GMX V2 Proposes Fee Allocation Options To Enhance Protocol Sustainability

Key Points:

• GMX proposes fee allocation options for GMX v2 to enhance protocol sustainability and incentivize participation.
• Option One suggests allocating 10% of protocol fees to the GMX Treasury, with distribution to liquidity providers and GMX stakers.
• Option Two maintains the existing V1 distribution, with a portion allocated to GMX stakers and reduced distribution for Chainlink oracles.

In a recent governance forum proposal and discussion, GMX has put forward two options for fee splits in the upcoming GMX v2. The proposals aim to distribute protocol fees to GMX stakers, GM liquidity providers, and the GMX Treasury.

Here are the details of the two options:

Option One – Fund GMX Treasury

• Allocate 10% of protocol fees to the GMX Treasury.
• Maintain a 70:30 ratio between GMX stakers and liquidity providers for an effective allocation: 10% goes to the GMX Treasury, 63% is distributed to liquidity providers in each specific liquidity pool, and 27% is allocated to a pool that benefits GMX stakers across all chains.
• Sub-allocation from the GMX Treasury will fund Chainlink oracles.

Option Two – Maintain Existing V1 Distribution

• Retain the 70:30 protocolFee parameter from GMX v1 with 70% of protocol fees distributed to liquidity providers in each specific liquidity pool and 30% allocated to a pool that benefits GMX stakers across all chains. Meanwhile, a distribution pool for GMX stakers is reduced by 1.2% of protocolFee to fund Chainlink oracles, resulting in an effective distribution of 28.8%.

If no fee is allocated to the GMX Treasury, the Chainlink Fee will be reduced from distribution to GMX Stakers based on a prior governance vote. GMX has previously indicated that it will be a launch partner for Chainlink’s low-latency oracles. Chainlink’s low-latency oracles will be included in the DEX to improve speed and data security. Chainlink service providers will get 1.2% of the total fees collected by the DEX.

Specific fees may vary for different markets and pools, depending on factors such as trade impact. It is important to note that the proposed fee splits and allocations are subject to further discussion and potential modifications based on community feedback. GMX aims to ensure a fair and sustainable distribution of protocol fees to incentivize participation from both GMX stakers and liquidity providers.

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