@CastleCapital Thank you for taking the time to review our proposal and providing feedback. Let us address them.
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We have adjusted the requested grant amount down to 750k ARB to be more in line with the recommended metrics of being live on Arbitrum for 4 months (The baseline performance is kept unchanged.) Also, given the 2x+ over subscription of the allocated 50Mn ARB by applicants, we think the reduced amount should make our application more appealing and reasonable to delegates. Please note that the rewards to be given out in each tier has also been updated accordingly.
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We believe our distribution mechanism, as originally proposed, is already well designed. Awarding bonus points to esHMX and DPs stakers are giving extra incentives to loyal traders over mercenary traders which is precisely what we want to achieve. As esHMX are given out to traders, how much esHMX staked acts as a proxy on how much users have traded over time and should be rewarded for their repeated use. In addition, as the rewards will be distributed over a period of 12 weeks, even users who are new to the HMX platform will have the ability to accumulate both esHMX and DPs through trading (as esHMX is awarded through usage of the protocol), allowing them to capture a larger share of the incentives over time.
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In terms of the benefits to other protocols on Arbitrum, we have to first appreciate that depending on the segment / functionalities of each protocol, some will naturally be more geared towards integration - e.g. launchpad, aggregator, etc., while others are more geared towards building internal features - e.g. base layer protocols. That being said, our current distribution method will benefit the protocols that build on top of us a trading activity naturally contributes to other aspects of the protocol. Trading generates revenue for the protocol, which is subsequently distributed to HLP depositors and stakers. Consequently, our partner protocols, built on top of HMX, will receive second-order benefits from our grant usage:
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Pendle: With higher HLP yields, which is a function of trading activities on HMX, our HLP pool on Pendle will be more attractive for users to trade on principle vs. yields, attracting more users to Pendle in the process.
- Penpie & Equilibria: Both protocols are built on top of Pendle and have listed HLP for staking. Similar to Pendle, these protocols are the natural beneficiaries of the increased HLP yields, attracting more users to them in the process.
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Stella: As some portion of the protocol revenue goes towards the staked HMX, users can expect more price action on the token as revenue goes up, from an increase in trading vol. This will enhance the appeal of leveraged yield farming through Stella’s farming feature on the HMX-ETH pool, increasing the usage of Stella.
- We have added as an additional condition that the ARB incentives amount distributed in a given week will not exceed the protocol revenue earned on the same week.
We have made the adjustment in the original proposal accordingly.