As part of the EMDX evolving path and its decentralization process, we are sharing a proposal going into further tokenomics details.
Since the beginning, our community and stakeholders have shaped the protocol’s future by making substantial contributions not only on the technical, but also on the economic side. The current proposal has taken into account this insightful collaboration and suggestions from many different contributors.
Moreover, this piece of the EMDX machinery is not only relevant as it should build out the EMDX ecosystem, but because it is the prelude for our next major move, which is our TGE / IDO event.
Proposal Summary
This proposal goes into further details about EMDX tokenomics, focusing on the following subjects:
- Distribution system adjustment
- Setting competitive incentives by:
— Decreasing protocol transaction fees
— Distributing platform fees - Looking for a balance between trading and token holder reward system
- Specifying staking conditions in order to accomplish strategic objectives
You will find here the core system of incentives to boost the usage, participation, and growth of EMDX.
It is now in your hands the decision to make it happen!
About the decision-making process.
The process to discuss this proposal is as follows
- CMS - Check for Motion Support
This proposal will be posted on the EMDX forum on Wednesday, September 14th, 2022 at 3 p.m. UTC and will be up until Monday, September 19th, 2022 at 3 p.m. UTC, if approved will then be moved to MGV stage.
Proposal link: https://forum.emdx.io/t/cms-proposal-on-further-tokenomic-details/1236 - MGV - Motion Granted for Voting (Snapshot Voting)
The Snapshot voting period will run from Monday, September 19th, 2022 at 3 p.m. UTC to Thursday, September 22nd, 2022 at 3 p.m. UTC.
Snapshot link: TBA
Topics allowed to be changed
Even though discussion, comments, and suggestions will be allowed on every aspect of the proposal, there will be no room for partial changes, which means it can only be approved or rejected as a whole. This is because we all want to speed up the journey to our TGE/IDO event.
Please keep in mind that following the TGE/IDO event, most aspects of the EMDX protocol will be under the control and governance of the community, and anyone will be able to submit proposals to change any part of the protocol.
FAQs
Here there are some common questions that have arisen while developing this proposal:
1. What parameter of the protocol can be changed by governance?
As of now we consider governance might mainly have influence over three aspects of the protocol:
After the EMDX TGE / IDO event all these subjects will be gradually open to governance for the community.
2. Is the Fee Structure modifiable by governance?
This topic will be initially restricted from voting, but once the protocol becomes self-sustainable (financially speaking) it will go under community governance.
3. Do you think the quantity allocated to market makers might risk dumping a bunch of tokens?
10% of the total supply has been allocated to MM, and will be distributable over the years, at a rate of 1.5% to 4.5% bimonthly. This means that the maximum annual distribution would be:
4. Don’t you think the applied discount on the fees is really huge?
Yes, probably. But the proposed fee structure offers high discounts to boost trading and its design was based on the current fee structure used by our competitors (dYdX, Bybit, Binance, FTX, etc.). Keep in mind that in order to access these discounts traders should operate proportionally related volume and hold a minimum amount of EMDX tokens.
5. How does the trading score work? Is it possible to have a little more details on the bimonthly percentage, and in what form it is paid?
As you can see incentive scheme sets, two main sources of rewards for traders:
- Rebates
Each rebate level is based on the fees paid by the traders. To access the benefit, they must simultaneously hold the minimum EMDX amount displayed in the last column at each level.
2. The trading score formula
As explained, token releasing will go from 1.5% (3rd Quartile) to 4.5% (1st Quartile).
The trading score formula is based on 2 variables: 1) total volume and 2) trader volume. When dividing the latter by the former, the output is the trader’s percentage of traded volume.
Let’s suppose:
Total volume during the epoch (previous 60-day period) was: USD 100,000,000
Trader’s was: USD 15,000
According to the formula:
15,000/100,000,000= 0.015% was the trader’s participation volume.
Let’s also say that:
The average daily volume (during the same time period) pushed EMDX to position 45 on the CMC DEX ranking, implying that the percentage of EMDX tokens to be released is 3% (2nd Quartile) out of 20% (total token rewards for traders), which is 6M tokens.
As a result, the trader will receive: 0.015% * 6M of tokens = 900 EMDX tokens.
6. Regarding the backdated trading mining, is it possible to have more details about it? Will there be vesting?
The same calculations as specified in question 5 should be applied here. The epoch 1 will occur between June 20th and August 20th. Assume that total volume was USDC 210M and ADV was 3,5M during this time window, and we ranked 45 on the CMC DEX. Again, only 3% of the tokens will be distributed.
Trader A did 100k in volume and trader B did 500k, over the same period.
By applying the formula, we get:
These rewards will be accumulated with the following epoch’s rewards and will be distributed all at once in the first public release once the EMDX token is on mainnet (something that we all have to discuss after agreeing about tokenomics, but we expect it to take place by December 22th, 2022).
7. What is the reason for redistributing up to 30% of the fees to the stakers? What is the strategy for the remaining 70%?
Protocols like Sushi Swap and GMX distribute about ⅔ of fees to liquidity providers and ⅓ to token holders. As of now (given our virtual pool infrastructure), at EMDX we don’t need liquidity providers so there is no need to distribute more fees.
We think that progressively distributing up to 30% of the fees is reasonable since we are gonna need to cover OpEx and allocate resources to keep developing all EMDX infrastructure and hiring key profiles.
The remaining fee revenues will be applied (after covering OpEx, Development and distribution to stakers) to provide our own liquidity and market-making activities on EMDX to support brand new listed tokens and products.
8. 25% of the liquidations will go to stakers in the super staking I pool. Where will the remaining 75% go?
Once a position is liquidated, 1/3 of the collateral goes to the keeper, while 2/3 goes to the insurance fund.
25% of the insurance fund will go to stakers, while the remaining 75% will be kept there as a backstop system.
9. 50% of ARB profits will go to stakers in the super staking II pool, but what will be the usage of the remaining 50%?
The remaining 50% will be held there to keep performing Arbs operations.
10. What does the 1/4 of the EMDX staking pool mean?
7,5% of the total token supply is allocated for staking purposes. This pool is split into 4 sub-pools: Vanilla Staking, Super Staking I, Super Staking II, and Subnet Staking. Each one will have 1/4 of this 7,5%.
If you have any further questions, please contact the Support Channel on Discord, the team is always available to answer any concerns. More FAQs will be added to the list as they emerge from community interaction.
