Proposal to Establish the GMX Safety Reserve (GSR)

  1. Introduction and Background

As GMX continues to scale, the security of traders, liquidity providers, and the broader community has always been paramount, with the majority of the GMX Treasury allocated to back our industry-leading Immunefi bug bounty program. Despite this strong foundation, large-scale exploits or black swan events could still pose significant risks to our protocol, as they do for all DeFi protocols. To bolster GMX’s resilience and cover for any significant compensation or bug bounty payouts that might otherwise impair the protocol, we propose creating a GMX Safety Reserve (GSR) overseen by the already-elected GMX Security Committee (see the Committee’s formation and role here).

  1. Funding and Growth

The GSR will be initially funded by transferring the protocol’s existing bug bounty reserves—currently comprised of ETH, ARB, and stablecoins—into a dedicated fund. To ensure the GSR’s long-term viability, we recommend allocating a percentage of the DAO’s fee revenue on an ongoing basis. Such allocation is presumed to be from the existing 10% of GMX V2 protocol fees allocated to the DAO, but both the size and source would be subject to a subsequent governance vote. Additionally, to harness additional resources beyond our existing ones, GMX contributors will seek grants, vested tokens, pledges, or conditional guarantees from key ecosystem partners such as oracle providers, chains, bridging platforms, and risk specialists.

Note: Many of these partner commitments may not directly enlarge the DAO’s treasury but would instead serve as conditional backstops, ensuring GMX has sufficient capital available in the event of catastrophic incidents. In the event these pledged assets must be deployed, a dispute resolution mechanism will be in place to determine whether and how they can be utilized, recognizing that ecosystem partner contributions are not the first line of defense. Notably, the upcoming bridging partner tender is expected to include a material contribution to the GSR, emphasizing the importance of these partnerships for GMX’s long-term security.

  1. Administration and Governance

The GMX Security Committee, already elected by the community, will administer the GSR. They and Labs contributors may manage a portion of the funds via a multisig wallet, allowing for more direct and efficient distribution. Smaller or urgent bug bounty payouts—particularly for critical vulnerabilities—could then be reimbursed or disbursed swiftly in coordination with contributors. However, more substantial payouts, such as large-scale compensation programs following a severe exploit, will be subject to an on-chain governance vote to ensure transparent, community-driven decision-making. This two-tiered approach balances the need for rapid response with robust oversight.

  1. Transparency and Oversight

To maintain community trust, regular reports will detail the GSR’s balance, partner contributions, and any disbursements. If the community decides to explore a low-risk yield strategy for idle funds including holding yield-bearing stables, a separate governance proposal will be required—preventing unilateral decisions that could expose the GSR’s heightened risk. This emphasis on transparency, combined with the Security Committee’s focused administration, reinforces GMX’s commitment to a secure and open ecosystem.

  1. Conclusion and Call to Action

By placing oversight of the GSR under the already-established GMX Security Committee, GMX can more effectively respond to security threats, reward researchers who disclose critical vulnerabilities, and provide compensation if unforeseen events occur.

We invite all community members to share feedback on this proposal during the designated discussion period and to participate in the on-chain vote. With collective support and thorough oversight, the GSR can become a cornerstone of GMX’s enduring focus on safety and reliability.

5 Likes

Good idea. Fits GMX’s reputation for long-term vision, security and community safety quite well.

I think it makes sense to start funding the GSR from the existing bug bounty funds, and then subsequently consider a small allocation from the Treasury fee revenue to build up resources. Would be great if we can get crucial ecosystem partners to align with the idea, and back it as well.

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idk if just me but clicking the committee link takes me to chatgpt

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happy to contribute to the dao in all its needs

To clarify the DAO’s structure and operations, a visual diagram would be beneficial. This diagram could outline the various committees, including:

  1. Listing Committee
  2. Security Committee
  3. Labs
  4. Governance Committee (focused on ARB token governance)

Regarding the DAO treasury, its operations are ongoing, but determining the optimal funding amount would require insight from someone closely involved with the treasury. Unfortunately, specific numbers are not provided here.

As the DAO expands, its funding operations are also growing. To facilitate contributions and provide clarity, the Governance Committee could provide an update on operations and focus on the following:

  1. Centralizing information on the DAO’s structure and operations
  2. Outlining ways for new entrants to engage with the community and contribute to its resilience

In its current state, the proposal shows promise, but the details are somewhat scattered. Clarifying these points would be beneficial for those seeking to join the community.

Lastly, it’s worth noting that GMX serves as a central brand while also acting as a decentralizing force.

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Will get that correct, fully admit running the proposal for grammer and cleanup through chatgpt, should have rechecked the links.

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Good points, will take note.

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