meanwhile the esGMX that has been given out dilutes holders and stakers.

There has never been an accounting of how effective these token swapshave been. And they were pushed and approved not on the ambiguous notion that “they would be, on average, dollar positive” but that they would drive volume and revenue to GMX, which again has never been shown to be the case, and for at least a few of the token swaps (like Rage Trade and Gamma) have been significant net losses in addition to be dilutive.

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I’m open to a critical evaluation of these past token swaps, that’s fair. But I would like to point out that they are generally for relatively low, symbolic amounts, and the yield dilution is infinitesimal in comparison to factors like MPs or protocol revenue split.

Long-term alignment is intangible, but nonetheless valuable. I think the case for STFX, RageTrade, Yak and probably others driving significant volume to GMX can also easily be made.