Introduce discount on fees for holding/staking GMX

Proposal to implement fee discounts for holding/staking GMX: this will bring more utility to GMX while making the exchange more competitive and attractive for large traders. This idea has been discussed several times already within the community and as far as I know the majority is in favor. The idea has also been mentioned in another proposal: Increase trading incentives with volume based fees - #5 by MMD

The fee discount tiers could be as follow
gmx fee tiers

Discount only applies on margin trading fees. Fees will be charged fully upfront; discounts will be distributed as rebates each week (in ETH). The amount of GMX required for each tier can be routinely adjusted based on the average price over a 30-day period. The holding of GMX could be calculated as an average over a 14-day period, to prevent pump and dumps for discounts.

The past period we introduced referral discounts and esGMX emissions reduction. Both worked out well so far, so I believe we are good to go to implement the above proposal. Would love to hear feedback from the community!

21 Likes

Hi sir, great idea. I was also discussing this internally with X, and we were both fan of this model + maybe a combination of MP points as well.

I think X ran some numbers to see if it’s still profitable for GMX, so he will probably put something out below!

2 Likes

Great proposal! The only thing is imo that these discounts are quite high, maybe it would make sense to implement this but with lower discounts. For the rest im happy with this idea as it would add more utility and make gmx more appealing to hold for users.

7 Likes

I strongly believe the max discount should be equal to 20% or less.
50% discount with GMX + 25% referral discount (self-refer abuse) could make the total discount as high as 75%, or 62.5%, depends on a formula.

we shouldn’t welcome high frequency traders exploiting oracle pricing. We will find this out when it’s too late, like the mini-exploit on Avalanche a few months ago.
I believe that we should keep fees relatively high for whales, and focus more on retail traders.

the idea is okay, but I propose to change the tiers:

$1000…5% discount
$2500…7.5% discount
$10000…10% discount
$50000…12.5% discount
$100000…15% discount
$250000…17.5% discount
$500000…20% discount

6 Likes

Also, we could distribute the rewards not as ETH, but as esGMX
Instead of distributing ETH, we could buy back GMX and distribute it to traders as esGMX with a 1 month requirement to vest. That is quite a short term, so traders will feel the value, but also will return to the platform a few more times to collect their rewards, and will likely continue to trade.

And maybe we shouln’t implement this proposal at all
this will add value to the token, but revoke some value from the platform

And if we do, we should closely monitor PnL and activity of traders with a high total discount (referral + token holding)

5 Likes

To summarize, we should keep the max discount low. Again, we don’t have to incentivize whales. Zero slippage trades are attractive enough.
I think, we can even cut all the tiers above 10%
something like:

$1000…5% discount
$2500…7.5% discount
$10000…10% discount

to keep it as a small, simple loyalty bonus for average Joe, not a tool for MM like Alameda or Jump trading.

this will improve the distribution of GMX token.
otherwise, we are making it too attractive for whale traders to acquire large amounts of GMX to push proposals in their favor and not in favor of the GMX protocol.

4 Likes

Overall I think it is a very good idea to implement a reduction in fees for GMX stakers, although I feel like in order to take a glance at the big picture this proposal could be made alongside the one about fee reductions by volumes (it was already mentioned in a Medium article but not sure what is the implementation calendar on that) as final profitability would be highly dependant on both programs

Sharing some numbers about the biggest competitors in case it might help:

  1. Binance - 25% discount on spot & 10% discount on futures if you pay fees on BNB
  2. FTX - More detailed, sharing their table

CEXes need liquidity badly, especially market maker liquidity, and are willing to pay for that.
GMX doesn’t have such problem, liquidity is provided by GLP, not traders.

5 Likes

I think there is a good idea in here, but we need to run the numbers because we don’t want to give massive discounts to whales. Like @jaoda said, zero slippage is already a huge incentive for whales.

Some ideas:

  • GMX must be staked >= 30 days to count towards discount/rebate.
  • Use GLP rather than GMX for calculating discount (whales holding GMX doesn’t actually benefit the platform, forcing whales to provide liquidity does).

I also think that, if we do this, rebates should be in ETH. The esGMX pool should be saved for staking rewards.

3 Likes

Thank you for the suggestion!

We were looking into this as well, still in the midst of analysing the numbers but will try to get that done soon so we can post the data here.

6 Likes

I do agree GLP is beneficial, but GMX is core to the platform.

I’d rather see GMX being used than GLP. GLP whales already have enough :wink:

GMX creates attention to the platform, brings in people that want to deposit GMX or GLP, rinse and repeat.

Creating more traction on the Uniswap GMX/ETH LP pair also gives fees to treasury and so on.

2 Likes

I would say the reason to create discounts is for GMX to appreciate in value and have longer term holders.
On GLP the only benefit is creating more liquidity on the assets that we probably already have plenty.

I agree, that to benefit for the discounts you would have to stake for at least 30 days, not just to buy and dump on the next week after the trade.

1 Like

Good answer. To be honest, I don’t think buying for a trade a selling afterward is a bad thing? We get 1% Uniswap fees every time someone would do this.

2 Likes

Love the idea on additional discount for those who hold/stake based on their esGMX and MP. Good for small retail investor like me to keep DCA into GMX :heart_eyes:

It has been a great rewarding journey so far in GMX protocol with constant discussion from dev team to safeguard the interest of all investor regardless of their contribution size. :smiling_face_with_three_hearts: :kissing_heart:

5 Likes

Following up on this, based on the stats so far, for Arbitrum and Avalanche, a 20% reduction in trading fees would result in roughly a 10% reduction in total fees received assuming volume numbers don’t change.

I think the first thing we would want to evaluate is whether the reduction in fees leads to an average increase in volume, it would be possible to do this by e.g. running a fee reduction promotion for a month and monitoring the results.

Would propose to run this first to better gauge outcomes before implementing the token based discount program for the long term.

6 Likes

That would be an interesting test experiment; good idea.

Great idea! Think this is both a good marketing event and interesting experiment to measure user behaviors. I’m in favour!

Great idea to run user testing based on this. True A/B testing might be hard though, unless someone can come up with something clever.

The goal of emissions and discounting (which are both effectively reductions to tokenholder earnings) ought to be to drive 1) increased usage and retention amongst existing users and 2) attract new users.

To that end, do we have a good sense for whether fee discounts for holding/staking GMX is the best mechanism to accomplish those goals above?

The opportunity cost here would be:

  • Further referral rewards
  • Product resources
  • Grants for cross-chain / cross-protocol development
  • Community grants for public goods projects (documentation, wikis, outreach, dashboards, etc)

If we do decide to do this in favor of experimentation with user acquisition strategies, I would echo what some others have said in here and am more in favor of starting small, then scaling it up from there after measureable success (and being disciplined about shutting off discounts when they are no longer working)

1 Like

Thanks @DeFiMan for sharing. To add onto this, including some info on incentive programs and fee models for onchain perps protocols below (dYdX being the 800-lb gorilla on this list) for the community + team’s reference.

dYdX - significantly cheaper + heavy discounting + heavy emissions
(not an endorsement, just a basic observation)

[apologies for multiple replies, am rate-limited on # of links I can post for now]

Gains Network - no explicit trading incentives via staking or volume tier-based discounts AFAIK