Thanks Taiki, I appreciate your willingness to put your ideas out there, even if they may not be received as you may have hoped. I generally agree with everything that’s been said in opposition to this proposal, and will add only my points which may seem small, but should drive home why it would be unwise to change the game theoretical structure so significantly after the fact. I am mainly focusing on esGMX earned through GMX staking, as GLPers yield has almost completely eliminated esGMX emissions over the last few months, meaning most esGMX now and through the end of the incentive period was likely earned by GMX stakers.
First, I need to give some historical background, and will take us back to August/September of 2021. Funding for the protocol development work / contributer(s), and liquidity for the GLP was entirely bootstrapped without any traditional VC investment. To do so, when the GLP pool was virtually at zero, a number of GMX supporters took a rather outsize amount of risk to contribute to fund GLP for an initial period of time, and were rewarded with a modest esGMX drop. This was at a time when negative memories of the farm-dumpy dynamics involving the predecessor protocol were fresh. Particularly in the face of a prior less successful attempt (with Gambit) to raise/maintain liquidity in a more traditional farming model with (now) better understood tokenomic shortcomings doing so was a massive gamble. In short, we are talking about a protocol that had new code, launched on an untested layer 2 with laughable TVL, used a new tokenomic model, relatively unproven smart contracts and keeper bots, led by an anonymous dev, and little in the way of assurance other than the shared belief in the vision and integrity of the lead dev/contributer. Fast forward a year and change, and the team / platform is about to launch synthetics. We do not yet know what the market’s appetite is for synth LP risk, but devaluing esGMX by removing its yield, besides violating trust in the integrity of the model/dev/community, would also hamper GMX’s ability to back and incentivize liquidity for synthetics through a similar indirect yield token model in the future, if necessary, without causing direct dilution of GMX or outright spending from the treasury. The value of the trust by those early investors and LPers, even those who sold their GMX or GLP holdings since, is worth more than any extra yield boost to either GLP or GMX stakers (which seems comparably more gratuitous in my opinion), whether 25 or 30% or more.
Second, the assertion that orphaned esGMX provides no value is also flawed. As already mentioned, the price stability created by the vesting scheme is obvious and has significantly reduced dilution in the short- and long-term, part of the reason for the god-coin-like performance during close to a year of down-only markets. Significantly, anyone vesting esGMX in a vault also gives back some of their yield to the remaining GMX/esGMX stakers by taking those out of circulation temporarily, and by burning any MP’s upon unstaking. The value accruing to esGMX clearly influenced (in the past) and will influence (going forward) the decision whether to unstake/lose MPs and vest them in the first place. Without yield, there is higher incentives for every single esGMX in existence to be vested, because the opportunity cost to do so is closer to zero (MPs aside). As the protocol continues to grow and the token price appreciates, it becomes costlier for someone who already sold some of his GMX holdings to come back into the market and buy back the GMX required (or take much longer) to vest the orphaned esGMX, but the net benefit increases proportionately. Therefore, (regardless of the going market price of GMX) the cost/ benefit analysis would be in an equilibrium, but for the value derived from the yield earned by the esGMX and the MP’s which would need to be burned to unstake and vest esGMX. It is evident that a significant share of GLP and GMX holders and sellers have opted to forego any potential upside on esGMX through unstaking/vesting, or even direct sales / transfers to a third party in significant part due to the risk-free nature of the yield that was promised by the platform in exchange for their support when yields were insufficient to compensate their risk while growth of the platform was feeble and uncertain. Even if you said - screw those people in the past - the incentives would clearly affect the behavior of esGMX stakers (GMX holders) in the future and cause additional and more aggressive dilution of GMX in circulation.
Lastly, it is not an unfair assumption to make that the community continues to grow, in part because of many wallets earning small but growing amounts of real yield on the platform from orphaned esGMX. The growth of a user base/network of supporters and people knowledgeable about the features, stability and value of GMX as a platform, and the intangible marketing benefits that come with this self-sustained interest in its growth should not be underestimated. Each esGMX staker benefits from more people knowing about and trading or LPing on GMX, and anyone receiving yield will also continue to present a favorable opinion to the world about GMX as they continue to be rewarded for their past and present involvement in the project. As a platform which wants to attract more users, paying some yield to reap those intrinsic marketing benefits is worth it in my opinion.