Gambit: Chapter II
It has been three weeks since the mainnet launch of Gambit, during this time the protocol has handled ~400 million USD of volume and distributed ~380,000 USD in fees.
We have also received a lot of feedback and that has played a large part in formulating the plan to bring Gambit forward.
Based on these, we have the following prioritisations:
- Improving the tokenomics of GMT and xGMT
- Adding more utility for GMT and xGMT tokens
- Securing the resilience of the USDG peg
- Increasing usage
- Further decentralisation
With these in mind, we would like to share our proposals with the community for discussion and implementation.
Drawing from a suggestion by p1no, we see that it is possible to re-shuffle rewards to increase APRs for xGMT and USDG without a significant adverse effect for other protocol participants.
The suggestion is to distribute the 20% USDG and 20% xGMT fees only to USDG and xGMT that are not already farming xGMT tokens in the GMT-USDG and xGMT-USDG pools.
Based on current figures the BNB fees received by GMT-USDG and xGMT-USDG make up only 1% of the APRs compared to the xGMT rewards received.
Since 70% of USDG and 81% of xGMT are staked in the GMT-USDG and xGMT-USDG pools, making this change would increase the USDG APR to 107.5% and increase the xGMT APR to 489.6%.
If there are no strong objections, this change can be made as early as the next fee distribution on 26 May 2021.
Based on the concerns raised by multiple community members, in particular, those from Black Yoda, Han Wen and Panth, we have re-looked at the tokenomics of the xGMT distribution, and would like to make the following proposal for updated emissions:
- Months 1–3
- GMT/USDG pair: 1200 xGMT tokens
- xGMT/USDG pair: 2400 xGMT tokens
- Total: 3600 xGMT (the total would vary based on when this proposal is implemented)
- Months 4–6
- GMT/USDG pair: 800 xGMT tokens
- xGMT/USDG pair: 1600 xGMT tokens
- Total: 2400 xGMT
- Months 7–9
- GMT/USDG pair: 400 xGMT tokens
- xGMT/USDG pair: 800 xGMT tokens
- Total: 1200 xGMT
- Months 10–24
- GMT/USDG pair: 100 xGMT tokens per month
- xGMT/USDG pair: 200 xGMT tokens per month
- Total: 4500 xGMT for 15 months
xGMT rewards can be boosted through locking of the GMT-USDG or xGMT-USDG LP tokens:
- Lock for 3 months: 10%
- Lock for 6 months: 20%
- Lock for 9 months: 50%
- 12 months: 100%
The main goal of the change in emissions is to provide larger rewards for long-term holders and those who believe in the vision of the project.
If this is implemented, we will also support auto-compounding for locked tokens. Stakers would be able to select the auto-compounding option, which would lead to the locking contract depositing the LP tokens into Autofarm.
The basic emission rewards will continue to be paid upfront, but boosted rewards will only be redeemable at the end of the locking period.
Maintaining the peg is an important part of the protocol, and we believe that introducing a bonding mechanism will help increase the resilience of USDG’s peg to 1 USD.
Bonds can be purchased at anytime with USDG. This purchasing would lock the USDG tokens and issue bond tokens in return.
Every 24 hours, the protocol checks if it is under-collaterised, if the protocol is not under-collaterised, it would distribute fees as usual to both bonded and unbonded USDG. If the protocol is under-collaterised, it re-adjusts its fee distribution such that 80% of USDG fees go to bonded USDG and the remaining 20% is distributed to unbonded USDG.
Redeeming bonds when the protocol is under-collaterised would incur a penalty equivalent to the percentage of under-collaterisation. For example, if 1000 USDG is locked for bonds and redeemed when the protocol is under-collaterised by 5%, then 950 of the locked USDG will be returned and the remaining 50 USDG will be burnt.
On the other hand, if bonds are redeemed when the protocol is over-collaterised, the redeemer will receive bonus USDG equivelant to the percentage of over-collaterisation. For example, if 1000 USDG is locked for bonds and redeemed when the protocol is over-collaterised by 5%, then 1050 USDG will be returned.
If the bonds are purchased when the system is over-collaterised, then the difference in the over-collaterisation percentage will be used to decide the bonus USDG to be received, the penalty percentage will still work in the same way. For example, if the bonds are purchased when the system is over-collaterised by 5%, then the purchaser receives a bonus only if they redeem when the over-collaterisation is more than 5%.
Bonds will be purchasable only by GMT holders, during the purchasing of bonds a proportion of GMT tokens would have to be locked together with the USDG tokens. The penalties and bonuses will not apply to the GMT tokens.
Bonds can also be locked to receive xGMT rewards, with boosted rewards depending on the locking duration.
Trigger orders will be developed in parallel over the following weeks and will include the following types
- Limit orders for swaps and leverage positions
- Stop-loss and take-profit orders for leverage positions
The current xGMT and GMT tokens will be re-used for the next chain that Gambit is launched on, they will be transferrable to the new chain for liquidity mining. Locked GMT-USDG and xGMT-USDG LP tokens will also be transferrable for this purpose.
If required, the xGMT mining rewards will either be split between the two chains or additional xGMT tokens will be minted on the new chain.
Once the protocol is stable and running well, the GambitDAO will be set up to control:
- All xGMT tokens in the treasury
- Distribution of fees: the only constraint would be the minimum 10% for the XVIX project and minimum 20% for xGMT tokens
- Whitelisting of tokens
- The additional assets when the protocol is over-collaterised
If the protocol’s AUM starts increasing earlier, we can look into using snapshot to allow an early voting of whitelisted tokens before the full DAO is set up.
We are grateful for all the feedback given even if we did not explicitly mention everyone in this post and we will continue working to improve things for all holders and supporters of the project.
Thank you for being here with us as we continue to build.
Based on feedback to keep separate features for each token, the bond proposal has been amended to use GMT tokens exclusively.
We also include here the proposal to use 10% of fees to buy GMT from the market and to store it in the Treasury, these GMT tokens can be used for additional incentives and new features.
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