[Proposal] Dynamic BBD Adjustment - Capping APR and Accumulating Overhead

[Saulius]

Sorry for late replies.

@Kalcrypto1

I was wondering if it is possible to design the following three states without hardcoding 10%, 50%, 10% params.

• Contraction State
• Steady State
• Growth State

I came up with a MA idea for the same and did some modeling with past data since BB&D with the help of chatgpt, here is what I came up with.

This will not work, because your model is based on MA of APR wich itself is derivative function inverse related to GMX token price. What growth or contraction states we are talking about? APR growth/contraction? If yes then we are in “perfect” APR expansion state because it steadily rising for 2 years from ~5% to current ~25%. But token price collapsed 5x in same period and it not feels like expansion state at all. BTW I tried to put your proposed formulas into spreadsheet and can’t get same reserve accumulation curve. Per my understanding your model can’t create any meaningful reserve in long run even with supper low token price (but steadily rising very high APR).

Maybe we can think about measuring and tracking MA of BB amount (rather than the APR itself). However, the purpose of my proposal was not only to smooth out the rewards, but also to stabilize the GMX token price, as the downtrend lasting 2–3 years is causing significant damage to protocol reputation and marketing efforts. To support the GMX and reverse downtrend, we need to accumulate as many tokens as possible at this ridiculous low <$9 price. In short- we need to go bold otherwise there will be no impact.

@coinflipcanada

Yield Expectation Anchoring: My primary concern is the 10% cap becoming a baseline expectation rather than a ceiling. This risks driving the token price down to meet that unsustainably high yield, even as a mature protocol would naturally stabilize at healthier rates (e.g., 4-6%).

I like your thinking what 5% APR is more healthier for mature protocol as GMX while majority of others are crying about such “low” my proposed 10% cap level. To satisfy all parties maybe we can introduce not strict “anchor” but target APR band (let’s say 15%-5%) and accumulate/release distribution only outside the band.

@coinflipcanada

Fee distribution as a stabilized: Buying and distributing when prices are on the rise, does less than accumulating fees and deploying them to buyback and distribute when the token is below historical levels.

My proposal seeks exactly the same- buy back and accumulate then price is super low and release only on uptrend.

@coinflipcanada

Reserve Consumption Volatility: The current structure allows the entire reserve to be consumed rapidly when fees are low or price appreciation is high, leading to a sudden “cliff” effect and working counter to stabilization goals.

I don’t believe anyone will complain if distributions will ramp up on token rally. When it comes to low fees, let’s not be naive- nothing will save us if fees collapse. All this proposal is only valid if fees will stay at least at current level.

@coinflipcanada

Reserve used to buy/distribute tokens ONLY when GMX is trading below a key technical indicator (e.g., 50/100-day MA, EMA, or other custom technical triggers).

@coinflipcanada

The Reserve smart contract must include a pause mechanism where fees simply accumulate without conversion or distribution effectively during periods when we are trading above the EMA / MA targets.

Implementing technical indicators/triggers will be too complicated/subjective and “pausing mechanism” sounds very scary to many holders so I am afraid will be rejected straight away.

@coinflipcanada

Mandatory Estimate: We require an estimate of both time and resources to be allocated for developing new smart contracts, changes to buyback/distribution contracts, and the necessary audits.

Simplest form of my proposal (APR cap or band) requires 0 time, 0 additional resources and 0 audits. Current BBD is manual process- once a week all BB GMX amount is manually withdrawn from FeeHandler contract and send to RewardsDistributor. Only difference will be to withdraw and/or send not all amount, but withing APR limits.

@coinflipcanada

• Review Mechanism: The DAO or a future Treasury Committee should be responsible for reviewing and updating the distribution mechanics every 6 months.
• Flexibility: The system must be designed to be flexible, not hardcoded, allowing for refinement as more data becomes available to automate the process.

Again - more flexible (and mysterious) system is or if it can be anytime altered/changed by few arbitrary people (committee) more scary/unacceptable/unreliable proposal feels to all current stakers/holders who can dismiss it in voting. In my opinion proposal should be as simple as possible and tampering proof to have chance to pass voting.

@HanYolo

I really think we are overcomplicating GMX for non expert users, which I think there are a lot in crypto. It should be straightforward and I sometimes have the feeling GMX community is filled with a lot of highly intelligent people trying to find an optimum with all these sophisticated solutions, while general public is loosing interest.

Just proves my concern- we can’t be overcomplicated here.