In this proposal, we propose to reduce the performance fee on GMX vault’s ETH reward from 20% to 0%. Please note that this reduction only concerns GMX’s native governance token GMX, and only the ETH reward. esGMX can not be transferred as things stand, and it is thus currently impossible to redistribute them to our vault holders.
Background
As of November 29, there were a total of only ~120k VST minted from GMX. Despite collateral mobilization being an innovation specific to our protocol, the GMX vault isn’t being utilized heavily. This brought us to assess the GMX vault more closely.
Motivation
In favour of removing the performance fee
Reducing the fee taken by our service means a higher yield to users. This could potentially be more attractive to new users to open a vault.
The Treasury would still receive and accumulate the esGMX rewards.
With the recent VRR implementation, deposit GMX on Vesta will become quite expensive. A potential strategy could rapidly be unprofitable for the investor. Removing the performance fee could mitigate that.
Against removing the performance fee
Our Treasury would lose one stream of revenue. ETH yield is roughly 5% on GMX, so it represents only 1% for all the GMX deposited on our platform.
We would love to know your opinions on this and hear your own pros and cons. Thank you all for your time, and we would love to reiterate our gratefulness for your support.
I think it makes perfect sense to have no perfomance fee on GMX, since Vesta is already getting the esGMX which is way more than 10% of the total rewards (and now interest on loans as well).
I don’t believe it will do much to encourage use of GMX as collateral, since losing the esGMX rewards is a much bigger deal for GMX than GLP. But it is not going to hurt.
What about having a dynamic perfomance fee similar to the reference rate? Closer to mint cap = higher performance fee. But have it very low at the low end, so as to only take advantage of high demand (or maybe some cutoff point where there is no performance fee below some mint% amount).
Hopefully minting using all collaterals is going to increase now since VST is closer to $1.
In favor of this. The GMX vault was already kind of unappealing as a user because you can’t accrue esGMX or MPs, and the extra fee on top made it even less attractive.
The reference rate is already eating up half of the ETH yield as of now, which could become more in times of less volatility and less fee revenue from GMX.
On top of that the treasury gets an extra ETH revenue from all esGMX on top of the performance fee, which is retained 100%.
This proposal should be implemented soon, as esGMX rewards are set to expire by end of the year. Attracting more GMX in the vault before that, might bring in more esGMX yielding the Vesta treasury ETH forever.