The preliminary proposal to update xGMT emissions was posted in Gambit: Chapter II. It has been three weeks since the… | by Gambit Protocol | May, 2021 | Medium.
The main goal of the proposal is to form a positive feedback loop and allow the protocol to grow steadily during its budding stage.
A few points of feedback have been given on the emissions proposal, so it would be prudent to detail the exact numbers before implementing emission changes.
Some data at the time of writing for context:
- USDG Supply: 3,862,541 (100%)
- USDG in GMT-USDG: 1,243,264 (32.19%)
- USDG in xGMT-USDG: 1,053,812 (27.28%)
- USDG in AUTO-USDG: 129,036 (3.34%)
- Staked USDG: 2,426,112 (62.18%)
- Unstaked USDG: 1,436,429 (37.19%)
- xGMT Price: 127 USD
- xGMT Supply: 11,241 (100%)
- Staked xGMT: 8607 (76.57%)
- Unstaked xGMT: 2634 (23.43%)
Current xGMT Rewards:
- GMT-USDG: 1000 xGMT per week, APR: 265.59%
- xGMT-USDG: 2000 xGMT per week, APR: 626.68%
As pointed out by multiple community members, the current xGMT rewards structure does not favour long-term stakers over short-term stakers. For the protocol to gain a stronger presence, it requires some time to attract new traders and requires a good amount of assets to provide liquidity.
Based on the current data, the primary driver for USDG liquidity is through xGMT staking, so aligning incentives for long-term stakers is important.
Multiple structures are possible but I believe a simple and effective way is to have larger rewards for locked LP tokens.
The APRs should be calculated to continue to allow room for short-term stakers, while allocating a large proportion of rewards to long-term stakers.
To calculate the projected APRs, we assume and even split of current stakers between in each staking group.
Proposed GMT-USDG Emissions:
- No lock pool: 100 xGMT rewards per week, APR: 106.24%
- 3 months lock pool: 125 xGMT rewards per week (+25%), APR: 132.80%
- 6 months lock pool: 175 xGMT rewards per week (+75%), APR: 185.91%
- 9 months lock pool: 250 xGMT rewards per week (+150%), APR: 265.59%
- 12 months lock pool: 350 xGMT rewards per week (+250%), APR: 371.83%
- Total: 1000 tokens per week
Proposed xGMT-USDG Emissions:
- No lock pool: 200 xGMT rewards per week, APR: 250.67%
- 3 months lock pool: 250 xGMT rewards per week (+25%), APR: 313.34%
- 6 months lock pool: 350 xGMT rewards per week (+75%), APR: 438.67%
- 9 months lock pool: 500 xGMT rewards per week (+150%), APR: 626.68%
- 12 months lock pool: 700 xGMT rewards per week (+250%), APR: 877.35%
- Total: 2000 tokens per week
The base 100 xGMT and 200 xGMT rewards together with 10% of bonus rewards can be distributed upfront, while the remaining 90% bonus xGMT for locked LP tokens will be distributed at the end of the locking period.
The total distributed tokens per quarter can follow the original distribution:
- GMT/USDG pair: 12,000 xGMT tokens
- xGMT/USDG pair: 24,000 xGMT tokens
- GMT/USDG pair: 8,000 xGMT tokens
- xGMT/USDG pair: 16,000 xGMT tokens
- GMT/USDG pair: 4,000 xGMT tokens
- xGMT/USDG pair: 8,000 xGMT tokens
It would be possible to add an option to auto-compound the rewards through Autofarm even for locked tokens.
Early exits for locked LP tokens could also be possible, but with remaining rewards and bonus rewards forfeited.
A penalty which only refunds 90% of LP tokens and locks the remaining 10% permanently can also be implemented.
Regarding the distribution of fees to only USDG and xGMT that are not in LP tokens, since the protocol’s growth is currently driven by LP tokens, such a change should be re-evaluated in a separate proposal, and should only be implemented if there is a large benefit for long-term stakers.
Since Arbitrum is launching on 28 May 2021, these changes can take effect after Gambit is launched on a second chain, either Polygon or Arbitrum seem likely at this point.