[MODIFIED] Marketing Funds to Promote GMX and to Test Trader Incentive Scheme

[Rob]

Interesting, maybe the rebate could be in the form of GM GMX [GMX-UDSC]. It would align with GMT, will put some thought into that.

[Btcfever]

Yes, Rob, please take these words to heart. You presented a really great idea, it just needs some smoothing over to take care of any unintended consequences.

First off though, let me just say that the irony is not lost on me that I spent a ton of time/energy warning against getting rid of Multiplier Points, and now I’m spending a lot of time/energy warning about bringing them back! But ultimately I do salute the team’s formulation and overall goal of this plan. I support the pivot back to a “Points” narrative. It is the right strategic move for the market since the dominant narrative for the other perps protocols these past two years was points accrual. My only issue is the current proposal does not address a lot of the risks inherent in this Version 1.0, and I hope you’re open to modifying it into a Version 2.0 that can safely guide GMX back to its relevance and asset health.

So bear with me Rob, I want to address the bad (concerns) and then the good (solutions). Sound good?

The Bad:

Ok, so it feels like this proposal is viewing GMX strictly through the lens of a trading platform, while ignoring its critical function as a yield-bearing investment asset. Rob, that function is the only thing that slowed the long rate of decay for the token from $62 to $7 over a span of two years, rather than all at once. The stakers deserve a parade. If we ignore the “Investor Perspective,” we risk really do risk a negative feedback loop that will send the price from $7 to $1 or less. Too much of the proposal is predicated on “hope”, ie you’re hoping new users like the UI, and therefore stick with the platform. Hope is not a strategy, and past assumptions about user behavior (like the BB&D rollout or the GM liquidity pool usage or the more stakers/buyers once MP’s are gone) have proven woefully incorrect. Let’s not “assume” what people are gonna do. When we get it wrong we get it catastrophically wrong. Instead let’s focus on what the market is telling us. The market really is telling us what we need to do to regain the ground we lost in the past two years. We just need to stop ignoring it.

Here is why “Version 1.0” of this proposal is dangerous, and exactly how we can fix it in “Version 2.0.”

1. The “Equilibrium” Fallacy & The Investor’s Perspective

You argue that the system will find an equilibrium because GMX is bought from the market to pay rewards. This assumes the existing holder base is static. If it was, the price would have gone from $92 to $7. Holders, even long-holding ones, will sell if they feel incentivized to do so.

• The Reality: Investors move capital to where they are incentivized. If you cut the yield of passive stakers to fund a program for traders, passive stakers will leave for greener pastures that don’t “steal” from them, as most would see it. And to be honest I think the proposal mischaracterizes everyone involved. NO ONE is looking for a perps platform that “offers an enjoyable UI/UX experience”. Further, you cannot convert a passive staker into an active trader:

  • Some of the holders are accounts holders that hold the token for other people - a lot of the passive stakers that stuck with the token through 2 years of “down only” were never authorized to make trades with their accounts
  • If anyone wanted to be a trader, then they would have been one. This scheme isn’t going to incentivize non-traders to begin risking capital. It’s going to incentivize them to find another investment asset that doesn’t treat them like shit after years of loyalty during the worst of times.

• The “Felt” Impact: You mentioned stakers might not “feel” the drop until it hits 25-50%. I assure you, investors “feel” a 1% to 24% drop, and they feel it as a breach of trust. I don’t get how anyone can think otherwise. I guess it’s more of that “hope” strategy.

• The Result: You might generate $2M in buy pressure from the program, but you risk triggering like ~$50M in sell pressure from long-term holders exiting. That is not an equilibrium, dude; it’s a crash.

2. Semantics: Delays are not Vesting

You suggested the “Week 1 Earn / Week 2 Convert” mechanism acts as vesting.

• The Flaw: That’s just the normal customary payout for yield, it’s not vesting. Real vesting aligns incentives over time. A one-week delay just adds a step before the dump which we already see with apr payout of GMX. The key to vesting is “over time”.

• The Data: We have over a year of data showing that liquid rewards are sold immediately. If we hand out liquid GMX, it will be sold. Especially if the recipients of said GMX are just wash-trading farmers.

3. The “Success” Danger & Wash Trading

You mentioned that for the passive APR reduction to be significant, 70-80% of volume would need to come from stakers.

• The Risk: This means the program’s “success” condition is actually the worst-case scenario for the token price, as it maximizes the yield drain on passive holders. Schemes like this could only work in a vacuum. The reality is there’s hundreds of other places that stakers can park their wealth that doesn’t make them feel like they’re suffering from a breach of trust (at best) or a victim of theft (at worst).

• Farmer Psychology: You mentioned that farmers might stay because of the great UX/UI. I hate to be the bearer of bad news, but if UX/UI drove volume, we wouldn’t be in this position. Traders who are drawn to a points-farming opportunity do not care about UX; they care about extraction. They will farm the rewards and abandon, like they always do. Also, you’re not giving wash-traders enough credit. Many people are going to figure out at what volume level the rebate payout is higher than the accumulated opening-closing fees, and they’re going to exploit it with worthless wash trades that don’t benefit the protocol (since fees paid will be less than rebate handed out). If wash trading actually benefitted a protocol, then GMX-SOL would be the new Hyperliquid. All I’m saying is please consider the ways in which this proposed program can be exploited.

• To carry on with this psychology topic: GMX doesn’t require “a classic onboarding activity”. If that was the program’s intent then the rebate program would be limited to new wallets that aren’t bubble-connected to any existing GMX trading wallets. Right now this program is inviting any loopholes to be exploited by bad actors while passive holders finally capitulate.

4. The "Trial Testing Period” isn’t actually testing the proposed program.

• You described two different versions of this new Multiplier Points for Traders scheme. The success of one doesn’t indicate the success of the other. One version uses funding from the Treasury, and the other uses “yield cleaving” from loyal stakers that have stood by the protocol during two years of calamity. The data you’ll ostensibly gather from one trial will not directly translate to a gauge of the success of the “permanent” version.

Ok so that’s the “Bad” that I’m trying to draw your attention to. Fortunately, there’s also a ton of “Good” that this proposal (as Version 2.0) can embrace and give GMX it’s very own renaissance.

The Good:

Instead of a proposal that alienates holders to chase traders, let’s adopt a V2 that aligns everyone. GMX initially flourished because it offered incentives to everyone to join the ecosystem. We need to re-embrace the incentives that worked. And I noticed that your proposal was intentionally light on details regarding “how” the new Multiplier Points would be calculated, in order to give the team a wide space to set it up. That was good, that was smart. So….

1) Add a “How long was the position open” Multiplier (Fixing Wash Trading) To prevent volume farming (wash trading), we must incentivize quality volume, not just quantity.

• Proposal: Introduce a multiplier based on the duration of the open position.

• Mechanism: Points = Fees x (Duration Multiplier).

  • Open/Close in 10 seconds (Wash trade) = 0x points.

  • Position held for under 30 mins = 0x points.

  • Hold for more than 30 mins (Real trade) = 1.0x points.

• This makes wash trading mathematically unprofitable without exposing the farmers to real market risk in addition the open/close fees.

2) ESGMX worked perfectly well before as an incentives payout mechanism, the reasons to not keep using it feel flimsy (ie, saying its “too complicated”). GMX payouts create dumpers, ESGMX payouts create “people suddenly aligned with the success of the protocol”.

• Proposal: Make the payouts in some form of esGMX. Perhaps have the protocol buy a corresponding amount of GMX, burn it, and the weekly rebates of esGMX are for that same amount. That way we get no inflation + incentivizing people to be tied to the ecosystem.

• Mechanism: Use a 90-day linear vest if you really take issue with the 1-year period. If the trader unstakes their principal GMX, vesting pauses. All this stuff worked before, let’s not recreate the wheel.

• Benefit: This forces traders to actually care about the GMX price for at least a quarter. If they aren’t willing to wait 90 days, they were only here to dump on us anyway.

3. Fix retention by bringing back the MP “burn” if you unstake GMX

• Proposal: Reintroduce the “Burn” mechanic from the pre-MP era.

• Mechanism: Tie “Multiplier Points” to staking status. If a user unstakes GMX, they burn a corresponding amount of multipliers.

• Benefit: This gamifies retention and was easily the best feature of the old MP’s. You can’t “wash trade” length of staking. This ensures that the people getting the rewards are the ones committed to holding the floor.

4. This proposal and all future proposals should automatically include a “Circuit Breaker” clause

• Proposal: We need a safety valve. If the program tanks the price or fails to generate real (non-wash) volume, the team must have the authority to pause/end it immediately without a new vote. We cannot watch the token drop another 80% while waiting for governance. Imagine if we had this during the $60 to $50, then $50 to $40 era. Designate a “stop loss” value for $GMX token (say, $4.85) that if it drops below the proposed program is suspended.

4. We shouldn’t rob the the passive stakers to fix mistakes a lot of them had no hand in. There’s other avenues for funding this trader incentive scheme. Let’s explore them and talk it out:

• One idea is to fund this from Incremental Revenue (revenue above a baseline average). Literally right now the GMX team is putting forward their funding proposal for the next year or two. Have them submit an actual budget, and revenue above this budget can be earmarked for trader incentives. I mean we’re taking $1.2 million dollars out of the treasury to subsidize GMX-Solana. That same amount would cover a few months of this program. Are we seriously going to fund someone else’s project using treasury money, but not our own?

• Another idea is to seek sponsorship from chain incentives (e.g., Arbitrum, MegaETH). It can’t hurt to ask, and GMX has done partnerships with the chains before. Tell them that GMX is interested in staging a new trading incentives program and see if we get any responses. It can’t hurt. I believe someone in this chat already cited that MegaETH is likely to introduce an incentive program. See if GMX can get aligned with them perhaps.

• Redirect some of the funding from marketing & community to this program. Should you really be paying 12 mods for a telegram channel that only get’s 1 new message every three days? You get the idea - Long story short, engaging in belt-tightening on the admin side isn’t going to tank the $GMX price from $7 to $1. Taking the funds from passive stakers will.

5) After the initial trial using Treasury funding, conduct another trial (with much more stringent circuit breakers) using the so-called “permanent” version of the program.

• If you are adamant about punishing the GMX holders that stood by the platform through years of hardship, at least perform a brief trial of “that version” first to gauge how everything will actually hold up. The difference between a Treasury-funded version of this new Multiplier Points program and a Staker-funded version is night & day, to the point where it’s unfair to call one a “trial” of the other. Right now we won’t be testing this major aspect of the new MP scheme until after the program has been “made permanent”. Let’s not do that. Heck, maybe do trial runs of different funding sources to see what’s achievable.

Ok well I’ve said my piece. I tried to get my thoughts and concerns on the last MP vote across and nobody was receptive. We ended up going from $62 to $7, and from being the #3 fee generator to #43 (according to Token Terminal). Now I’m trying to get my thoughts and concerns out about this new MP vote. Thank you for at least hearing me out Rob, and now I have to pray that you’ll take the warnings to heart.

Despite my harsh prognostications, I am overjoyed that the team is looking to pivot. We’re at a crucial point where we risk going from #43 to becoming a virtually-dead platform with only a few niche traders at most. We need to expand the GMX footprint, not shrink it to a narrow subset of “heavy staker-traders.” That means the proposal should offer ways to appeal to everyone to join the ecosystem, including people that want to “buy and forget about it” which is how most people get into crypto and we shouldn’t want to shut that market out. This proposal has the potential to revitalize the protocol, but only if we iron out the blindspots and polish it into a Version 2.0: one that uses real vesting, prevents wash trading via time-weighting, and protects the passive capital that anchors the system.

Edit: Dangit I forgot I had questions for you.

1. How are the success metrics that you list in your top post “weighted”? Meaning which are more important than which others? You listed many, which raises the possibility of some metrics looking good and others underperforming. Does the program get scrapped if even one metric is bad? I’m just saying that I can see a scenario where the Volume Growth increases and Claim Rate is high, but GMX Stake Change is close to zero and the Budget Efficiency is poor, as well as the Trader Acquisition being unsuccessful. It’s a bit muddled as to what actually constitutes enough of a success to greenlight actually going to permanent mode. If the liquid GMX given as rebates are nearly all insta-sold rather than staked, would that be enough to put a stop to deploying a permanent version?
2. You mentioned that “gamification in the permanent model that this marketing activity will test. Elements do expire, and some term requirements of GMX staking before the bonus gets activated.” Do you forsee making modifications to the program during the testing trial? If so you should add language on that.

[0xjunwei]

Based on discussion the past few days, im also curious on what are the plans to utilize the 150k marketing of this program .

Also noticed the timeline changed from weeks to phases, does this indicate an accelerated phase where certain parts dont require a week or would it indicate an delay in kickstarting the program ? Initially was around 4 weeks from proposal posting.

Going to assume this requires an tally vote to send the funds out of treasury ? Maybe we adjust the numbers to also account for tally fee etc if so iirc

[Tano]

No I think the weekly format got a few people too excited to fast as it meant it would’ve been live in 4 weeks, which I don’t think is correct.

[Jonezee]

Yep, as Tano said, the structuring in 4 weeks is a bit too simplistic and would be likely to create unrealistic expectations.

The coming month will also include the launch of GMX on MegaETH, the next steps for Multichain, additional marketing campaign efforts, events, etc. Busy times. We’d rather overdeliver than overpromise.

[0xjunwei]

Nice, alrights thanks for the confirmation was just wondering as i noticed the change and wasnt sure what it implies.

[Seraph]

@Btcfever

First off though, let me just say that the irony is not lost on me that I spent a ton of time/energy warning against getting rid of Multiplier Points, and now I’m spending a lot of time/energy warning about bringing them back!

YES, lets move on, no more tinkering with the tokenomics!
Lets focus on marketing and making this trader incentives a success to bring volume back to GMX.

thank you for your support. i will go one step further and say lets get the traders fees back.
when trader trades till our OI is consistently above $1000m, then we worry about other things…. ^.^

[bparlan]

this is very valuable comment regarding v2 building process.

[nxs]

Do it and iterate! The team should be coming up with some bad ass ideas and presenting to the community. Lets give people some incentives to be here.

[Seraph]

I am going to share a bit more….
Tmr Megaeth is doing testing, and they should be launching by end January for public. Any delay is probably only 1 week or so, so let say early-Feb… GMX would be launching on megaeth.

Along with this, there would be a few marketing campaign with various different agencies. YES, we engage more than 1 agency, there should be 3 agencies with a fourth incoming.
This is how serious we are taking marketing.

One of the biggest campaigns would be to

1. spread the word for incentives for traders, loyalty points for trader incentives
2. megaeth launch, the fastest L2, your executions would on the swiftest chain
3. multichain, if your wallet is on other chains such as BNB, Base, Mainnet etc etc, you can trade on GMX….

it would be very busy Feb to April.
Appeal to all to follow our GMX twitter, and retweet, like and engage, you know that the algorithm will spread to more non-GMX traders the more we engage!

[Jonezee]

Appreciate your professional input on this proposal (though I would request you to try to write more concisely )

To address some of your concerns:

1. The “Equilibrium” Fallacy

Stakers who do not themselves trade may face a small reduction in their passive staker APR. Stakers who do trade would be rewarded for doing so. Traders who don’t currently stake will also have an additional reason to stake. This strengthens the link between token and protocol usage.

The program would also likely increase overall volume, thereby raising the average Staker APR. And GMX’s revenue-sharing with stakers is already among the most generous in all of crypto.

2. Delays ≠ Vesting

• “Week 1 Earn / Week 2 Convert” isn’t real vesting, just a normal payout with one extra step. Real vesting aligns incentives over time, not after 1 week.

Conversely, if the rewards were provided in esGMX, it is highly likely that the program would see significantly less adoption. In the current climate, users aren’t enthusiastic about locked-up tokens.

Doing volume to earn points, then doing volume to convert your points to rewards, can contribute to the flywheel effect.

3. Success = Worst Case Scenario

• Program “succeeds” only if 70-80% of volume comes from stakers. Wash traders will exploit the system (volume where rebates > fees). Farmers will leave after farming

Key performance indicators will be a volume and staking increase, not just a shift to volume coming mainly from stakers.

Farmers are welcome, in this scenario, as they will help the overall flywheel effect. There will obviously be safeguards against exploitative farming and washtrading being viable. Our data and security partners are involved in the design.

4. Trial Doesn’t Test Actual Program

• Treasury-funded trial ≠ staker-funded permanent version; Testing one doesn’t gauge the success of the other.

Funding this program from the Treasury is the sensible, practical way to trial such an incentive scheme without requiring smart contract changes. It allows us to gather crucial data to assess whether formalizing incentives for stakers and traders is likely to be long-term beneficial for the protocol and all its user groups.

[Rob]

Post has been updated to fit a more general approach covering all marketing activities including the test incentive scheme. Handcuffs would be removed, and the question of “wen marketing” shall be answered.

[0xjunwei]

Assuming the proposal goes to snapshot end of next week, will we make it for MegaEth launch ? Given snapshot 5 days and unsure if you need tally to send funds?

[Saurabh]

Yes, we will need Tally to send the funds, but these incentives will be on top of the MegaETH incentives provided by the MegaETH team

[0xjunwei]

My initial assumption be that the incentives be aligned with megaeth day 1 launch thus the queries but seems like it might be a week or two after based on snapshot and tally voting timelines.

Additionally we should recalc the 3.15m amount to account for tally fees.

Overall still support the proposal but just clarifying on launch alignment, due to the lengthy process of snapshot + tally voting.

[Saurabh]

Totally understand the concern. To clarify, these incentives are in addition to what the MegaETH team is already providing. The intent is to run them over a longer window to effectively bootstrap early liquidity and sustained trading activity, rather than strictly anchoring them to day-one launch timing.

On the Tally fees point agreed. We’ll update the proposal during the Tally vote to reflect the revised amount, and the final figure will be clearly stated there.

This proposal brings together multiple initiatives to reduce the need for repeated DAO proposals.

[Seraph]

Thanks for the add-on and edits
for all other readers, pls note there is a Summarize button for AI to help out if you are lazy to read everything.

[Edifier]

@Rob Can you please add in your summarize :

A minimum GMX staked to be qualified for the campaign

For example : minimum 50 GMX then beyond 50 GMX it will qualify also for the multiplier

[Edifier]

Moreover, on top of the traders incentives which will generate more fees and more GMX buying (from BB & minimum stacking to be qualify for trading incentives & multipliers), I suggest to modify the BBD to create a huge GMX token shock.

Split the stacking rewards :

50% buy back and burn

50% distributed in ETH or USDC to avoid selling pressure

Less token in the future means more revenue for the long term stackers and more value for the GMX token. That’s mathematics !

The current model with 100% revenue distributed in GMX makes no sense as the token haved been dropped 60% since 1 year.

[Tano]

I don’t think this proposal should include any change to the tokenomics, let’s focus on the incentives program first and see how it performs.

And I also said multiple times that burning doesn’t have much positive effects on the protocol anyway besides throwing away money, GNS did a burn, token still went down 90%, UNI is doing a burn, token doing worse then before.

Just saying burns won’t solve the issues