Product Update: Parameter Optimization and Incentives for September 2023
Dear Dragons,
Aside from the ongoing development of various features and enhancements that are in progress and set to be released in the upcoming weeks, another crucial factor that will contribute to the success of HMX are the protocol parameters. These variables are under close monitoring, and we periodically make necessary adjustments, ensuring they remain optimized to perfectly align with our strategic objectives.
After reviewing HMX’s operations in full-scale for several weeks, we have enough data points to better fine tune some of the parameters for the month of September.
esHMX Incentives Allocation Adjustment
The APR% for our HLP stakers continues to be, by far, the highest among Perp DEXs. As such, we are reallocating a portion of the esHMX incentives from HLP to the Trader Loyalty Credit (TLC) bucket. At the apparent level, this change might seem like a net loss for the HLP. However, we believe higher allocation to TLC will create a flywheel effect that will be net positive for the whole protocol.
Higher Rewards to TLC -> Higher trading volume -> Higher Protocol Revenue -> Higher Rewards distribution to HLP.
So for the month of September, the esHMX incentives allocation will be as follow:
- Trader Loyalty Credit: 40% -> 45%
- HLP: 15% -> 10%
The other incentive allocations remained unchanged. In September, esHMX incentives will be allocated as follow:
- TLC: 72,000 esHMX (~USD 1.04 Mn)
- HLP: 16,000 esHMX (~USD $232k)
- HMX & esHMX staking: 40,000 esHMX (~USD 580k)
- Open Positions: 16,000 esHMX (~USD $232k)
- UNI V3 HMX LP: 16,000 esHMX (~USD $232k)
HLP Composition Adjustment
We will adjust the target composition for HLP to:
- 90% GLP
- 10% USDC
Given HLP’s yield is already very high, we are adjusting down the GLP composition to reduce the counter trading risks for our liquidity providers. In the future, we also plan to introduce other assets (e.g. BTC, ETH) into the HLP composition directly as well, but these will be done gradually over time. There is nothing LPs need to do.
Open Position Incentives
We have added information on the open positions portion of the esHMX incentive for each market in our Docs.
These value will be reviewed and adjusted monthly as well to align with the popularity of each market.
