GMX: Transition from “Buyback ETH and Distribute ETH” to “Buyback GMX and Distribute GMX”

Proposals
41

In response to the proposal for Buyback GMX, the D2 Finance team strongly supports this idea for the following reasons:

GMX++ Vaults

We are excited to announce that with the implementation of this proposal, we will be able to release GMX++ vaults. As soon as Dolomite allows lending on GM GMX, we will offer a vault with GMX exposure that will earn additional GMX.

With our monthly epoch, it has been challenging to fully benefit our users with the GMX multiplier system ( we have been traded GMX in our vaults just in just spot format).

This change will completely transform our approach and allow us to introduce another vault on top of GMX, enhancing our users confidence to deposit.

Positive Impact on $GMX Price Growth in the Long Run and Help Allocation of Other Vaults like ARB++

Since GMX++ is primarily exposed to GMX, healthy price growth of teh underlying is crucial. Implementing a buyback feature that creates consistent buying pressure for GMX tokens, instead of minting new ones, is essential. Utilizing the ETH reward for GMX buybacks could positively impact GMX++ by providing a reliable onboarding mechanism.

Our “vaults of vaults” structure, such as ARB++, will be able to purchase GMX++ in larger quantities, knowing there is constant buy pressure.

Increased Exposure of $GMX in the Open Market

Maintaining consistent purchasing volume can enhance liquidity, which is fundamental for our monthly epoch system. Enhanced liquidity will support the stability and growth of our GMX++ and other interconnected vaults.

2 Likes
42

Can you expand on what is this premium. When is the premium paid/received?

43

We are in favor of this proposal. Buying back GMX with the fees from the protocol will help increase the price in the long run. Many users in this ecosystem are happy to see the GMX price go up, as it will help unify the community.

We also need to consider the relationship between the price of GMX and the long-term success of the GMX protocol. Right now, I do not see a strong connection. GMX LPs and GMX traders do not come to GMX for the GMX tokens.

If this were ten months ago, we would definitely vote no because we held a lot of GLP at that time. Forcing GLP holders to accept GMX would not be a good idea, as it is difficult to sell $5M worth of GMX tokens in the market, while ETH does not have this issue. Now, with V1 fading out, it is acceptable for us to support this proposal.

Lastly, when GMX holders make decisions for LP holders, they need to consider the long-term profit of the LP holders and not focus solely on the GMX price itself.

2 Likes
44

Thank you for your support. Yes, the goal of this proposal is based on the context of GMX V1 gradually being replaced by GMX V2. Indeed, GMX Hodlers and GMX LPs are two different groups, so this proposal focuses more on preserving the value of the GMX Token itself. Therefore, this proposal will not and does not want to have any impact on GMX V2 LPs.

45

As a conservative delegate, I am skeptical about this proposal and would vote against it. It is yet another attempt to artificially inflate GMX token price, which I doubt will work. I have said many times that the only thing that directly affects the price in the long term is the development of the platform, new features and markets which will increase fees revenue.

I think that this proposal has a few flaws:

  • moving from ETH to GMX “real” yield will reduce the attractiveness of GMX staking for serious and big investors. No matter how good and established GMX token is, it will never be equal to the ETH;

  • by taking additional conversion steps, we will lose part of the revenue and give it to LPs or arbitrage players. In unfavorable market conditions, this can amount to 1-2% of the total accrued fees, which in the long term will add up to a significant loss for stakers;

  • we will cause additional inconvenience for some partners (again!) who have integrations or who have adapted their protocol mechanics to the old flow where revenues were paid in ETH;

P.S.
Another complain from my side would be about the rushing this proposal - it was published on the forum just a few days ago and we already have a snapshot vote on it. Bearing in mind that summer is the holiday season, there were definitely a lot of community members (including me) who didn’t even have a chance to speak about it before the voting started.

4 Likes
46

Hey @Saulius ,

I’ve been waiting for your objections for quite some time now, from opposing the MP Cap to the End MP to the GMSOL Audit Fee, and now the BB&D. Without your complaints and objections, proposals would be incomplete.

You have indeed mentioned numerous times that you believe the only factor affecting the price is the development of the GMX business itself. Here, I’d like to give you some basic advice on viewing this issue: when you say “only,” regardless of your conclusion, it’s already wrong.

The development of the GMX business focuses on value increment, which is the SPEAR of GMX; the interest distribution method and economic model of GMX focus on value retention, which is the SHIELD of GMX.

When you only have the perspective and ability to look at different spears, you will naturally find that shields are useless and non-aggressive. What I’m doing, which is different from you, is continuously absorbing offensive suggestions from the community, as well as defensive suggestions, instead of placing my preferences for offense and defense above the facts.

You continue to represent the so-called serious and big investors, claiming that no matter how good and established the GMX token is, it will never be equal to ETH. I can also represent the serious and big investors I know and tell you that whether it’s GMX, ETH, or even BTC, they are merely different functional tokens with liquidity.

It’s not impossible for GMX to reach the market cap of ETH today in the future. What you are saying now is like someone in 2013 when BTC was below 1B, saying, “No matter how good and established BTC is, it will never be equal to Silver.”

You also claim that taking additional steps might cause stakers to lose 1%-2% of their earnings, calling it a significant loss in the long term. I’d say if you can overlook the significant enhancement in GMX’s value retention capability and call a 10% APR drop to 9.8%-9.9% APR a significant loss, I’d like to comment but honestly can’t find the right words.

Finally, enjoy your summer holiday, but DeFi never sleeps.

2 Likes
47

Addressing Concerns on the Buyback GMX Proposal:

1. Reduced Attractiveness of GMX Staking: We understand the concern regarding the shift from ETH to GMX yield. However, it’s important to highlight that the proposal’s primary aim is to enhance GMX’s liquidity and long-term value, which indirectly benefits all stakeholders, including serious and big investors.

By creating consistent buy pressure for GMX tokens through buybacks, we can stabilize and potentially increase GMX’s value, making it a more attractive asset in the long run.

Additionally, the implementation of a D2 Finance’ GMX++/WETH pool will facilitate seamless swaps back to ETH, ensuring that investors can retain their yield in ETH if they prefer.

2. Revenue Loss Due to Additional Conversion Steps: While it is true that conversion steps may introduce some inefficiencies, the overall benefits of enhanced liquidity and stable price growth outweigh these minor losses.

Our planned GMX++/WETH pool will provide a direct and efficient route for conversions, minimizing potential losses to LPs who only looking to earn ETH.

Furthermore, we expect as there is embedded alpha in GMX++ we anticipate that should be
more reliable yield for these stakers.

3. Inconvenience for Partners: We acknowledge that changes in revenue flow can cause inconvenience for some static partners.

However, the proposed changes are designed to create a more robust and sustainable ecosystem for GMX. The transition to GMX buybacks and the subsequent stabilization of GMX price will ultimately benefit all stakeholders, including partners, by providing a more attractive and liquid market for GMX tokens. The GMX++/WETH pool will serve as a bridge, allowing partners to continue receiving their yields in ETH while benefiting from the improved GMX liquidity and stability.

In Summary: AT D2 Finance we beleive that this proposed buyback initiative is not an attempt to artificially inflate the GMX token price but a strategic move to enhance its liquidity, stability, and long-term value for most of stakeholders, or at least who can build on a flexible framework and adapt.

3 Likes
48

Thank you for detailed comment. It has eased my concerns a little and seeing overwhelming support on snapshot vote my stance now changes from objection to neutral.

4 Likes
49

We are in favor of this proposal.

  1. Positive Impact on $GMX Price Growth
  • Create sustain buying pressure for GMX Token, potentially drawing in new participants and investors
  • Need to make it SUPER CLEAR that fees are used to buy from open market rather than minting new tokens
  • Need to ensure a proper system in place and that there are no “exploitable” frontrunning in the scenario where GMX grows bigger, more fees = bigger buybacks = potential frontrunning arbitrage
  1. Addressing Dormant Addresses
  • Currently, rewards in ETH/AVAX accrued to dormant esGMX addresses, effectively burning these rewards
  • By switching to GMX buybacks & distribution, this effectively helps more circulating GMX go dormant
  1. Real Yield Narrative
  • Love the option to opt for ETH/AVAX yields, which can help maintain GMX’s real yield narrative
4 Likes
50

Banger by of a quote

51

Saulius just wanted to say its always appreciated to have someone with a different lens share their opinion. Thank you for the contribution and sharing your concerns.

2 Likes
52

I’m against giving rewards to GMX. You can expect short-term price increases with buybacks, but the appeal of GMX tokens will gradually drop and the price will continue to fall in the long run. Rewards should be given in ETH.

53

I believe voting has already taken place.

54

Why would constant buyback pressure reduce the appeal of the GMX token?

55

The ‘Buyback GMX and Distribute GMX’ proposal, which would change the current revenue distribution model, has passed a Snapshot vote. It now moves on to an on-chain vote by the GMX DAO on Tally:

:small_orange_diamond: https://tally.xyz/gov/gmx

Delegates and community members, please review the proposal and vote now.

56

Value retention for gmx is more important than holding all the fees in eth for distribution. More market making on gmx more fees for the platform period

Swap gmx to eth like the market already has been regardless of eth distribution then?

Fees are earned in many assets and distributed out in the gas token of the chain. Well now they go to gmx token which you hold. That’s net buying all throughout the week. Whether people sell makes a market.

57

swap from eth to weth only need a few gas fee. but swap eth to gmx need exchange fee and service fee as well as price impact that have bad effect on gmx holders. benefits also decrease steadily

58

all that makes more money for future gmx revenue and arbitrum activity, but if it does become a marginal problem we can switch back

There are nine pages of markets for gmx

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2 Likes
59

Team, we’ve voted for a change almost a month ago.
When the transition from ETH to GMX will take place?

60

Substantial changes to the smart contracts are involved, so this has to be done securely and will take the time required to do it right.

2 Likes