[HIP-3] Enhancing HMX Tokenomics: A Proposal for Sustainable Growth

[Takamura]

Hey Dragons!
We have an exciting proposal from the HMX team to improve our tokenomics and enhance the sustainability, governance, and long-term value of HMX. The proposed changes aim to create a more stable and thriving ecosystem for everyone involved. Let’s dive into the details:

Motivation:
Since HMX’s launch in 2023, one of our growth strategies has been to reward trading activities through sizable esHMX token emissions. The approach proved effective in accelerating our platform’s growth, achieving a peak daily trading volume of over $650 million and a cumulative total exceeding $30+ billion in ~6 months. This framework was essential for bootstrapping activity and establishing our presence in the competitive decentralized perpetual exchange market.

However, a significant dynamic shift has occurred over the past several months as HMX becomes more mature. Attracted by our competitive fees, UI/UX, and top-tier security measures, the dependency on esHMX emissions for traders has diminished. To illustrate this point, in April, esHMX rewards constituted only about 14% of total trading fees paid by users.

We observed that the majority of the traders who received esHMX elected to vest and sell them, creating a constant selling pressure on the HMX tokens. This is understandable because traders are not necessarily invested in the platform token, and view HMX incentives as part of the PnL. This, however, has a second order effect where it discourages other buyers leading to lower demand and prices for HMX. Lower HMX price impacts stakers and also loops back to traders in a vicious cycle as their esHMX rewards are also valued less.

In addition, we have also observed that HMX traders are more sensitive to fees than to trading incentives. To illustrate this, despite increasing PYTH rewards in March, we still experienced a decrease in trading volume, which was due to the raised trading fees.

We have been working on a comprehensive plan to revamp the HMX tokenomics in conjunction with the upcoming launch of [REDACTED] project - (It’s a stealth project that the core team has been developing for over the past 10 months) - later this year, with the goal to enhance the token’s attractiveness and incentivize long-term holding and staking, aligning with our strategic product roadmap for 2024.

In the meantime, we are proposing, through this HIP, a first step in the change to interrupt the current negative cycle by recalibrating the emission and reward structures. We intend to create a “virtuous cycle” that enhances benefits for HMX holders and stakers, thereby enhancing the token’s value and stabilizing our economic model.

We invite all stakeholders to participate actively in discussions and to stay updated through this forum as we roll out further initiatives.

Summary:

DISCARDED PART
T̶o̶ e̶n̶h̶a̶n̶c̶e̶ t̶h̶e̶ s̶u̶s̶t̶a̶i̶n̶a̶b̶i̶l̶i̶t̶y̶ a̶n̶d̶ g̶o̶v̶e̶r̶n̶a̶n̶c̶e̶ o̶f̶ H̶M̶X̶, t̶h̶i̶s̶ p̶r̶o̶p̶o̶s̶a̶l̶ i̶n̶t̶r̶o̶d̶u̶c̶e̶s̶ t̶w̶o̶ k̶e̶y̶ c̶h̶a̶n̶g̶e̶s̶:̶

• F̶i̶r̶s̶t̶, u̶s̶e̶r̶s̶ m̶u̶s̶t̶ n̶o̶w̶ s̶t̶a̶k̶e̶ a̶n̶ e̶q̶u̶i̶v̶a̶l̶e̶n̶t̶ a̶m̶o̶u̶n̶t̶ o̶f̶ H̶M̶X̶ t̶o̶k̶e̶n̶s̶ t̶o̶ v̶e̶s̶t̶ t̶h̶e̶i̶r̶ e̶s̶H̶M̶X̶, a̶d̶h̶e̶r̶i̶n̶g̶ t̶o̶ a̶ 1̶:̶1̶ r̶a̶t̶i̶o̶ a̶n̶d̶ a̶ 3̶6̶5̶-̶d̶a̶y̶ v̶e̶s̶t̶i̶n̶g̶ p̶e̶r̶i̶o̶d̶. E̶x̶i̶s̶t̶i̶n̶g̶ e̶s̶H̶M̶X̶ v̶e̶s̶t̶i̶n̶g̶ p̶o̶s̶i̶t̶i̶o̶n̶s̶ w̶i̶l̶l̶ b̶e̶ p̶a̶u̶s̶e̶d̶, r̶e̶q̶u̶i̶r̶i̶n̶g̶ u̶s̶e̶r̶s̶ t̶o̶ r̶e̶-̶v̶e̶s̶t̶ u̶n̶d̶e̶r̶ t̶h̶e̶ n̶e̶w̶ p̶r̶o̶p̶o̶s̶e̶d̶ m̶e̶c̶h̶a̶n̶i̶c̶s̶.
• S̶e̶c̶o̶n̶d̶, t̶h̶e̶ e̶s̶H̶M̶X̶ r̶e̶w̶a̶r̶d̶ a̶l̶l̶o̶c̶a̶t̶i̶o̶n̶ w̶i̶l̶l̶ b̶e̶ a̶d̶j̶u̶s̶t̶e̶d̶, p̶r̶i̶o̶r̶i̶t̶i̶z̶i̶n̶g̶ 6̶0̶%̶ f̶o̶r̶ H̶M̶X̶/e̶s̶H̶M̶X̶ s̶t̶a̶k̶e̶r̶s̶, r̶e̶a̶l̶l̶o̶c̶a̶t̶i̶n̶g̶ 2̶5̶%̶ t̶o̶ T̶L̶C̶, a̶n̶d̶ p̶r̶o̶v̶i̶d̶i̶n̶g̶ H̶L̶P̶ a̶n̶d̶ o̶p̶e̶n̶i̶n̶g̶ p̶o̶s̶i̶t̶i̶o̶n̶s̶ w̶i̶t̶h̶ 1̶0̶%̶ a̶n̶d̶ 5̶%̶, r̶e̶s̶p̶e̶c̶t̶i̶v̶e̶l̶y̶. T̶h̶e̶s̶e̶ c̶h̶a̶n̶g̶e̶s̶ a̶i̶m̶ t̶o̶ b̶a̶l̶a̶n̶c̶e̶ a̶n̶d̶ s̶u̶s̶t̶a̶i̶n̶ H̶M̶X̶’s̶ t̶o̶k̶e̶n̶o̶m̶i̶c̶s̶, b̶e̶n̶e̶f̶i̶t̶i̶n̶g̶ a̶l̶l̶ s̶t̶a̶k̶e̶h̶o̶l̶d̶e̶r̶s̶ i̶n̶ t̶h̶e̶ l̶o̶n̶g̶ r̶u̶n̶, a̶n̶d̶ a̶l̶i̶g̶n̶ w̶i̶t̶h̶ o̶u̶r̶ 2̶0̶2̶4̶ r̶o̶a̶d̶m̶a̶p̶ i̶n̶i̶t̶i̶a̶t̶i̶v̶e̶s̶.

PROPOSAL ADJUSTMENT
To enhance the sustainability and governance of HMX, we have revised the proposal based on community feedback to introduce only one change.

• We will adjust the esHMX reward allocation as follows: 40% for HMX/esHMX stakers, 30% for HLP, 25% for TLC rewards, and 5% for opening positions. This change aims to balance and sustain HMX’s tokenomics, benefiting all stakeholders in the long run and aligning with our 2024 roadmap initiatives.

Execution Details:
To strengthen the sustainability of HMX and incentivize all HMX holders, we propose the following enhancement:

DISCARDED PART
1̶. S̶t̶a̶k̶e̶ H̶M̶X̶ t̶o̶ V̶e̶s̶t̶ e̶s̶H̶M̶X̶
T̶o̶ v̶e̶s̶t̶ e̶s̶H̶M̶X̶ t̶o̶k̶e̶n̶s̶, u̶s̶e̶r̶s̶ m̶u̶s̶t̶ m̶e̶e̶t̶ s̶p̶e̶c̶i̶f̶i̶c̶ c̶r̶i̶t̶e̶r̶i̶a̶:̶

• V̶e̶s̶t̶i̶n̶g̶ C̶r̶i̶t̶e̶r̶i̶a̶:̶ F̶o̶r̶ e̶v̶e̶r̶y̶ e̶s̶H̶M̶X̶ t̶o̶k̶e̶n̶ t̶o̶ b̶e̶ v̶e̶s̶t̶e̶d̶, a̶ u̶s̶e̶r̶ m̶u̶s̶t̶ s̶t̶a̶k̶e̶ a̶n̶ e̶q̶u̶i̶v̶a̶l̶e̶n̶t̶ a̶m̶o̶u̶n̶t̶ o̶f̶ H̶M̶X̶ t̶o̶k̶e̶n̶s̶ (̶1̶:̶1̶ r̶a̶t̶i̶o̶)̶.
• V̶e̶s̶t̶i̶n̶g̶ P̶e̶r̶i̶o̶d̶:̶ T̶h̶e̶ v̶e̶s̶t̶i̶n̶g̶ p̶e̶r̶i̶o̶d̶ w̶i̶l̶l̶ r̶e̶m̶a̶i̶n̶ a̶t̶ 3̶6̶5̶ d̶a̶y̶s̶. D̶u̶r̶i̶n̶g̶ t̶h̶i̶s̶ t̶i̶m̶e̶, s̶t̶a̶k̶e̶d̶ H̶M̶X̶ t̶o̶k̶e̶n̶s̶ m̶u̶s̶t̶ b̶e̶ e̶q̶u̶a̶l̶ t̶o̶ o̶r̶ g̶r̶e̶a̶t̶e̶r̶ t̶h̶a̶n̶ t̶h̶e̶ a̶m̶o̶u̶n̶t̶ o̶f̶ u̶n̶v̶e̶s̶t̶e̶d̶ e̶s̶H̶M̶X̶ i̶n̶ t̶h̶e̶ v̶e̶s̶t̶i̶n̶g̶ p̶o̶o̶l̶.
• E̶n̶f̶o̶r̶c̶e̶m̶e̶n̶t̶ o̶f̶ N̶e̶w̶ C̶r̶i̶t̶e̶r̶i̶a̶:̶ I̶f̶ t̶h̶i̶s̶ p̶r̶o̶p̶o̶s̶a̶l̶ i̶s̶ p̶a̶s̶s̶e̶d̶, a̶l̶l̶ t̶h̶e̶ c̶u̶r̶r̶e̶n̶t̶l̶y̶ v̶e̶s̶t̶i̶n̶g̶ e̶s̶H̶M̶X̶ w̶i̶l̶l̶ b̶e̶ p̶a̶u̶s̶e̶d̶.
  • V̶e̶s̶t̶e̶d̶ H̶M̶X̶ t̶o̶k̶e̶n̶s̶ c̶a̶n̶ b̶e̶ c̶l̶a̶i̶m̶e̶d̶
  • V̶e̶s̶t̶i̶n̶g̶ e̶s̶H̶M̶X̶ t̶o̶k̶e̶n̶s̶ w̶i̶l̶l̶ n̶e̶e̶d̶ t̶o̶ b̶e̶ r̶e̶-̶v̶e̶s̶t̶ a̶d̶h̶e̶r̶i̶n̶g̶ t̶o̶ t̶h̶e̶ n̶e̶w̶ c̶r̶i̶t̶e̶r̶i̶a̶.

2̶. E̶x̶a̶m̶p̶l̶e̶s̶:̶

• C̶a̶s̶e̶ 1̶ :̶ A̶l̶i̶c̶e̶ h̶a̶s̶ 1̶0̶ e̶s̶H̶M̶X̶ t̶o̶k̶e̶n̶s̶ a̶n̶d̶ n̶o̶ o̶n̶g̶o̶i̶n̶g̶ v̶e̶s̶t̶i̶n̶g̶ p̶o̶s̶i̶t̶i̶o̶n̶. S̶h̶e̶ w̶a̶n̶t̶ t̶o̶ v̶e̶s̶t̶ a̶l̶l̶ o̶f̶ h̶e̶r̶ e̶s̶H̶M̶X̶ t̶o̶k̶e̶n̶s̶. S̶h̶e̶ n̶e̶e̶d̶s̶ t̶o̶ s̶t̶a̶k̶e̶ a̶t̶ l̶e̶a̶s̶t̶ 1̶0̶ H̶M̶X̶ t̶o̶k̶e̶n̶s̶ i̶n̶ o̶r̶d̶e̶r̶ t̶o̶ v̶e̶s̶t̶ a̶l̶l̶ o̶f̶ h̶e̶r̶ e̶s̶H̶M̶X̶. A̶s̶ t̶i̶m̶e̶ p̶a̶s̶s̶e̶s̶ a̶n̶d̶ s̶h̶e̶ h̶a̶s̶ 3̶ e̶s̶H̶M̶X̶ l̶e̶f̶t̶ i̶n̶ t̶h̶e̶ v̶e̶s̶t̶i̶n̶g̶ p̶o̶o̶l̶, s̶h̶e̶ c̶a̶n̶ u̶n̶s̶t̶a̶k̶e̶ u̶p̶ t̶o̶ 7̶ H̶M̶X̶ t̶o̶k̶e̶n̶s̶, l̶e̶a̶v̶i̶n̶g̶ a̶t̶ l̶e̶a̶s̶t̶ 3̶ s̶t̶a̶k̶e̶d̶ H̶M̶X̶ t̶o̶k̶e̶n̶s̶ i̶n̶ t̶h̶e̶ p̶o̶o̶l̶.

• C̶a̶s̶e̶ 2̶ :̶ P̶a̶u̶l̶ h̶a̶s̶ 1̶0̶ e̶s̶H̶M̶X̶ t̶o̶k̶e̶n̶s̶ a̶n̶d̶ n̶o̶ o̶n̶g̶o̶i̶n̶g̶ v̶e̶s̶t̶i̶n̶g̶ p̶o̶s̶i̶t̶i̶o̶n̶. H̶e̶ w̶a̶n̶t̶ t̶o̶ v̶e̶s̶t̶ 5̶ e̶s̶H̶M̶X̶ t̶o̶k̶e̶n̶s̶. H̶e̶ n̶e̶e̶d̶s̶ t̶o̶ s̶t̶a̶k̶e̶ a̶t̶ l̶e̶a̶s̶t̶ 5̶ H̶M̶X̶ t̶o̶k̶e̶n̶s̶ i̶n̶ o̶r̶d̶e̶r̶ t̶o̶ v̶e̶s̶t̶ h̶i̶s̶ 5̶ e̶s̶H̶M̶X̶. A̶s̶ t̶i̶m̶e̶ p̶a̶s̶s̶e̶s̶ a̶n̶d̶ h̶e̶ h̶a̶s̶ 3̶ e̶s̶H̶M̶X̶ l̶e̶f̶t̶ i̶n̶ t̶h̶e̶ v̶e̶s̶t̶i̶n̶g̶ p̶o̶o̶l̶, s̶h̶e̶ c̶a̶n̶ u̶n̶s̶t̶a̶k̶e̶ u̶p̶ t̶o̶ 2̶ H̶M̶X̶ t̶o̶k̶e̶n̶s̶, l̶e̶a̶v̶i̶n̶g̶ a̶t̶ l̶e̶a̶s̶t̶ 3̶ s̶t̶a̶k̶e̶d̶ H̶M̶X̶ t̶o̶k̶e̶n̶s̶ i̶n̶ t̶h̶e̶ p̶o̶o̶l̶.

• C̶a̶s̶e̶ 3̶:̶ I̶f̶ B̶o̶b̶ h̶a̶s̶ a̶n̶ o̶n̶g̶o̶i̶n̶g̶ v̶e̶s̶t̶i̶n̶g̶ p̶o̶s̶i̶t̶i̶o̶n̶, h̶e̶ m̶u̶s̶t̶ c̶l̶a̶i̶m̶ h̶i̶s̶ v̶e̶s̶t̶e̶d̶ H̶M̶X̶ t̶o̶k̶e̶n̶s̶. H̶i̶s̶ v̶e̶s̶t̶i̶n̶g̶ e̶s̶H̶M̶X̶ w̶i̶l̶l̶ b̶e̶ p̶a̶u̶s̶e̶d̶ a̶n̶d̶ n̶e̶e̶d̶ t̶o̶ b̶e̶ w̶i̶t̶h̶d̶r̶a̶w̶n̶ f̶r̶o̶m̶ t̶h̶e̶ v̶e̶s̶t̶i̶n̶g̶ p̶o̶o̶l̶. T̶h̶e̶n̶, h̶e̶ m̶u̶s̶t̶ r̶e̶-̶v̶e̶s̶t̶ a̶c̶c̶o̶r̶d̶i̶n̶g̶ t̶o̶ t̶h̶e̶ n̶e̶w̶ c̶r̶i̶t̶e̶r̶i̶a̶. I̶f̶ h̶e̶ h̶a̶s̶ 5̶ e̶s̶H̶M̶X̶ r̶e̶m̶a̶i̶n̶i̶n̶g̶, h̶e̶ n̶e̶e̶d̶s̶ t̶o̶ s̶t̶a̶k̶e̶ 5̶ H̶M̶X̶ t̶o̶k̶e̶n̶s̶ t̶o̶ v̶e̶s̶t̶ t̶h̶e̶ r̶e̶m̶a̶i̶n̶i̶n̶g̶ e̶s̶H̶M̶X̶.

3. Re-allocate esHMX Rewards

The current esHMX reward allocation is as follows:

• 50% to TLC
• 30% to HMX/esHMX stakers
• 10% to HLP
• 10% to Open positions

PROPOSAL ADJUSTMENT
The new proposed allocation is:

• 40% to HMX/esHMX stakers
• 30% to HLP
• 25% to TLC
• 5% to Open positions

The core team reserves the right to adjust the percentage allocation of each category by up to 20% without requiring a governance vote. This flexibility supports our upcoming initiatives. Any adjustment beyond this percentage will require a governance vote. For example, the HLP allocation could be adjusted from 10% to as high as 30%.

Please be assured that this proposed change is just the beginning of several enhancements planned for the coming months. Our community is crucial to the success of HMX, and we are committed to hearing all feedback. We will maintain transparency in our communications, continuously posting updates, engaging in discussions, and involving our community at every step. Together, we are on a path toward sustained growth and enhanced sustainability of our ecosystem.

[KemarTiti]

gm gm Dragons,

First off, thanks a lot for this proposal and the time you’ve put in.

I do agree with the assessment and the need to tweak some things to further benefit the wider HMX community.

I find the proposed 1:1 staking ratio of HMX:esHMX a very elegant solution to either have users better align with HMX (would increase their stake to still be able to collect their escrowed rewards) or forego their rewards.

I’m also fine with the suggested re-allocation of the esHMX rewards.

In regards to the right to adjust the percentage allocation of each category by up to 20% without requiring a governance vote, it might still be useful to have proactive announcement of such changes (most people don’t like surprises) and ideally have some data points to assess the reasoning/validity of the changes decided by the core team.

[DeFiVoyager]

These changes will only reduce the exchange’s attractiveness. Long-term vesting holds user assets hostage until certain conditions are met. This approach is never well-received and is quite short-sighted.

New users will see a 365-day vesting period (who even thinks of this?) and choose another exchange with better terms.

Why would I use an exchange where I get rewards only after a year and need to buy more tokens?

To attract long-term investors and reduce token price pressure, create conditions where long-term holders benefit from penalties paid by traders who sell their rewards. Look at IntentX’s tokenomics, which prioritize long-term holders while allowing traders flexibility with their rewards.

Or consider Vertex, which is also addressing high sell pressure, but by improving conditions through buybacks rather than restrictions.

[naphatmanu]

Hey DeFiVoyager, just wanted to chime in here. Honestly, tokens u mentioned are heading downward. Incentives with GOV tokens aren’t great—they’re inorganic and people just leave when the incentives dry up.

I think most traders at HMX are here for the organic growth and this could be a good step to start addressing the issue. Trader can still stake esHMX to get yields and earn from staking but they will have no incentive to vest their esHMX.

Plus, this will act as a penalty to those paper hands who want to sell off HMX tokens quickly. Let’s focus on improving conditions rather than imposing restrictions that will sustain the ecosystem.

[naphatmanu]

I believe that this will bring more sustainability to HMX ecosystem as a whole. This will penalize vesting people and incentive more to people who stake and lock their tokens to promote a huge reward to HMX long term holder. I’m on it!

[Whipper]

Thank you for sharing this proposal. I appreciate the innovative approach to bringing more value to HMX holders. It’s becoming increasingly evident that we need to overhaul the current tokenomics model.

Here are my thoughts:

While the proposal doesn’t alleviate selling pressure, it’s likely to trigger a major pump once announced. Parasitic farmers may exploit this by buying enough HMX to continue dumping current and future veHMX. This fails to address the root issue, which is the excessive distribution of tokens to farmers.

Moreover, it may upset many traders and current stakers who are vested, as it would require them to put up more capital or continue staking to access their currently vested tokens. This could reflect poorly on the team, as it seems they’re reneging on their own arrangements.

Furthermore, it inadvertently incentivizes current HMX stakers to vest rather than stake esHMX, as no investor would want to be “stuck.”

Here’s a suggestion I believe is worth considering:

Users who stake HMX and traders who receive veHMX should only receive the benefits of rewards associated with staking, without the ability to “vest” veHMX. This would create a locking effect on HMX, making it scarcer. Since vesting takes a year anyway, most users simply stake their veHMX. This approach achieves the following:

• Removes all selling pressure from veHMX
• Allows only the benefits of staked veHMX to accrue to stakers and traders, encouraging them to continually claim rewards and thus improving user retention.

It’s important to remember that HMX already has a maximum cap of 10,000,000 tokens. Despite being one of the larger exchanges by volume metrics, our token isn’t attracting much attention because it’s on a downward trend. However, once users can no longer sell veHMX, the token’s value will likely increase. This is due to our generous APY for HMX stakers, which serves as a strong incentive to keep users staking while attracting new users to buy HMX, thus creating significant buy pressure.

It’s crucial that any changes moving forward take effect from the time of the vote and are not retroactive.

If this suggestion is considered too radical, another option could be allowing users to vest veHMX, but with an 80% fee distributed among those who are staking, providing additional incentive to stake. I’d love to hear everyone’s thoughts on this.

[PHYSCO]

Gm Dragons,

It is really great to see the team are trying to put more effort on building a sustainable ecosystem for the exchange and focus on rewarding those loyal token holders and traders.

I can see the motivation of rewarding those loyal stakeholders by reallocating esHMX reward allocation so that HLP and HMX stakers get more rewards. Before that, i do agree that too much incentive rewards was distribute to traders which not really that great as they might think this as extra ev and decide to vest and sell. Although this attract a lot of trading volume to the platform, but it is not really that friendly to hmx stakeholders as we facing constant selling pressure and the reward will become less attractive to trader which might cause them to choose another exchange instead. So i personally think by changing the esHMX reward allocation is a wise move in this proposal but not the new vesting mechanism.

I get the point that the team is trying to create more utility for HMX token such as if user decide to vest esHMX to HMX, they will need to stake the same amount of HMX in order to vest esHMX. Although this changes can indeed bring some buying pressure and slow down the selling pressure for HMX token, but i dont see that as a long term sustainable plan as trader will still sell after the vesting is completed. The key point for the selling pressure is still unsolve, this solution will only create a short term effect and after one year the selling pressure will keep going on.

In the current situation, HMX token has not much difference with esHMX as they both have the same utility and share the same reward pool. The only difference is esHMX cant be sell and have no liquidity. I dont see the point of user buying HMX token just to make the token vest into liquid token if they have the same utility. I will just stake the esHMX and receive the staking reward. In the view of loyal user, they already have HMX token so they dont need to buy more HMX to vest their esHMX. In the view of traders, they can just stake the esHMX token and still earn the staking reward as HMX token staker which mean they forced to be stakeholder of the platform while they are not that loyal to the project and still getting benefit from it. Those two views wont create effective buying pressure on HMX token but just able to control the selling pressure for the short term.

In my opinion, i think it might be better if we have like burning mechanism or penalty to those who want to vest esHMX into HMX and introduce more utility for esHMX token so the liquid supply (HMX) getting lesser and lesser which decrease the selling pressure. Conversion of HMX to esHMX can also be introduced to encourage people convert HMX to esHMX to get more rewards and this will create buying pressure for HMX as well. For the penalty mechanism, esHMX holder can choose the vest period and choose whether vest with HMX or without HMX, and it will vest the certain % of the esHMX and the remain esHMX(HMX) will be burned or distribute across staker. This will make token deflation and circulating supply will getting lower. Although this mechanism might cause some selling pressure as dumpers have a exit mechanism but just with lesser amount. But i think it will be good for long term as at least they wont stake and split the staking reward among those loyal staker because they dont want to buy HMX just to vest the token.

[Iniquity]

@Takamura

We intend to create a “virtuous cycle”

This is a no brainer.

[0xCasey]

Hey to all,

Well such drastic changes are never great for protocol. There will be backlash for sure. But if you want to do such changes i would create 2 groups.

We could also take a look at GMX.

1. Group - Traders - well sure - we can ask them to buy hmx so they will be able to vest - but majority will just leave onto next protocol - 1:1 is too harsh i think it could be little bet lower like 1 to 0,5 or so.
   - Eshmx farmers -same as for esgmx-

2. HLP/ SURGE stakers- I mean here it doesnt make sense at all to pressure these people for 1:1- they are already providing liq. and are already locked with HLP. As for esgmx to gmx - they are just locking HLP/ GLP to vest tokens.

Any additional locking of hmx - is contraproductive and HLP LPs will just leave.

[Shift]

I agree with rebalancing esHMX rewards but not with the new locking model, as it may overly complicate matters for traders, potentially leading them to explore other platforms.

While I support the proposal’s aim to enhance HMX tokenomics and the new reward allocations, the locking mechanism could backfire. I would suggest enabling shorter 180 and 90-day vesting options with a burn mechanism, could be enough for now.

Perhaps it would be better to focus on reducing DP inflation after 1 year of staking to sustain high APR that would ensure the protocol attracts new HMX stakers over the long term and prevent the problem that occurred on GMX."

[mei]

Many probably did not realize that since March there are a lot of selling pressure from the unlock HMX of private investors and they are still unlocking and selling monthly (more than traders I would say, the other large part is from monthly HLP surge, could provide relevant data taken to these two groups of selling). So if this proposal were to pass, it will only benefit them (private investors)the most (and that is what they want to see!). It would only be fair if private investors unlocking rules subject to this new vesting rules (if it pass) as well. Otherwise, it is very clear who are the winner and benefit the most from this change.

[Whipper]

Interesting point!

Please feel free to share that info

[mei]

A quick trick to figure out is look through dexscreener and filter out selling amount >10k dollar (or a bit smaller say 5k to get more users to study, but 10k is sufficient to figure out where most of the large whale/selling pressure coming from) and then you could look up debank to check out how they get their HMX from (should not take more than 10min for the whole process).
Tbh, I do not find this proposal to be helpful unless unlocked monthly private investor also subject to the rules (the same thing apply to team token and perhaps ecosystem one too), otherwise, clearly there is a conflict of interest here (imagine that really and truly only 40% of the supply can be earned without buying vs the other 60% which who knows when they will get sold) . A little bit math here Breaking down unlocked monthly private investors supply which accounts for 6.6% total supply for 18 months (you think is less huh? that is 640k in total divided by 18 =35.5k equivalent to about 248k dollar monthly, compare to current diminishing esHMX on TLC which is 50k USD per week which is about 220k per months, it is clearly the former exceed the later)

How could you really prevent selling pressure or better yet keep consistent buying pressure? We all actually know the answer - high APR. Imagine that we got 100%+ APR/APY consistently weekly, vesting the token is foolish coz it is goning to take one year to unvest, and that your holding esHMX return within a year is greater than the opportunity cost of vesting - so why would one vest and sell? Wouldn’t it be better to just compounding them?and that you actually want to buy more because they are REAL YIELD (capital can be recoup within a year, any sane people will not miss out this opportunity). Following this logic, if price still continue to drop with HIGH APR, who are actually have more intention to sell? the one with a lower cost or getting them for free. That really just leave us the private investors, HLP surge, and team group (do note that current traders only able to recoup less than averagely 14% of the trading fee paid with esHMX vesting and selling and that have to spread within 12 months - that really is not as free/as low cost than former group).

IMO, instead of “fine-tuning” the tokenomics, it is better to shift the attention to the crucial stuff- trading vol/ trading fee (really this is the parts that every perp #1 priority) which are the only thing that can translate into high HMX APR and create a win-win scenario for everyone.

Also, I recalled that there should be closed to or over 200k dollar in POL (protocol own liquidity) which the team mentioned that they could be used for buy back (clearly, it does not make sense now until about 14-15 months later when private investors and HLP surge esHMX fully unlocked and that who want to sell would have sold). With the increasing trading vol/fee → more POL → more buy back in the future ->high HMX price in the future. With this in mind, It is really short-sighted to focus on current HMX price, coz if you stake and do not mean to unstake, then it would notreally concern you or make a difference! All you care is the REAL YIELD provided/ the income you will receive every min/day/month/year, and as long as the REAL YIELD is high enough, higher price in the future is guaratee.

With all the above points mentioned, I find this proposal to be not so helpful and the negative impact is greater than the short term benefit it brought, not to mention it is sort of a coercion type. No one like to be forced to do “something”, we are all here to make money, to make crypto great, to make HMX expose to greater audience, coercion is not the way to do it - could look great short term but long term probably not so.

[mei]

One more point to throw in: Seems like everyone assumed that most selling pressure (from current and onwards - note only 50k+ USD worth esHMX ever earned by trading weekly) is the farmer and not other groups. We hold this statement true temporarily.

Then if this proposal were to get into voting, do you think it will pass? Withholding the fact that selling pressure are from farmer, that means they must have lots of HMX/esHMX unselling or waiting to be vested, then this proposal essentially telling them to buy what they have sold previously! What would they do under this circumstance? Will they buy it? Are they willing to feed the other people money who have the HMX ready to be sold free monthly or anytime? That really just leave them one choice: they will stop the vesting process and vote NO for the proposal (unless the team further restrict esHMX voting right)

On the other hand, if the farmers did not have much esHMX waiting to be vested and sell, then isn’t this proposal appears to be less helpful and that selling pressure must come from elsewhere.

[shutsuwei88]

Hey Dragons,

Here are my thoughts on the proposal, an explanation of the angle we’re coming from, and how I’ve reflected your feedback.

The key motivation behind this proposal is to find a balance and bring sustainable growth to the protocol. It’s not easy to fine-tune this to the right balance, but I believe feedback from everyone here will shape the proposal in the right direction.

I understand the reasons behind many of you concern about users who vest esHMX needing to find 1:1 staked HMX in order to be able to vest esHMX. The angle we’re coming from when we prepared this proposal is that there are ~73,387.57 HMX that are vested and pending to be claimed by esHMX vestors. If this proposal is passed and executed, esHMX would still have these vested HMX to stake and choose to continue vesting their esHMX without an extra cost to buy HMX off the market, unless they would like to increase their vesting capacity. We believe this creates longevity. For long-term holders, this would help prevent mercenary farmers, while for farmers, they still receive vested HMX, stake those, earn yields, and have vesting capacity to realize extra yields. That’s where the angle we’re coming from.

Regarding the last topic, reflecting community feedback, I still believe enforcing esHMX holders to have some staked HMX is a great idea as it creates incentive alignment in the ecosystem. HMX is a yield-earning asset. Hence, the costs of holding it for them will be lower over time anyway. However, I can see the 1:1 ratio is too restrictive. One solution would be adjusting the ratio down from 1:1 to something lower while keeping other parts of the proposal the same.

[Subutai]

Dayummmm, all them farmers and dumpers are getting sooo mad

Disclaimer: I personally hold 5 figures of HMX, so I believe I can speak on behalf of many HMX holders.

I think esHMX holders who are just farming and dumping are the most affected from this proposal, and it can clearly be seen from the amount of comments that we’re getting in this forum.

If you have vested esHMX and staked, you are actually fine according to the proposal. You will have enough HMX from your vested esHMX to vest for the remaining allocation.

On the other hand, if you’ve already dumped all your HMX from vesting, UH OH

This is a very good first step for the tokenomics revamp and I am fully supporting this proposal.

What the protocol should do next is, instead of distributing incentives every second, do it in batches like multiple seasons of airdrop instead based on the point system.

Study Jupiter and see what they did - no more escrowed tokens and airdrop actual tokens in seasons according to points, which can be earned through trading or providing LPs. When you airdrop in seasons, you allow users to speculate on the price by giving a specific date of when the supply will be introduced into circulation. If you take out escrowed tokens, then it even further reduces the uncertainty of supply introduction, and will attract many more speculators and investors.

As for investors and team, maybe also introduce the same unlock schedule as the same airdrop season just to align the supply introduction. I think that’s the best way to go forward and grow HMX. Just my 2c.

[joe]

I have five figures of HMX (staking) and a large portion of esHMX that is still vesting.

my personal plan was to have a combination of staking the vested HMX, and also selling some of what is vested. This is to recoup a portion of the fees I have spent over the months.

Forcing me to start the vesting time over, resulting in less HMX / day, and also forcing me to purchase HMX just to be able to continue vesting seems like a great way to penalize early protocol users who decided NOT to start vesting and dumping immediately.

Some of us chose to not vest immediately as doing so reduces the amount of rewards we were getting.

Everyones situation is different, so please consider that.

[0xCasey]

I thought about it again can OP - explain his thinking better about this proposal ?

Because - lets say it will be 1:1 or lower - doesnt matter - so OK - people will buy it now - then start to vest over - (i am not fan of doing this retrospectively)

once people buy - lets say hmx will go 100% - and then vesting will start again - and there will be same selling of tokens. Same pressure - only new traders will as well go to other platforms - because they wont be buying tokens just to do something they can do elsewhere without these restrictions.

It doesnt make sense at all to do this - we will just pump the price for short period of time. And then we are right back at start. - 0 sense.

There are more things that can be done -

1. better hmx/eshmx - utility
2. nerf new inflation

Otherwise we are just pumping the token for short period - and doing nothing else - this will bring no real benefit if you think about it other than just pump hmx price for short period because of buys -and then same sell pressure starts again.

[mei]

Always try to think of the intention behind all this: who benefit the most (hint at my previous post)from such so-called evolutionary tokenomics change, it will then all make perfect sense. If this proposal were to pass even with slight change of lowering the hmx requirement, the result would not be much different either - HMX stacker will still suffer! It will further dilute the already ATL USDC APR with more HMX that were currently vesting but not sell till desired price reach to unvest + forced inorganic buy of HMX that will eventually get dump. So, at first we have 21 day locking period of HMX stacking and stacker already complaining non-stop and now things get further. Why can’t the focus be on bringing benefit to the community, why no more consistent work/event carry out to incentive trading → increase the trading vol/fee → increase HMX APR, that is the only way to create a virtuous upward cycle for HMX price. Other stuffs done are just short-sighted and not really worth wasting the community resources.

[shok888]

It’s very unreasonable. If it really happens like this, I will lead all fans to quit.