GMX

Last week, we had a proposal suggesting a change in GMX’s current revenue distribution model from “Buyback ETH and Distribute ETH” to “Buyback GMX and Distribute GMX.” This change aims to leverage the advantages of “buyback,” enhance GMX’s long-term value retention ability, and optimize user experience and protocol strategic flexibility while minimizing model changes and fully preserving the “real yield” advantages.

The specific implementation path will refer to Xdev’s proposal:

“For the buyback mechanism, I would like to propose the following process:

• Fees are swapped to ETH or AVAX, using GMX V1 / V2 swaps as it is currently.
• The portion of ETH / AVAX allocated for buyback is deposited into a Buyback contract.
• The Buyback contract will allocate 1/7 of the deposited ETH / AVAX to buy GMX every day for 7 days.
• The Buyback price will be based on the GMX Chainlink oracle price (available on Arbitrum and Avalanche).
• There will be a premium to buyback the GMX, which gradually increases from 0% to 5% over the week.
• An example of the interval value can be 1 hour, which would split the purchases into 168 buys over 7 days. If the size of a purchase per interval is greater than, e.g., 20k USD, the interval may be decreased for smaller but more frequent buys.

This is to reduce the risk of front-running/price manipulation from a single purchase. The GMX bought back can then be distributed in the following week. With this format, it also means that during the transition from rewards in ETH / AVAX to rewards in GMX, there will be one week where GMX tokens are being bought back and there are no tokens to distribute. For this week, GMX matching the estimated buyback amount could be minted for distribution, or if this one week gap is fine, then this mint may not be needed.”

Xdev has considered the issue of accumulated fees not being distributed in the first week. The fees are actually accumulated, and to keep the technical implementation as simple as possible and avoid the need to mint any additional GMX, this vote assumes that there will be no reward distribution in the first week. This approach ensures a smooth transition of the system. In summary, if the proposal passes, Xdev’s proposed implementation aims to provide the optimal path for choosing to receive GMX or ETH/AVAX.

We will now vote on this proposal. Below are the explanations for the options (using Arbitrum as an example):

1. “Buyback ETH and Distribute ETH.” Fees are stored in ETH and then distributed as ETH, retaining the current model.
2. “Buyback ETH and Distribute ETH” and implement the option to “Convert ETH to GMX.” Fees are stored in ETH and then distributed as ETH, retaining the current model, but adding an option for users to convert ETH directly to GMX.
3. “Buyback GMX and Distribute GMX” and implement the option to “Convert GMX to ETH.” Fees are stored in GMX and then distributed as GMX, reforming the current model, but adding an option for users to convert GMX directly to ETH.

For reference, here are the opinions from GMX Delegates and partners: GMX Delegate Tano - https://gov.gmx.io/t/gmx-transition-from-buyback-eth-and-distribute-eth-to-buyback-gmx-and-distribute-gmx/3693/24 GMX Delegate SniperMonke - https://gov.gmx.io/t/gmx-transition-from-buyback-eth-and-distribute-eth-to-buyback-gmx-and-distribute-gmx/3693/37 GMX Delegate Shogun - https://gov.gmx.io/t/gmx-transition-from-buyback-eth-and-distribute-eth-to-buyback-gmx-and-distribute-gmx/3693/38 GMX Delegate XM and GBC - Option 3 - https://gov.gmx.io/t/gmx-transition-from-buyback-eth-and-distribute-eth-to-buyback-gmx-and-distribute-gmx/3693/39 Vaultka - https://gov.gmx.io/t/gmx-transition-from-buyback-eth-and-distribute-eth-to-buyback-gmx-and-distribute-gmx/3693/40 D2 Finance - https://gov.gmx.io/t/gmx-transition-from-buyback-eth-and-distribute-eth-to-buyback-gmx-and-distribute-gmx/3693/41