SECTION 1: APPLICANT INFORMATION
Applicant Name: HMX Team
Project Name: HMX
Project Description:
HMX is a perpetual protocol with cross-margin and multi-asset collateral support on Arbitrum. HMX offers low-fees trading on crypto, FX, and commodities markets with up to 1,000x leverage.
Team Members and Qualifications:
Shu Wei (Co-founder, Head of Engineering)
- 6 years in smart contract development
- Experience working with notable projects such as OPN (previously OmiseGo) and large corporates such as Agoda
Rockman (Co-founder, Head of Marketing & Community)
- 6 years experience in DeFi
- Ex-TradFi professional having worked extensively in corporate banking and wealth management
Tao Ree (Co-founder & Head of Strategy & BD)
- 6 years experience in DeFi
- 2 years experience in banking industry
- Ex-Management consultant
John Xina (Head of Product)
- 6 years experience in smart contract & product development
- Led technical consultant for a large technology consulting firm
Kim Hera (Engineering Team Lead)
- 6 years in smart contract development
- Experience working with various DeFi projects
Jinlong9922 (Senior Developer)
- 4 years in smart contract development
- 6 years in frontend development
Yingyang888 (Senior Developer)
- 4 years in smart contract development
- 6 years in frontend development
Kangdaiyu (Senior Developer)
- 4 years in smart contract development
- 6 years in frontend development
Chentang88158 (Developer)
- 1 year in smart contract development
- 1 year in frontend development
Asaki-Katsu (Developer)
- 1 year in smart contract development
- 1 year in frontend development
In addition to the team members above, we also have 2 business analysts and 6 community managers
Project Links:
Other relevant project links can be found on our Linktree.
Contact Information
TG: @taoree88, @rockman_HMX
Twitter: @HMXorg
Email: contact@hmx.org
Do You Acknowledge That Your Team Will Be Subject to a KYC Requirement?:
Yes
SECTION 2: GRANT INFORMATION
Requested Grant Size: 750,000 ARB (Reduced from the original 1.95M ARB)
- The actual distribution amount will be between 0 - 750,000 ARB, based on the trading volume and new users growth achieved vs. baseline (please note that we kept baseline and the KPIs we need to achieve unchanged)
- Requested amount is reduced to be more in line with the recommended metrics of being live on Arbitrum for 4 months. Also, given the 2x+ over subscription of the allocated 50Mn by applicants, we think the reduced amount should make our application more appealing and reasonable to delegates.
- ARB incentives amount distributed in a given week will NOT exceed the protocol revenue generated on the same week.
- Unused ARB will be returned at the end of the program
- More details in section3
Grant Matching:
HMX will be providing incentives with its Governance Token ($HMX) alongside the grant incentives from Arbitrum. The $HMX incentives over the same time period will be higher than the requested grant value.
-
HMX allocates 40% of the governance token as community incentives. Currently, 160,000 HMX (~$1.4Mn USD) are being distributed to users on a monthly basis.
-
For the full details of our incentives program, please refer to our Docs.
Grant Breakdown:
We propose a 3-month incentive program from November - January. 100% of the grant will be distributed weekly as incentives to traders (more details in section3.) The rationale for this decision are as follow:
- Yields on HMX (and any DEXs, for that matter) are driven by trading volume. Higher trading volume will drive higher protocol revenue which in turn will make staking APR% for HLP (our liquidity pool) and $HMX staking higher. It will also directly increase the transaction volume for the platform and the Arbitrum network.
- While we already incentivize traders with $esHMX, having additional ARB incentives would make the rewards program more attractive due to ARB being a well-established token with top-tier reputation, liquidity, and market cap.
- We already have sufficient liquidity in the liquidity pool (HLP) to support significant additional trading volume. Thus, there is no need to incentivize the liquidity pool TVL directly. Once the trading volume goes up, the resulting higher fee distribution to the liquidity pool, will result in a natural increase of the TVL.
Funding Address: 0x24d53494dc9e260a6b2ddb0b40c1ed222471779c
Funding Address Characteristics:
This address is a 2 / 3 gnosis safe address with private keys stored in hardware wallets separately by HMX core team members
Contract Address:
The contract address to be used for rewards distribution will be provided at a later stage once it is deployed.
The contract addresses related to incentivization include:
- Trading Contract: 0x0E7C0d58f2e4a6b28597D51a34C4b7acDA1Ee719
- TLC Staking Pool: 0x03BaC369E37a78420dDc284ff6e7E94D15571BbA
- HMX, esHMX, and Dragon Point Staking Pool: 0x92E586B8D4Bf59f4001604209A292621c716539a
SECTION 3: GRANT OBJECTIVES AND EXECUTION
Objectives:
Our objectives are:
Leverage the ARB incentives to attract and accelerate new users growth to the HMX platform, and convert them into long-term users.
- Receiving ARB incentives from trading on HMX would subsidize trading costs for users, making the barrier to try HMX lower, accelerating adoption. We would like to highlight that HMX already offers one of the lowest trading fees amongst PerpDEX. Our fees for BTC and ETH markets are on-par with major CEXs, such as Binance (0.04%) The primary objective here is to grow the size of the PerpDEX ecosystem on Arbitrum (through acquisition of new users) and not to take market shares from existing PerpDEX on Arbitrum. To this effort, we have marketing initiatives lined up to run concurrently during the rewards period to maximize the grant effectiveness (more details below)
- Being a grant recipient would help increase HMX’ visibility and credibility, acting as another social proof for many new users to give HMX a try.
- We believe HMX has many unique features and strong value propositions. We hope to turn a significant percentage of these new users into long-term users even after the incentive program ends, creating sustainable value for the Arbitrum network.
Increase the attractiveness to trade on HMX with existing users
- For existing users on HMX, having the additional ARB incentives would increase the attractiveness of trading on HMX, increasing our wallet share for those traders (i.e., how much they trade on HMX vs. other platforms)
Key Performance Indicators (KPIs):
KPIs that we will be using to measure the success of the program are:
- Trading Volume
- Daily Active Users
- New users acquired (unique wallet addresses)
- Open Interest
How will receiving a grant enable you to foster growth or innovation within the Arbitrum ecosystem?:
HMX is designed from the ground up with many innovative features such as multi-collateral support and cross margin. Our development approach has been very collaborative with the community and users. For example, we conducted a month-long beta period where we had a dedicated channel for users to provide feedback on our Discord. Through that framework, we have received many valuable suggestions (70+ feedbacks / requests) and have already finished implementing many requested features. With more users joining our community, we look forward to having a more vibrant discussion and feedback which will allow us to come up with more innovative features that meet the users’ needs and foster growth on the Arbitrum network.
Justification for the size of the grant:
HMX has seen rapid adoption by the community with over $3Bn+ in cumulative trading volume since launch. The protocol also sees 200-500 daily active users and 4,100+ unique users (wallet addresses.) Our TVL has also grown quickly to see $26+ Mn TVL. We are grateful for the support of our users and the Arbitrum community and hope to continue contributing to the growth and innovation of the ecosystem.
Note: Screenshots data as of 27 September 2023
Over the past month, HMX consistently ranks in the top 5 by 24hr trading volume according to Defillama.
To see more comprehensive HMX’s stats, please visit our Dune Dashboard
As the grant program is designed to stimulate growth and activities on the Arbitrum network, we believe it only makes sense for the grant to be given in proportion to the demonstrated success as aligned to our objectives. Namely, the size of the grant / the incentives given to the HMX’s users will be subjected to:
- The growth from the current trading volume baseline
- New users growth
We would like to note that even with the maximum requested grant amount (1.95 Mn ARB), the current esHMX incentives being distributed by the platform will still make up for more than 60% of the total incentives given over the same time period.
Based on the information above, we believe the requested grant size is appropriate because
- It is commensurate with the level of activities on HMX and proven by the demonstrated traction of the platform
- The distribution amount being proportional to the trading volume growth & new users acquired would ensure the Arbitrum foundation is not “over spending” on the grant
- The max. grant value represents ~30% of the incentives being given out by HMX over the same period. This percentage represents the fact that HMX will still be responsible for providing majority of the incentives to its users
Execution Strategy:
ARB Rewards Amount
ARB rewards amount to be given out each week will be calculated based on the 1.) total platform trading volume that week and 2.) new users acquired that week. Weekly epoch will run from Thursday Midnight UTC through 11.59PM UTC Wednesday.
We are setting a baseline as follow:
- Weekly trading volume: USD 250,000,000
- Weekly new users acquired: 100 users (measured by unique wallet addresses growth week over week)
The incentives given each week will be based on performance of both metrics that week relative to the baseline.
| Tier | Performance vs. Baseline | Weekly Volume Range | Weekly New Users | Weekly ARB Rewards |
|---|---|---|---|---|
| 1 | 0% - 80% | 0 - 200 Mn | 0-80 | 0 |
| 2 | 80% - 100% | 200 - 250 Mn | 81-100 | 18,750 |
| 3 | 100% - 125% | 250 - 312.5 Mn | 101-125 | 37,500 |
| 4 | 125% - 150% | 312.5 - 375 Mn | 126-150 | 43,750 |
| 5 | 150% - 175% | 375 - 437.5 Mn | 151-175 | 50,000 |
| 6 | 175% - 200% | 437.5 Mn - 500 Mn | 176-200 | 56,250 |
| 7 | 200% + | 500 Mn+ | 200+ | 62,500 |
In order to be qualified for a tier, BOTH tracked metrics must be satisfied. If only one metric is achieved, we will go down to a lower rewards tier where both metrics are satisfied. For example, if a weekly trading volume was $400 Mn and 130 new users were acquired for the week, 43,750 ARB will be distributed that week.
Note: The max total rewards possible = 62,500 ARB * 12 weeks = 750,000 ARB
Allocation Method
To disincentivize mercenary traders and potential selling pressure on ARB from these users, we will distribute the ARB rewards in the form of escrowed ARB (esARB.) In order to receive ARB, users will need to vest esARB, which will be released linearly over 1 year. Please note that we are not converting ARB into another token, but merely releasing it over time.
To not penalize actual long-term traders, we will allow for accelerated vesting schedule for users who continue to trade on HMX beyond the incentivization period.
- The maximum accelerated vesting period will be 3 months (i.e., get all rewards out by the end of April 2024)
- The exact formula for acceleration rate will be finalized at a later date. It will be a function derived from TLC, trader’s trading volume, and trading activities.
Allocation Formula
The amount of ARB each user received will be based on their Rewards Points (RP) vs. the total Rewards Points obtained by all users.
- ARB received by a user = (User’s Rewards Points) / (Total Rewards Points)
Each week, users will have their Rewards Points (RP) calculated per the formula below:
- Rewards Points = TLC * ( 1 + min(1, (500* HMXstaked / TLC)) + min(1, (5000 * DP / TLC)))
Where,
- TLC = Trader’s Loyalty Credit. For every $1 of trading volume, HMX’s users will be awarded at least 1 TLC (depending on the asset that they trade) more info here.
- HMX staked = Staked HMX & esHMX tokens
- DP = Dragon points more info here.
The distribution formula above is designed to reward traders based on their level of activities and provide extra bonus to loyal platform users by looking at the amount of HMX & esHMX staked and Dragon Points. However, simply having a lot of staked HMX and DP will NOT earn you any Rewards Points. Users will still need to trade to receive the benefits.
We believe this can help create a positive flywheel effect where users who want to earn the extra bonus will have incentives not to vest their esHMX and keep it locked. As they continue to trade on HMX and accumulate more esHMX, their bonus will also grow automatically. At the same time, users who don’t want to bother with the HMX tokenomics can still enjoy the incentives by simply trading on HMX. As HMX still makes up for the majority of the platform incentive, a positive price dynamic on HMX will help create higher APR% and make it more attractive for users to trade, and provide liquidity.
Note: we have the following measures in place to make it fair and discourage wash tradings:
- TLC is directly proportional to the trading fees paid, so users cannot game the system by choosing to trade in a particular market to earn higher rewards
- Only trading transactions that increase the position size will be counted towards TLC.
Grant Timeline:
Grant will be distributed equally each week over a 3 months period (12 weeks) from November through January. The week will be synced with our TLC rewards distribution (Thursdays.) Rewards will be distributed based on the activity that week. For example, trading activities from 2 Nov - 8 Nov will be calculated and distributed on 9 Nov.
| Period | Rewards |
|---|---|
| 2 Nov - 8 Nov | Up to 62,500 ARB |
| 9 Nov - 15 Nov | Up to 62,500 ARB |
| 16 Nov - 22 Nov | Up to 62,500 ARB |
| 23 Nov - 29 Nov | Up to 62,500 ARB |
| 30 Nov - 6 Dec | Up to 62,500 ARB |
| 7 Dec - 13 Dec | Up to 62,500 ARB |
| 14 Dec - 20 Dec | Up to 62,500 ARB |
| 21 Dec - 27 Dec | Up to 62,500 ARB |
| 28 Dec - 3 Jan | Up to 62,500 ARB |
| 4 Jan - 10 Jan | Up to 62,500 ARB |
| 11 Jan - 17 Jan | Up to 62,500 ARB |
| 18 Jan - 24 Jan | Up to 62,500 ARB |
Resources
If the grant is approved, we will dedicate the necessary resources to carry out the plan above.
- Develop the necessary smart contracts for rewards distribution
- Develop the necessary UI for rewards claiming and tracking for users
- Develop the necessary dashboards for reporting the KPIs and distribution
We have marketing campaigns lined up that we will run concurrently during the incentives period (using our own marketing budget) to achieve the maximum impact for the grant.
- Ad banners on top token sites such as Coingecko & GeckoTerminal
- YouTube video and an explainer articles with top content sites such as DeFiant
- Advertising on top DeFi-focused publications such as The Daily Degen and The DeFi Edge
Do you accept the funding of your grant streamed linearly for the duration of your grant proposal, and that the multisig holds the power to halt your stream?
Yes
SECTION 4: PROTOCOL DETAILS
Is the Protocol Native to Arbitrum?: Yes
On what other networks is the protocol deployed?: No
What date did you deploy on Arbitrum?: Our first contract was deployed on Arbitrum on 29 May 2023
Protocol Performance:
We highlights our key performance metrics below
Activity Stats (as of September 26th 2023)
- Total trading Volume: $3Bn+
- Revenue distributed to users: $1Mn+
- Platform TVL: $26.19M
- HLP TVL: $23.99M
- Unique Users: 4,100+
- Unique Traders: 2,700+
- Unique HLP Depositors: 2,500+
- Total number of trades Supported: 40,000+
Community Stats
- Telegram + Discord members: 9,000+
- Twitter Followers: 15.5k+
- HMX token holders: 1,500+
- No. Tickets Supported: 700+
- No. of Community UI/UX Suggestions: 75+
For a full detailed statistics, please visit our Dune Dashboard.
Protocol Roadmap:
Since the full-scale launch of HMX, we have already released numerous UX/UI improvements and new features. Some highlights include:
- Progressive Web App (PWA)
- Referral program
- Support yield-bearing token as collateral - i.e., wstETH
- On-chart trading
Major upcoming features to be released in Q4 2023 are highlighted below:
Python SDK API:
- Allow quant traders to do programmatic trading on HMX
- Onboarding this group of users will bring in a lot more volume and enable additional interesting use cases in the future. For example, Social trading where users can follow the signals they subscribe to and get the trade executed automatically.
Variable Trading Fees:
- We will create a variable trading fee which will be a function of liquidity depth, volatility, and trading size
- This new logic will be applied to mid-cap and low-cap markets and will help eliminate the oracle price front-running issues, allowing us to offer more trading markets and higher trade size limits to users.
Customized Index market:
- Create a composite index of assets for users to trade
- For example, instead of trading an individual FX market, users will be able to trade on a basket of currencies against USD.
Other UX/UI improvements planned include:
- Rewards auto-compounding
- Notifications - price, margin level, trade executed, etc.
- Trade Ladder page
- Ability to swap between collateral assets directly on HMX
- Ability to move collateral between subaccounts
- Gas-less trading
Audit History:
HMX has passed 3 formal audits, with the latest audit completed this month (September 2023). The reports can be found below:
- Cantina (incubated by SpearbitDAO) Audit Report LINK
- WatchPug’s Audit Report: LINK
- 0xfoobar’s Audit Report: LINK
SECTION 5: Data and Reporting
Is your team prepared to create Dune Dashboards for your incentive program?:
Yes, we are committed to create any required dashboards to be transparent with the grant/incentive distribution. This is demonstrated by our already existing Dashboards we have created in the past to be transparent to our community
- HMX platform statistics: https://dune.com/hmxintern/hmx-analytics
- HMX tokenomics dashboard: https://dune.com/hmxintern/hmx-tokenomics
- Funding Rate dashboard: https://dune.com/hmxintern/funding-rate
Does your team agree to provide bi-weekly program updates on the Arbitrum Forum thread?
Yes, we will dedicate resources to do the updates
Does your team acknowledge that failure to comply with any of the above requests can result in the halting of the program’s funding stream?:
Yes
Edit Note:
1.) Added a banner graphics for aesthetic
2.) Added a missing parenthesis in the Rewards Points calculation formula
3.) Edited grant amount request and clarified that the unused amount will be return at the end of the program
4.) Reduced grant amount requested to 750k and updated the distribution amount in each performance tier to reflect the reduction
