GMX And ​​Its Expansion Plots On Arbitrum

The Arbitrum ShortTerm Incentive Program has passed nearly half of its first journey with many outstanding proposals, the most outstanding is probably GMX’s proposal for 14 million ARB tokens that has caused a stir in the community. Join Weakhand to learn about the story behind GMX’s proposal and the expansion plots on Arbitrum.

To better understand GMX and the Arbitrum ecosystem, people can refer to the following other articles:

• What is GMX (GMX)? Overview of GMX Cryptocurrency
• What is Arbitrum (ARB)? Arbitrum Cryptocurrency Overview
• Summary of Potential Projects on the Arbitrum Ecosystem

Overview of GMX

GMX is a decentralized exchange that provides 2 products including Spot trading and Perpetual trading with low transaction fees and no price slippage. Initially, GMX’s development team started building the project on BNB Chain, but then switched to Layer 2 Arbitrum.

The move to Layer 2 Arbitrum is probably one of the best decisions of the GMX team when it has made the project the protocol with the largest TVL in the ecosystem despite the majority of the time since then. GMX’s product launch point is downtrend.

GMX’s influence on Arbitrum

Talking about GMX’s influence, we cannot ignore the TVL index as this is the largest protocol in the ecosystem with $419M in locked assets, accounting for about 1/4 of Arbitrum’s TVL. However, most of the current TVL is still located at V1 instead of V2, the reason may come from the fact that the majority of trading volume is still above V1, making the profit when providing liquidity higher.

Regarding transaction fees, GMX is always in the leading position and is one of the protocols that generate a lot of transaction fees as well as revenue in the DeFi market. There was a time when the amount of fees generated on GMX daily surpassed even leading protocols such as Uniswap, AAVE or Ethereum.

During ArbitrumDAO’s airdrop to protocols operating on its ecosystem, GMX was also one of the two projects that received the most tokens with 8M ARB tokens, on par with a project under construction in the Gaming segment, TreasureDAO. .

GMX And ​​Its Expansion Plots On Arbitrum

Proposal for 14M ARB from Arbitrum Short-Term Incentive Program

Arbitrum Short-Term Incentive Program (STIP) is a program organized by ArbitrumDAO with the aim of incentivizing liquidity for projects in the ecosystem in the short term by allocating ARB as liquidity mining rewards. A total of 50M ARB tokens will be used in this liquidity incentive program until January 31, 2024.

The roadmap of the STIP program will be implemented as follows:

• September 1, 2023: Suggestions posted on the forum.
• September 10, 2023: Vote on Snapshot.
• September 20, 2023: On-Chain Voting.
• September 20, 2023-October 12, 2023: Start STIP Round 1.
• October 12, 2023-October 9, 2023: Start STIP Round 2.

Each Round will last for 3 weeks with the following allocation:

1. Project submits proposal: First 7 days.
2. ArbitrumDAO reviews the proposal: Next 7 days.
3. Voting from the community: Last 7 days.

In the final days of STIP Round 1, GMX officially participated with a proposal for 14,000,000 ARB tokens from ArbitrumDAO, this amount of tokens accounts for about 28% of the total amount approved to organize this incentive.

We can quickly summarize the GMX distribution incentives if approved as follows:

• 6M ARB: Used for trading incentives through contests on GMX V2.
• 6M ARB: Used to encourage liquidity on GMX V2.
• 2M ARB: Used to support GMX V2 liquidity integration protocols that cannot receive a grant from the STIP program.

All 14M ARB allocation will be used by GMX within 4 months starting from October 23, 2023 to January 24, 2024. With a fairly large number of incentives with a total of 3.5M ARB used each month, GMX sets the following development goals:

1. Increase TVL for GMX and the entire Arbitrum ecosystem.
2. Increase the number of dApps built on the liquidity of GMX V2 and Arbitrum.
3. Increase community participation and activities in ecosystem governance.
4. Increase the value of the GMX token and the total market capitalization of projects built on GMX.

The unusual proposal to use 8M ARB tokens comes from GMX DAO

Returning to the Arbitrum event that deployed tokens in March 2023 and then airdropped to all DAOs of protocols operating in the ecosystem, GMX was in the leading position with TreasureDAO when receiving 8,000. 000 ARB tokens.

After submitting a proposal for 14M ARB tokens from ArbitrumDAO, on September 26, GMX made another proposal on its Snapshot platform with the purpose of using the 8M ARB received from the airdrop to authorize voting for Coinflipcanda. (a member of the GMX team) and was quickly approved immediately afterwards with 93% approval votes.

Those who receive authorization will have a maximum term of 6 months and can be eliminated through DAO voting. In addition, they must also respect the following principles:

1. Vote in favor of proposals that directly or indirectly affect the finances or interests of GMX.
2. Vote for protocol partners collaborating with GMX.
3. Abstain from GMX competitor proposals.
4. When participating in voting, delegates need to consult with opinions from the community.

What is GMX’s conspiracy?

The first point worth mentioning is that this proposal to use 8M ARB was made right after they submitted a proposal for 14M ARB incentive from Arbitrum by the same person, Coinflipcanda. In addition, Coinflipcanda is also the only person who presented himself as the only authorized delegate of 8M ARB from the DAO without going through a discussion on the GMX forum, which should have been required for all proposals. must have.

A question that arises is why by the time the proposal was approved, which was 6 months after GMX received the airdrop, did DAO use ARB? While other major protocols in the ecosystem have used ARB to implement other liquidity incentive programs.

There is no need to think too deeply when we can see right in the first principle that requires delegates to vote in favor of proposals that directly or indirectly affect finances or benefits. of GMX, in this specific case we can understand it as a proposal for 14M ARB incentive.

With 8M ARB authorized by GMX DAO and more than 4M ARB previously authorized by Coinflipcanda, GMX can take advantage of these tokens plus its influence to easily approve its proposal to ArbitrumDAO. .

And if GMX’s intentions are really like that, are they worthy of being called the largest DAO on the Arbitrum ecosystem when they are trying to take advantage of their power to ask for a huge amount of ice? from ArbitrumDAO.

With TVL accounting for about 25% of the entire Arbitrum ecosystem but proposals accounting for 28% of the allocation, if we calculate according to the ratio of allocation rate to TVL ratio, the number is 1.12. Therefore, this is not a really reasonable proposal, because the simple thing is that other protocols only ask for a much lower number.

Summary

Above is the information that everyone needs to know to better understand GMX’s incentive proposal and expansion plans on Arbitrum. Weakhand hopes that through this article, everyone has learned useful information for the research and investment process.