[HIP-7] HMX New Tokenomics Proposal

Hey Dragons! :dragon:
Just a few days ago, we unveiled our roadmap for the future, and today, we’re excited to take things further by presenting our new tokenomics!

These changes are designed to enhance sustainability, simplify mechanics, and align incentives across the ecosystem, all while paving the way for a stronger future.

We can’t wait to hear your thoughts and feedback.your input will help shape the next phase of HMX. Here is the tokenomics plan:


Introduction:

At HMX, our mission is to redefine the on-chain decentralized trading experience. Over the past year, HMX has introduced innovative features such as Cross Margin, Multi-Asset Collateral, Gas-Free Trading, and some of the lowest trading fees in the industry. These advancements have significantly reduced costs for traders, contributing to a total trading volume exceeding $50 billion.

As outlined in the journey to one piece, the protocol is entering a new era with three transformative pillars: New Product, New Tokenomics, and New Branding. This proposal focuses on the “New Tokenomics,” presenting key changes designed to enhance token sustainability, improve user incentives, and align the HMX token with the protocol’s long-term growth strategy.


Problems:

Since the launch of HMX’s TGE in August 2023, the protocol has established its position as one of the leading perpetual DEXs on Arbitrum. However, despite this organic success, the HMX token’s performance has been underwhelming. The token reached a peak market capitalization of $15 million but currently sits at approximately $5 million (as of December 2), with a price-to-fee (P/F) ratio of just 0.36x (annual fees: $14 million). This misalignment between the protocol’s performance and its token valuation stems from two key challenges:

  1. Low Circulating Supply (Low Float): HMX currently has a circulating supply of around 3.2 million tokens out of a total supply of 10 million, meaning nearly 70% of the tokens remain uncirculated. This creates a perception among investors of looming sell pressure, reducing the token’s attractiveness and liquidity in the market.
  2. Complexity of Current Tokenomics: The HMX ecosystem currently composed of multiple token types, including HMX, esHMX, HLP, and Dragon Points. While each serves a specific purpose, this fragmented structure complicates the overall tokenomics and deters retail investors, who might struggle to understand the token’s utility and mechanics. This lack of clarity has diminished broader interest in the HMX token.

Addressing these issues is essential to enhance token performance, align it with the protocol’s success, and build a sustainable and attractive ecosystem for users and investors alike.


Proposal:

The HMX token was introduced a year ago to serve as the governance mechanism for the HMX Protocol. Its tokenomics, rolled out subsequently, provided utility through revenue-sharing and trading fee discounts for token holders and stakers. While these mechanisms have been effective, there is significant room for improvement to maximize the ecosystem’s potential and address current challenges.

To ensure long-term sustainability and enhance the token’s alignment with the protocol’s success, a restructured tokenomics model is essential. The new tokenomics framework, designed to address key issues such as low float and complexity, will require community input and approval via the HMX governance system.

The revamped tokenomics plan is built on four foundational pillars:

  1. Launch a New $[REDACTED] Token
  2. Enable $HMX Holders to Migrate to $[REDACTED] at a 1:100 Ratio
  3. Wind-Down of $HMX Tokenomics
  4. Enhanced $[REDACTED] Token Utility

Launch of the New $[REDACTED] Token

To optimize tokenomics and provide a fresh foundation, a new token ($[REDACTED]) will replace $HMX. The final name and ticker will be announced alongside the rebranding initiative.

Design Principle:

  1. Full Float Tokenomics: The new tokenomics aim to promote a fully circulating supply, minimizing dilution and reducing selling pressure. By maximizing the circulating supply, the new token will foster a community-driven ecosystem, empowering holders and new buyers.
  2. Simplicity in Tokenomics: Moving away from complex token models, the new tokenomics are designed to be straightforward. This approach eliminates unforeseen selling pressure and makes the token’s utility and value proposition easy to understand for both retail and institutional investors.
  3. Preservation of Value for Existing Holders: The new tokenomics are designed to enhance the ecosystem while ensuring existing holders are not diluted. The changes will create value for traders, holders, and the protocol, aligning the interests of all stakeholders with the protocol’s long-term growth.

$[REDACTED] Token Details:

  1. $[REDACTED] is a placeholder for our new token, with the official name to be revealed alongside our new branding launch.
  2. Total Supply: 1,000,000,000 $[REDACTED] tokens will be minted at launch.
  3. Initial Circulation: By the end of January, approximately 5,385,238 of $HMX and $esHMX tokens will be eligible for conversion to $[REDACTED].
  4. New Allocation:

a. Approximately 38% of the total supply will be allocated to an airdrop program, designed to support the upcoming launch, enhance liquidity, and reward loyal HMX holders. This allocation is designed to boost the launch of the new product while recognizing and incentivizing long-term supporters.
b. This new allocation has the purpose to Boost our new Product Launch, Reward HMX Long term Supporter, both HMX and HLP.
c. Team allocations will be reduced by 50%, reflecting the team’s commitment to fostering long-term community success. This reduction ensures that $[REDACTED] becomes a truly community-driven token with the majority of its supply in active circulation.
d. Team and investor allocations will represent 7.5% of the total supply. These tokens will remain illiquid at launch and will be subject to a structured vesting schedule.

  1. Inflation Model: The $[REDACTED] token will adopt a community-governed inflationary model, where the inflation rate is determined through an annual governance vote. To ensure stability and build community trust, the inflation rate will be set at 0% for the first year, with a guardrail limiting annual increases to a maximum of 5%. This safeguard prevents sudden spikes in token supply and maintains market confidence. Starting in the second year, the community will vote on any proposed inflation rate, with the resulting funds allocated to support growth initiatives, trading campaigns, and other strategic efforts to drive protocol adoption and ecosystem expansion.

Migration Mechanism for $HMX Holders:

Upon the launch of $[REDACTED], all $HMX holders and stakers will have the opportunity to migrate their tokens at a 1:100 ratio. This redenomination is value-neutral, ensuring holders experience no loss in value. The migration process will remain open for 1 year after the Token Generation Event (TGE) to accommodate all participants. Any unconverted tokens after this period will likely be attributed to inactive wallets (e.g., lost keys, users exiting crypto, etc.). Unconverted tokens are effectively “burned”, benefiting the rest of the holders through a lower supply.

Migration Process:

1. $HMX Stakers:

a. Stakers will continue earning organic yield from $HMX uninterrupted and your staked tokens will automatically be migrated for you to $[REDACTED].
b. Dragon Points (DP) will remain integral to governance and incentives. DP accumulation will be capped at 2x the staking position in $[REDACTED].
c. A snapshot of all Dragon Point holders will be taken, with a special surprise prepared for these participants.

2. $HMX Holders:

a. Holders can convert their tokens at a 1:100 ratio to $[REDACTED] and participate in governance and ecosystem incentives.
b. We will create a UI portal for you to convert your $HMX to $[REDACTED]

3. $esHMX Holders:

a. $esHMX holders will have the opportunity to convert their tokens into b$[REDACTED] at a 1:100 ratio. b$[REDACTED] represents a locked version of $[REDACTED]. Once converted, holders will have two options for utilizing their b$[REDACTED]:

  • i. Stake b$[REDACTED]: Continue staking b$[REDACTED] to earn protocol yields.
  • ii. Unstake and Unlock b$[REDACTED]: Choose to unstake and begin the vesting process to vest b$[REDACTED] into fully transferable $[REDACTED]. The unlocking vesting will take 3 years. The DP requirements will not be applied for the vesting of b$[REDACTED] into fully transferable $[REDACTED].

4. $esHMX Vester:
All vesting positions will be automatically converted to b$[REDACTED] and will continue with their existing vesting periods.

$HMX Tokenomics Wind-Down

If approved, the proposal will initiate the following steps:

  1. Emission of $esHMX tokens will cease by the end of January 2025.
  2. The migration to $[REDACTED] will begin in Q2 2025, alongside the rebranding launch targeted in February 2025 (tentative timeline).
  3. Remaining circulating $HMX tokens will go through the transition as outlined in the migration process.

Enhanced $[REDACTED] Token Utility

The introduction of the Central Limit Order Book (CLOB) model will create additional revenue channels for the protocol, complementing the existing pool-based model. This expansion will enhance earning opportunities for token holders.

New Revenue Distribution Model:

  1. Pool-Based Trading Fee Distribution:

a. 50% to the HLP Staking Pool.
b. 45% to the Revenue Central Pool (CRP).
c. 5% to Protocol-Owned Liquidity (POL), ensuring robust on-chain liquidity for governance tokens.

  1. CLOB-Based Trading Fee Distribution:

a. 95% of CLOB trading fees will flow directly into the Revenue Central Pool.
b. 5% to Protocol-Owned Liquidity (POL).

Introducing Central Revenue Pool (CRP):

The Central Revenue Pool (CRP) serves as the primary hub for managing fees collected from both pool-based and CLOB trading activities. It is designed to promote sustainable growth and equitable rewards by strategically allocating resources and covering costs associated with the new CLOB launch, ensuring maximum benefit to the entire ecosystem.

Fees collected in the CRP will be allocated to two primary purposes:

  1. Yield for Stakers: 50% of CRP revenue will be distributed to $[REDACTED] token stakers.
  2. Operational Costs: The remaining 50% of the CRP revenue will be allocated to cover essential expenses. With the launch of the new CLOB model, a significant portion of this allocation will support the increased costs associated with the Designated Market Maker (DMM) operations. Additional operational costs will include contributions to the Insurance Fund, the Development Fund, and general protocol-related expenses necessary to ensure the growth of the ecosystem.

Impact of New CLOB Revenue Model:

The CLOB model is anticipated to substantially enhance protocol revenue, leading to increased yields for $[REDACTED] token holders. Below is a comparison of the current scenario and the projected outcomes within six months of the CLOB model’s launch:

Current Baseline: Revenue to Token Stakers with Current Setup (24–30 Nov 2024)

Scenario 1 - Base Case: Revenue to Token Stakers with New Setup (Assuming CLOB achieves 50% of Pool-Based Volume)

We believe 50% of pool-based volume is a reasonable target and has a very high likelihood of success. Given the current market condition, we are seeing a lot of new users entering the market. We will be carrying out a significant amount of marketing activities to promote the platform and should attract those traders to the CLOB.

While we expect some cannibalization of the pool-based model to occur, the amount will be minimal. Pool based models still provide key advantages to its main user group - large accounts who prefer speed and ability to enter large positions without slippage. The fact that HMX still has significant volume today despite many new CLOB platforms proves this point. The CLOB model will target a new group of users.

The $450M weekly volume represents approximately 0.9% of the market share when compared to the weekly trading volume of the top two perpetual DEXs, Hyperliquid and dYdX.

Under this scenario, the Total Revenue to Token Stakers increases by 32.14%.

Scenario 2 - Optimistic Case: Revenue to Token Stakers with New Setup (Assuming CLOB achieves 100% of Pool-Based Volume)

In an optimistic case, the $900Mn weekly volume represents approximately 1.8% of the market share when compared to the weekly trading volume of the top two perpetual DEXs, Hyperliquid and dYdX.

Under this scenario, the Total Revenue to Token Stakers increases by 100%.

Scenario 3 - Pessimistic Case: Revenue to Token Stakers with New Setup (achieves 30% of Pool-Based Volume)

Under this scenario, the Total Revenue to Token Stakers also increases by 5%.

As long as the CLOB model achieves more than 30% of the pool based model (~$38.5Mn volume / day), the stakers will be better off, and this endeavor would be positive EV. We believe this is a very low bar to achieve given the current market sentiment and all the campaigns we have planned to promote this new product.

These scenarios demonstrate how the changes in revenue streams, combined with the launch of the new CLOB model, are designed to support the protocol’s growth and drive increased revenue generation.

Conclusion:

The proposed changes mark an incredible moment for the HMX ecosystem, addressing critical challenges while laying the foundation for sustained growth. The launch of the new token, coupled with the CLOB system and rebranding initiative, will attract new users, re-engage the community, and better align tokenomics with the protocol’s long-term vision.

Next Steps:

By voting yes on this proposal, you support the creation of the new $[REDACTED] token, the migration process, the burning of a portion of the token supply, the updated incentive scheme, and the gradual wind-down of HMX tokenomics. This proposal will remain open for community discussion to gather feedback and address any concerns before being finalized.

Once discussions are complete, it will be submitted for a snapshot vote, where your participation will help shape the future of the HMX ecosystem and align its tokenomics with long-term growth and sustainability.


Frequently Asked Questions

Q1: Will HMX existing holders be diluted?

As part of the new tokenomics migration, our guiding design principle has been to ensure the “Preservation of Value for Existing Holders.”

To achieve this, we will allocate at least 25% the airdrop allocation to reward loyal token stakers. This ensures that all loyal stakers benefit and maintain their value without experiencing any dilution. Meanwhile, new users will need to compete and generate fees to earn their share of the remaining allocation.

Q2: What’s the 2x capped mean for DP

Under the new tokenomics, the DP APR will remain at 100%. However, users can only hold DP up to 2x the size of their staked position. Additionally, with the migration, DP will be redenominated at a ratio of 1:100.

Example:

  • Alice currently holds 100 HMX and 50 DP.
  • After the migration, Alice will receive 10,000 $[REDACTED] and 5,000 DP (following the 1:100 redenomination).
  • Post-migration, Alice can continue to earn more DP until she reaches the cap of 20,000 DP, which is 2x her staked amount.
  • Once she reaches the cap, Alice will continue to earn yield but will no longer accrue additional DP unless she stakes more $[REDACTED].

Q3: What mechanisms are in place to ensure a seamless and transparent migration process?

As always, we are committed to transparency and ensuring everything is done on-chain. We have carefully planned the migration process, leveraging our past experience to ensure a seamless transition.

The majority of our circulating supply is locked within the staking contract, and this supply will be automatically migrated to $[REDACTED] without any user involvement. The entire process will be conducted on-chain. This also applies to migrating esHMX to b[REDACTED].

For the remaining 7% of the circulation, we will keep the migration portal live for 1 year after the Token Generation Event (TGE) , allowing token holders to swap to $[REDACTED] at any time during the period.

All migrations will be conducted on-chain and can be audited at any time.

Q4: How will the 1:100 redenomination impact perceived token value in the market? Will this create confusion for retail investors?

We don’t believe that 1:100 redenomination will create confusion for retail investors. As part of our “Journey to the One Piece” initiative, we plan to release the new tokenomics and branding simultaneously. This ensures that new retail investors and token holders engage with us under the updated branding and tokenomics, without any preconceived impressions of the previous HMX.

Additionally, there are many cases where projects have redenominated to a larger supply, on top of my head: Polkadot (DOT) and Ribbon <> Aevo

Q5: How will the team’s allocation be reduced by 50%?

Under the current token supply schedule, as of January 2025, the HMX team is scheduled to vest approximately ~1.07M HMX tokens. With the new tokenomics, the team’s allocation will be reduced to ~535k HMX tokens (or 53.5M $[REDACTED] tokens), which will continue vesting. This effectively means that 50% of the team’s unvested supply will be burned.

For details, please refer to the vesting schedule here: HMX Supply Schedule - Share to Public - Google Sheets

Q6: How will the community-governed inflation rate process be managed to avoid conflicts of interest or governance stalemates?

The community-governed inflation rate process will be designed to ensure transparency, fairness, and efficiency, minimizing the risk of conflicts of interest or governance stalemates.

Here’s how:

  • Clear Framework: The inflation rate will operate under a predefined framework with transparent guidelines that outline acceptable parameters for adjustments. This ensures all participants have a clear understanding of the process. The framework will be designed in collaboration with the community and will need to pass through our standard governance process.
  • Quorum Requirements: Governance proposals related to inflation will require a quorum to be met before voting results are considered valid. This prevents decisions from being influenced by a small, unrepresentative group of participants.
  • Guardrail: To ensure stability, any increase or decrease in the inflation rate will be capped at a maximum of 5% per year. This prevents sudden, significant changes to the token’s inflation dynamics.
  • Gradual Changes: Any proposed changes to the inflation rate will be implemented gradually and fully on-chain, allowing the community to monitor and audit as needed to prevent unintended consequences.

By combining these measures, the governance process will be balanced and resilient, fostering collaboration while avoiding decision-making bottlenecks.

Q7: What criteria will be used to determine eligibility for the 38% airdrop allocation?

We have not yet finalized the exact criteria for determining eligibility for the 38% airdrop allocation, as we aim to optimize the campaign and keep it as dynamic as possible. The plan is to implement a point system that allows flexibility in assigning points to specific actions based on the protocol’s needs.

For example, in one epoch, we might allocate more points to maker orders than taker orders if there is a need to encourage liquidity. In another epoch, the allocation criteria might differ. This dynamic approach ensures that the airdrop aligns with the protocol’s evolving priorities and objectives.

Q8: What specific marketing strategies will be employed to attract users to the CLOB model?

  • New Branding / New Tokenomics - The crypto community loves new, shiny coins. With the new branding and a significant portion of the supply allocated for airdrops, we anticipate $[REDACTED] will generate buzz and capture mindshare on X.
  • Collaborate with Research Entities - We have signed an agreement with research entities to publish in-depth articles about our product and technology on a global scale. This initiative will bring greater visibility to both our new product and the airdrop program we plan to launch.
  • KOLs Activation - We have been collaborating with KOLs consistently to ensure our major updates reach our target audience effectively. This will be the same when we roll out the CLOB release on prod.

Q9: How will the protocol ensure that the CLOB model doesn’t cannibalize pool-based volumes significantly?

As outlined in the proposal, each model offers distinct benefits and serves different use cases. The CLOB model provides lower fees, access to a wider range of assets, and virtually unlimited position sizes, making it attractive to certain types of traders and enabling us to capture untapped markets, such as lower-cap tokens and meme coins. On the other hand, the pool-based model offers predictable price impact, which is particularly valuable for large accounts entering significant positions.

While we anticipate some level of cannibalization between the two models, they are designed to complement each other. By catering to different trading preferences and needs, both models can coexist and contribute to the overall growth and utility of the protocol.

Q10: Are there contingency plans if the CLOB model underperforms or fails to attract sufficient trading volume?

There are several items and strategies we can implement to mitigate, prevent, or shift the direction:

  • Pool-based will still be active and live alongside CLOB - The pool-based model will continue to operate alongside CLOB, ensuring that the protocol maintains a steady source of trading volume and revenue even if CLOB falls short of expectations.
  • Incentive Adjustments - We can implement targeted incentives, such as fee rebates, trading competitions, or liquidity rewards, to attract traders and market makers to the CLOB model. Additionally, we can consistently compete with other platforms by offering highly competitive trading fees without concern about potential attack vectors, as trading fees are one of the most critical factors traders consider when choosing a venue. We could even introduce negative fees to rebate makers and liquidity providers, further incentivizing their participation.
  • Iterating based on community feedback - If the CLOB model underperforms, we will prioritize gathering feedback from the community and iterating on the product to enhance its functionality and appeal, whether listing new markets, improving liquidity, or any product improvement feedback.

Q11: How will the team manage potential cost increases associated with DMM operations and ecosystem expansion?

Costs associated with DMM will increase only if we need to onboard more DMMs. An increase in DMM-related costs would indicate higher trading volume on our platform, necessitating additional liquidity and, consequently, more market makers. This is ultimately a good problem to have.

Ecosystem expansion costs are manageable and controllable. We will allocate these funds to collaborating with leading research entities, establishing an ambassador program, and working closely with KOLs to ensure our story reaches new investors and users, while maintaining an appropriate share of the operational budget.

Q12: How does this proposal align with the broader roadmap and vision for HMX’s growth?

This takes our protocol to the next level, enabling us to offer a wider range of assets, virtually unlimited position sizes, lower fees, and the best UX for traders to trade without limits, while also reigniting excitement on our platform.

2 Likes

Hey Guys, could you or someone from the team help clarify something for me?

Do circulating tokens include esHMX tokens? I’m trying to understand how the total circulating supply goes from 3.2 million tokens in December 2024 to 5.3 million tokens by January 2025.


The release today states, “HMX currently has a circulating supply of around 3.2 million tokens out of a total supply of 10 million.”

However, it also mentions, “By the end of January, approximately 5,385,238 of $HMX and $esHMX tokens will be eligible for conversion to $[REDACTED].”

Hey @Whipper, currently there are approximately ~3.2M HMX tokens and ~1.5M esHMX tokens in circulation. By the end of January, the combined supply of HMX and esHMX is projected to reach ~5.3M, which reflects an increase of only 600k tokens.

If you’d like to dig deeper into the tokenomics you can track everything on-chain here: HMX Tokenomics Dashboard.

Hope this clears things up. Let me know if you have any more questions :wink:

1 Like

Can you clarify how the team is reducing its ownership or giving up tokens? It states, “Team allocations will be reduced by 50%, reflecting the team’s commitment to fostering long-term community success. This reduction ensures that $[REDACTED] becomes a truly community-driven token with the majority of its supply in active circulation.”

I was under the impression that the original plan was to burn tokens not in circulation, but since the new token will have a supply of 1,000,000,000, it seems like we’re converting the entire 10,000,000 HMX tokens at a 1:100 ratio.

What happened to the burning of tokens?

1 Like

Friends, I’m unsure about the idea of a 38% airdrop. Wouldn’t that severely impact the price of HMX or the new token’s reputation? Could we get more details on eligibility, the assumptions regarding benefits, and whether there’s an ideal timing for this?

Why should we consider an airdrop at all? It’s common knowledge that airdrops are often sold immediately, offering little to no return on investment.

1 Like

As an early user, I have read the new tokenomics proposal with great interest. It is clear that you are aiming for a fundamental restructuring to elevate HMX to a higher level. The proposal offers promising prospects such as improved sustainability, a simpler model, and new opportunities through the CLOB. However, such drastic changes also come with great responsibilities. Trust and reputation are crucial, and this transition must be executed flawlessly to preserve them.

While the proposal holds much promise, it also raises some critical questions regarding its impact on existing users, implementation, and the long-term vision. Below are my questions:

Token Migration and Value Preservation:
1. What mechanisms are in place to ensure a seamless and transparent migration process?
2. How will the 1:100 redenomination impact perceived token value in the market? Will this create confusion for retail investors?

New Token Utility and Governance:
3. What specific benefits or utilities will $[REDACTED] offer to differentiate it from $HMX?
4. How will the community-governed inflation rate process be managed to avoid conflicts of interest or governance stalemates?

Airdrops and Rewards:
5. What criteria will be used to determine eligibility for the 38% airdrop allocation?
6. How will the airdrop balance rewarding loyal holders with attracting new users to the ecosystem?

CLOB Model and Revenue:
7. What specific marketing strategies will be employed to attract users to the CLOB model?
8. How will the protocol ensure that the CLOB model doesn’t cannibalize pool-based volumes significantly?
9. Are there contingency plans if the CLOB model underperforms or fails to attract sufficient trading volume?

Operational Costs and Revenue Distribution:
10. What percentage of the CRP revenue is expected to go toward operational costs beyond the initial launch?
11. How will the team manage potential cost increases associated with DMM operations and ecosystem expansion?

Risks and Security:
12. What safeguards are in place to mitigate risks of token volatility during the transition to $[REDACTED]?
13. Will the rebranding and token swap include security audits or external validation to protect against technical vulnerabilities?

Long-Term Vision:
14. How does this proposal align with the broader roadmap and vision for HMX’s growth?
15. What metrics will be used to measure the success of the new tokenomics and CLOB model after implementation?

what about fees for HLP providers?

1 Like

Hey @yanip , welcome to the HMX forum and nice to have you in here with other dragons! :innocent:

Pool Based Perp Dex will continue like this and HLP stakers will get 50% of the platform revenue of it ( pool based ). So traders will have the option to select which one they prefer to trade like pool based or CLOB or both.

Hey @Hmxdegen , it would be used for liquidity, hodler loyalty, other incentives including airdrop. So we stated it as an airdrop program since we’re going to use that allocation as incentives for the long term supporters.

Hey @Hmxdegen, thank you for raising these points. While Sultan has already answered you, I’d like to add that ensuring a fair distribution of the supply is a key priority for us. Airdropping or selling a significant portion of the supply to the community is essential for achieving what is considered a fair launch. This approach helps build trust and ensures that the token is distributed as widely as possible and that’s the reason why we designed the new tokenomics that way.

Hey @StruvusMaximus, first of all, thanks for raising such great questions. Let me elaborate and answer them here:

Token Migration and Value Preservation:

1. What mechanisms are in place to ensure a seamless and transparent migration process?

As always, we are committed to transparency and ensuring everything is done on-chain. We have carefully planned the migration process, leveraging our past experience to ensure a seamless transition.

The majority of our circulating supply is locked within the staking contract, and this supply will be automatically migrated to $[REDACTED] without any user involvement. The entire process will be conducted on-chain. This also applies to migrating esHMX to b[REDACTED].

For the remaining 7% of the circulation, we will keep the migration portal live for 1 year after the Token Generation Event (TGE), allowing token holders to swap to $[REDACTED] at any time during the period.

All migrations will be conducted on-chain and can be audited at any time.

2. How will the 1:100 redenomination impact perceived token value in the market? Will this create confusion for retail investors?

I don’t believe the 1:100 redenomination will create confusion for retail investors. As part of our “Journey to the One Piece” initiative, we plan to release the new tokenomics and branding simultaneously. This ensures that new retail investors and token holders engage with us under the updated branding and tokenomics, without any preconceived impressions of the previous HMX.

Additionally, there are many cases where projects have redenominated to a larger supply, off the top of my head: Polkadot (DOT) and Ribbon → Aevo


New Token Utility and Governance:

3. What specific benefits or utilities will $[REDACTED] offer to differentiate it from $HMX?

$[REDACTED] will remain the centerpiece of our protocol, retaining all the existing utilities of $HMX. It will continue to play a pivotal role in driving engagement and value within the ecosystem, solidifying its importance to our protocol’s functionality.

4. How will the community-governed inflation rate process be managed to avoid conflicts of interest or governance stalemates?

The community-governed inflation rate process will be designed to ensure transparency, fairness, and efficiency, minimizing the risk of conflicts of interest or governance stalemates.

Here’s how:

  1. Clear Framework: The inflation rate will operate under a predefined framework with transparent guidelines that outline acceptable parameters for adjustments. This ensures all participants have a clear understanding of the process. The framework will be designed in collaboration with the community and will need to pass through our standard governance process.
  2. Quorum Requirements: Governance proposals related to inflation will require a quorum to be met before voting results are considered valid. This prevents decisions from being influenced by a small, unrepresentative group of participants.
  3. Guardrail: To ensure stability, any increase or decrease in the inflation rate will be capped at a maximum of 5% per year. This prevents sudden, significant changes to the token’s inflation dynamics.
  4. Gradual Changes: Any proposed changes to the inflation rate will be implemented gradually and fully on-chain, allowing the community to monitor and audit as needed to prevent unintended consequences.

By combining these measures, the governance process will be balanced and resilient, fostering collaboration while avoiding decision-making bottlenecks.


Airdrops and Rewards:

5. What criteria will be used to determine eligibility for the 38% airdrop allocation?

We have not yet finalized the exact criteria for determining eligibility for the 38% airdrop allocation, as we aim to optimize the campaign and keep it as dynamic as possible. The plan is to implement a point system that allows flexibility in assigning points to specific actions based on the protocol’s needs.

For example, in one epoch, we might allocate more points to maker orders than taker orders if there is a need to encourage liquidity. In another epoch, the allocation criteria might differ. This dynamic approach ensures that the airdrop aligns with the protocol’s evolving priorities and objectives.

6. How will the airdrop balance rewarding loyal holders with attracting new users to the ecosystem?

A significant portion of the airdrop allocation will be reserved for long-term investors. Specifically, at least 25% of the airdrop will be dedicated to rewarding our loyal supporters as a token of appreciation. Meanwhile, new users will need to compete and generate fees to earn their share of the remaining allocation. As outlined in our proposal, our design principle is the “Preservation of Value for Existing Holders.” So, sit back, stay staked, and enjoy the rewards!


CLOB Model and Revenue:

7. What specific marketing strategies will be employed to attract users to the CLOB model?

  • New Branding / New Tokenomics - The crypto community loves new, shiny coins. With the new branding and a significant portion of the supply allocated for airdrops, we anticipate $[REDACTED] will generate buzz and capture mindshare on X.
  • Collaborate with Research Entities - We have signed an agreement with research entities to publish in-depth articles about our product and technology on a global scale. This initiative will bring greater visibility to both our new product and the airdrop program we plan to launch.
  • KOLs Activation - We have been collaborating with KOLs consistently to ensure our major updates reach our target audience effectively. This will be the same when we roll out the CLOB release on prod.

8. How will the protocol ensure that the CLOB model doesn’t cannibalize pool-based volumes significantly?

As outlined in the proposal, each model offers distinct benefits and serves different use cases. The CLOB model provides lower fees, access to a wider range of assets, and virtually unlimited position sizes, making it attractive to certain types of traders and enabling us to capture untapped markets, such as lower-cap tokens and meme coins. On the other hand, the pool-based model offers predictable price impact, which is particularly valuable for large accounts entering significant positions.

While we anticipate some level of cannibalization between the two models, they are designed to complement each other. By catering to different trading preferences and needs, both models can coexist and contribute to the overall growth and utility of the protocol.

9. Are there contingency plans if the CLOB model underperforms or fails to attract sufficient trading volume?

There are several items and strategies we can implement to mitigate, prevent, or shift the direction:

  • The pool-based model will remain active and operate alongside CLOB - The pool-based model will continue to operate alongside CLOB, ensuring that the protocol maintains a steady source of trading volume and revenue even if CLOB falls short of expectations.
  • Incentive Adjustments - We can implement targeted incentives, such as fee rebates, trading competitions, or liquidity rewards, to attract traders and market makers to the CLOB model. Additionally, we can consistently compete with other platforms by offering highly competitive trading fees without concern about potential attack vectors, as trading fees are one of the most critical factors traders consider when choosing a venue. We could even introduce negative fees to rebate makers and liquidity providers, further incentivizing their participation.
  • Iterating based on community feedback - If the CLOB model underperforms, we will prioritize gathering feedback from the community and iterating on the product to enhance its functionality and appeal, whether listing new markets, improving liquidity, or any product improvement feedback.

Operational Costs and Revenue Distribution:

10. What percentage of the CRP revenue is expected to go toward operational costs beyond the initial launch?

As outlined in the proposal, 50% of the CRP revenue will go toward operational costs.

11. How will the team manage potential cost increases associated with DMM operations and ecosystem expansion?

Costs associated with DMM will increase only if we need to onboard more DMMs. An increase in DMM-related costs would indicate higher trading volume on our platform, necessitating additional liquidity and, consequently, more market makers. This is ultimately a good problem to have.

Ecosystem expansion costs are manageable and controllable. We will allocate these funds to collaborating with leading research entities, establishing an ambassador program, and working closely with KOLs to ensure our story reaches new investors and users, while maintaining an appropriate share of the operational budget.


Risks and Security:

12. What safeguards are in place to mitigate risks of token volatility during the transition to $[REDACTED]?

We will allocate a budget from our own resources and work with our market makers to manage liquidity during the migration process.

13. Will the rebranding and token swap include security audits or external validation to protect against technical vulnerabilities?

Yes, everything on HMX is always audited by top-tier security research firms, such as Cantina, a subsidiary of Spearbit.


Long-Term Vision:

14. How does this proposal align with the broader roadmap and vision for HMX’s growth?

This takes our protocol to the next level, enabling us to offer a wider range of assets, virtually unlimited position sizes, lower fees, and the best UX for traders to trade without limits, while also reigniting excitement on our platform.

15. What metrics will be used to measure the success of the new tokenomics and CLOB model after implementation?

  • Weekly Active Traders
  • Weekly Trading Volume
  • Weekly Average Open Interests
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Hey @Whipper, we’ve added a FAQ section at the bottom of the main post. Q5 answers your question :wink:

@Takamura thank you for thoroughly and promptly answering the questions.
I believe that the HMX platform, with this concept proposal and the integration of the provided feedback, will take another step forward.

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You’re welcome @StruvusMaximus. Thank you for your support and thanks again for your questions!

What do you mean by a fair launch? The token is being converted, not starting a new project. I’m struggling to see how this airdrop differs from the current incentives we already have, as both seem likely to create sell pressure. Could you clarify how this airdrop would be more beneficial than our existing rewards program? Additionally, any details on eligibility criteria would be greatly appreciated.

Does anyone support rewarding traders in USDC instead of HMX tokens? Providing traders with what they prefer could help reduce constant sell pressure.

Rather than airdropping token incentives, why not allocate or share a portion of trading fees with traders? It seems like a win-win for everyone involved.

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You only addressed the first part of the question. I think Whipper raises a valid point about the overall token supply, and I was curious about that as well.

“ I was under the impression that the original plan was to burn tokens not in circulation, but since the new token will have a supply of 1,000,000,000, it seems like we’re converting the entire 10,000,000 HMX tokens at a 1:100 ratio.

What happened to the burning of tokens?”

GM HMX and Dragons! :dragon:

I’m 0xNomist, a researcher from Tokenomist.ai. The team mentioned this tokenomics proposal in our X thread, so I wanted to hop in and share a few thoughts after running the numbers comparing to the current tokenomics on our website HMX (HMX) | Tokenomics, Supply & Release Schedule.

Highlighting the New Tokenomics

New Token Allocation

Assuming private sale and team tokens have vested until the end of January 2025 and the team unvested allocation is reduced by half, here’s how the updated allocations of the remaining tokens look:

Old Tokenomics

Allocations Remaining Tokens
Team 1,071,429 $HMX
Private Sale 213,333 $HMX
Ecosystem Fund 1,250,000 $HMX
Community Incentive 2,080,000 $HMX

New Tokenomics (Conversion rate is 1:100)

Allocations Remaining Tokens
Team (50% Reduction) 53,571,500 $[REDACTED]
Private Sale 21,333,333 $[REDACTED]
Liquidity, Holder Loyalty, Incentives 386,571,400 $[REDACTED]

To simplify, we grouped allocations into Insiders (Team + Private Sale) vs. Community (Other Allocations) for clarity:


This updated allocation reflects a clear shift toward community ownership, significantly reducing insider tokens. This aligns well with the current trend in projects like Hyperliquid, where more tokens are allocated to the community. It’s a strong move to keep things decentralized and community-focused!

Addressing 1-Y Emission Issue

$HMX Emission

Under the old tokenomics, $HMX’s 1-year token emission was relatively high compared to other projects in the same category. According to our comparison feature, $HMX currently ranks 3rd within its category, with a 1-year token emission of over 40% relative to unlocked supply:

$[REDACTED] Emissions

The new tokenomics update seems to significantly address this issue. Here’s the updated 1-year emission relative to unlocked supply, assuming (as mentioned in Q1) that all of the “Liquidity, Holder Loyalty, Incentives” allocations are airdropped to holders at the start:

This adjustment significantly lowers emissions to less than 5%, a promising step strengthening HMX’s competitive positioning among tokens in the same category. However, it’s important to note that the inflation model for $[REDACTED] can be triggered starting in the second year, allowing the community to vote on an inflation rate between 0% and a maximum of 5% to support protocol if needed.

A Question on Emissions

With low emissions and no inflation in the first year, how does the team plan to incentivize user participation and stay competitive? Would love to hear more about the planned incentives for $[REDACTED] and how they align with the broader tokenomics strategy.

Overall Thoughts

The updated tokenomics show a strong shift toward community ownership and a thoughtful approach to addressing key challenges like emissions and insider allocations. It’s exciting to see these changes align with broader trends in the space while focusing on long-term sustainability.

Thank you for inviting us to participate in this forum and contribute to the discussion. Looking forward to seeing how the community shapes the next phase of HMX! :dragon:

3 Likes

Hey @Hmxdegen,

I’d like to share the thought process behind our new airdrop incentives and explain why we believe this would be a significant shift from our previous token incentive model.

While our new CLOB and order book infrastructure aren’t entirely new projects, these launches are a huge step forward for HMX. Coupled with the current bullish market sentiment and growing narrative around perpetual DEXs, we believe now is the perfect time to boost our growth and elevate the protocol to the next level.

To achieve this, we see the need to deploy incentives that attract a completely new audience to support us and grow the loyal community members like you. That said, we’ve learned a key improvement from our past incentive strategies will not to repeat the same route again.

Here’s the thought process behind our upcoming airdrop and updated tokenomics:

1. Problems of the Current Incentive Model

a. The use of esHMX for weekly trader incentives introduces unpredictable selling pressure, complicating long-term value assessment for investors.
b. This uncertainty has deterred new investors from acquiring HMX tokens, even though organic yields for stakers are highly competitive.
c. Consistent selling from traders who receive incentives has depressed the token price over time, weakening overall confidence in its potential.


2. The New Airdrop for Our New Rebranding Launch

a. One-Time Airdrop Allocation: Instead of periodic emissions, 38.7% of the token supply will be deployed in a one-time incentive campaign to support the rebranding and CLOB product launch.
b. Strategic Attention and Volume Growth: This large-scale airdrop is designed to attract significant attention, onboard new traders, and drive trading activity, which ultimately benefits token holders with higher yields.
c. Eliminating Continuous Emissions: Post-launch, there will be nearly full float in the tokenomic. This would substantially reduce long-term selling pressure on the token.
d. Short Initial Selling Pressure: While some selling pressure from farmers is expected immediately post-airdrop, from the latest data, HYPE airdrop, shows that well-structured airdrops can lead to upward trends. After the initial sell-off, the protocol can retain traders and the price went up for more than 400% from the TGE.


3. If people have an interest in our token, how can they get it?

a. With this model of migration, there are only 2 options for investors to get our token

  • i. Buy HMX Tokens: Investors can acquire HMX tokens before the launch, driving up demand, increasing token prices, and gain value for rewards on our airdrop. You can see some major price action during the past few weeks after we announced the Journey to One Piece.
  • ii. Trade on the New CLOB Platform: With this option, traders participating on the platform generate additional yields that flow back into the token ecosystem, boosting demand and value for the new token.

b. This alignment creates a positive feedback loop, sustaining growth in token value and trading volumes, even after full dilution.

To show our confidence in this approach, the team has burned 50% of unvested tokens. Details of the airdrop allocation will be shared at the launch of the rebranded protocol. You can refer to FAQ #7 regarding the airdrop criteria.

We hope this response would help you understand more of our Journey to One Piece.

Hey @0xnomist, welcome to the HMX Governance Forum. Firstly, thank you so much for sharing this with the community, it’s much appreciated!

Regarding your question, yes, with the launch campaign and airdrop, we anticipate attracting a significant number of new traders to our protocol, which will directly drive growth and traction. Over the past few months, we tested the product with reduced incentives, and the trading volume remained relatively stable, demonstrating that we can retain traders even with nearly zero incentives.

We will continue to monitor this closely and are prepared to implement other growth initiatives such as trading competitions or fee reductions to maintain trader engagement.

In the unlikely event that we struggle to retain users, token holders will have the option to vote through the governance system to decide whether to introduce inflation for growth purposes. That said, we believe that the strength of our product will sustain user interest and activity even with low incentives.

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Thank you to all the Dragons for your valuable feedback and questions. After internal discussions with our council, we’ve decided to move this proposal forward as a HIP for further discussion before proceeding to the voting stage.