Update xGMT Emissions

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:

Months 1–3

  • GMT/USDG pair: 12,000 xGMT tokens
  • xGMT/USDG pair: 24,000 xGMT tokens

Months 4–6

  • GMT/USDG pair: 8,000 xGMT tokens
  • xGMT/USDG pair: 16,000 xGMT tokens

Months 7–9

  • 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.

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I don’t think how much new funds the reform proposal will bring. Under the current fee structure, obviously lp is a better choice, and the price of xgmt will be under pressure.

I think this would actually increase the liquidity of USDg and this structure incentivizes long-term holding.

If I understand what you mean, you’re not against the emission changes, but you’re suggesting that it is still better to distribute BNB to only USDG and xGMT that is not staked?

I think that could make sense when done together with the emission changes. With the current rate of inflation, a pure holding strategy of xGMT might not be ideal due to the sell pressure from the inflation.

If the emissions are updated to reduce the upfront xGMT distributions, then a pure xGMT holding strategy for BNB rewards could make sense.

Yes, I have no objection.

Based on feedback from community members, the rewards should be adjusted to target a percentage bonus in APR in the pools with a longer lockup, instead of having a fixed amount of xGMT distributed per pool. I think this makes sense.

2 Likes

So I’m coming in late on this. I like this a lot. From what I’ve seen in other successfully launched projects, it’s best to incentivize long term holding - using both carrot & stick as appropriate.
These specific proposals aside, it’s very important to instill the idea of flexibility as early as possible. By flexibility I mean the need to tweak protocol mechanics and tokenomics - sometimes frequently - in search of an optimal balance in the ecosystem. Communities that expect all rules to be cast in stone from the start tend to fair poorly over time. Flexibility is key and that’s why I have no qualms accepting these proposals. Should we come to a realization that these exact mechanics don’t work well then we should be flexible enough to tweak them further and correct any wrongs.

Thanks for the detail writeup btw @xdev_10

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“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.”

Ooh. Slightly off topic, but I really, really like the sounds of Gambit launching on those protocols. Polygon is really gaining rapid use right now, and it looks like a lot of capital is migrating there. Please keep us up to date on when you join those chains, and also, could you partner with autofarm again (polygon chain version) to create an auto compounding option like you have with BSC? Thanks so much, keep up the good work, and I vote for whatever makes us the most money! :slight_smile:

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will be posting the plan for the second chain for Gambit this week :slight_smile:

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The xGMT reward values per pool are assuming equal distribution in each locking tier.

I like the idea of promoting long-term liquidity locking, but it should be dynamically weighted. There should be a target max APR for each locking pool. If there isn’t enough staked then xGMT is reserved to help boost APR in the future if a pool becomes “over subscribed”.

yea agree, will re-propose this one together with the second chain plan, because if we re-use the same xGMT tokens then we would need to consider the emissions for the second chain

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