Reverting back to Fee Payout In Eth

Proposals
1

GMX community,

This is meant as a constructive contribution to the discussion, not a critique of past decisions.

One of the things that originally set GMX apart was how clear its value proposition was: the protocol generated real fees, and GMX stakers earned a share of those fees in ETH. That simplicity mattered. It made GMX feel less like a typical DeFi token and more like ownership in a revenue-generating system.

The move toward distributing rewards exclusively in GMX via buybacks is understandable. Using real fees instead of emissions is the right instinct, and buybacks can align long-term incentives. Still, I think it’s worth revisiting whether removing ETH payouts entirely was an improvement or whether something important was lost.

At a basic level, if GMX is producing real fees, it is intuitive to want those fees paid out in a highly liquid asset like ETH. Liquidity matters. ETH payouts allow stakers to realize returns without selling their GMX position itself. Without that outlet, the only way to take profit or reduce risk is to sell GMX directly, which concentrates sell pressure on a thinner market.

Paying fees in ETH does not dilute GMX, nor does it force selling of GMX. In fact, it can reduce GMX sell pressure by shifting realized returns into a deeper, more liquid asset. This is how dividends work everywhere else: shareholders get paid in liquid cash so they don’t have to sell their ownership stake to see returns.

There is also a narrative cost to GMX-only rewards. ETH payouts were a very clean signal of real profitability. Buyback-only rewards introduce reflexivity, returns become more dependent on token liquidity and market sentiment, which makes GMX harder to evaluate as a business and easier to mischaracterize externally.

A possible middle ground is a hybrid approach:

  • A portion of protocol fees distributed in ETH, preserving GMX’s identity as a protocol that pays real, exogenous yield.

  • A portion used for GMX buybacks, supporting long-term alignment and compounding for those who want it.

  • Optionality, so stakers can choose between cash-flow realization and increased exposure.

This would not undo the logic behind buybacks, nor reintroduce emissions. It would simply restore clarity around where GMX’s value comes from while keeping incentives aligned for long-term holders.

GMX has survived because it has been conservative, transparent, and willing to revisit decisions when there’s a strong case. Re-examining fee distribution through the lens of liquidity and ownership feels consistent with that philosophy.

Curious to hear others’ thoughts.

-ShoeStar

PS. It is super difficult to create a discounted cashflow model using gmx as the rewards, due to the illiquidity of gmx. I highly advise we stwitch back to eth fees because this allows us to actually model GMX like a stock, boil GMX down it is a business that is profitable. So lets get paid out in profitability, not in a coin that will lose value when we sell it. Thank you :slight_smile:

1 Like
2

I pretty much agree with your line of thinking.

To use a simple analogy: if a country pays interest in an external hard asset like USD or gold, its currency is more likely to be accepted by a broader pool of investors, and its exchange rate has a better chance of staying stable. On the other hand, if interest is paid in the country’s own currency, it starts to look like the system is just printing rewards for itself, which can easily spiral into inflation.

Applied to GMX, the logic feels similar. Paying rewards in GMX is effectively existing holders continuously reinvesting into themselves. Without a steady stream of new external capital, the holder base will likely shrink over time.

That’s why I also support at least experimenting with distributing GMX rewards in ETH. Try it, observe the results, and iterate.

3

Thanks for bringing on this discussion, I think we plan to discuss tokenomics in the recent future with some adjustments to the current Buyback and Distribute way of working. Maybe with a cap of what GMX gets paid out, or no yield being distributed until the price reaches a certain equilibrium.

Just saying that going back to ETH, will break a lot of things as the whole GMX contract which has been upgraded after the BB&D, would involve another round of upgrades to go back to ETH as a reward which will break existing protocol blocks again and will require people to upgrade these once again, which will most likely not happen.

4

Compared to the importance of finding a best mechanism for GMX price discovery, implementation workload should be a secondary concern. Especially when the protocol already has 30–40 active contributors, engineering effort is not the binding constraint or reason.

1 Like
5

I am not saying that it’s OUR engineering effort / workload, a lot of protocols are building upon the GMX token as well, I am saying that this is an issue for existing integrations, not our contributors time.

Again, not saying this is a big issue, it’s just an issue we want to avoid as much as possible. If we want healthy changes and integrators building upon us, we shouldn’t introduce breaking changes to the tokenomics every few months.

7

not another tokenomics post

can we let the developers build and stop wasting time on coding new tokenomics

It doesn’t matter BB&D or BBB or ETH or USD or BTC, there is only 1 summary:- there is no one solution that fits all

eventually someone will ask to move to another format and here we go again.

let’s focus on building

Get the RWA up, forex, stocks, gold, silver, oil, copper

Get megaeth working. Let the trader loyalty program ball rolling. Let the marketers move fast.

Every minute spent on tokenomics is a minute wasted not build the ecosystem.

Build it and get the fees and volume up!