Hi Fredeger, I’ve carefully read it twice, and I am extremely shocked at how clearly you’ve analyzed the pros and cons of every possibility of this issue. Compared to your analysis, many of my own suggestions seem quite inferior.
I’d like to speak from my own perspective as the second largest holder of GMX and the largest holder of esGMX. I may have a certain say in this matter. Over the past year, I have purchased more than 100k esGMX, of which only 42 were generated by myself. I’ve mentioned early on in the community that there was no need for me to buy GMX. I could easily exchange GMX for esGMX at a ratio of 1:2.5 to 1:3, and for MP at a ratio of 1:20 to 1:50. From a governance perspective, there’s no difference between GMX, esGMX, and MP; and from a yield perspective, there’s no difference either. The only minor difference is that GMX can also generate MP.
In other words, the value of GMX has been completely diluted.
The stark discrepancy in the capital ratio required to obtain the same Fee Power highlights the irrationality within the entire system. Personally, I am against any unfair practices, but I am even more opposed to some so-called OGs who continuously emphasize their own interests while neglecting the bigger picture. They have already accumulated significant profits in the process from 0 to 200%, and regardless of any changes we make moving forward, these OGs will continue to reap the highest returns in the entire system.
To the old holders, MP is seen as a reward, but to new potential users, it appears as an insurmountable oppression.
Very few people can foresee two years into the future; most people’s cognitive process involves buying due to some reason and then gradually learning and understanding. The impact of MP is that it significantly raises the mental threshold for buying. The thought that one needs to buy and hold for two years just to catch up with the current level of OGs is quite daunting. However, if buying were easy and if GMX performs well, then holding for two years would come naturally.
Therefore, my proposal would be a one-time solution to address this issue:
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Convert all MP into esGMX at a 10:1 ratio, and thereafter, both GMX and esGMX will not generate MP anymore. And it’s fair for everyone.
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Reinstate esGMX as a staking incentive, aiming for a target APR of 20%, to distinctly differentiate the value between GMX and esGMX.
This approach would eliminate 100% of the Base APR dilution, immediately restoring the Base APR to a normal level, and ensure the future APR dilution rate remains very low (due to the esGMX incentives. For example, if the Base APR is 12%, then only an additional 8% of esGMX would be introduced each year, meaning the Base APR would only decrease from 12% to 11.04% after one year).
Particularly, restoring the target APR to 20% through esGMX is crucial. The long-term decline of GMX/BTC and GMX/ETH after we stopped the esGMX incentives (we performed very well during the bear market, and it’s impossible to perform worse during a bull market) suggests to me one thing: we might have thought that esGMX had completed its historical mission, but we could be wrong. It may well be a long-term mission, and esGMX should serve as a market balancer over the long haul.
Some OGs might worry about the reduction in the penalty for soft locking, or even threaten to dump their holdings. In response, I can only say that increasing market turnover is not necessarily a bad thing, and I believe there are ample funds eagerly waiting for them ：）