BIP-2: Proposed Distribution Percentages for BMX Freestyle

This proposal aims to establish distribution percentages for revenue generated by BMX Freestyle on both Base and Mode. If passed, revenue will begin streaming the following epoch.

Proposed Distribution Percentages for BMX Freestyle:

• 30% to trader incentives
• 30% to native liquidity incentives (e.g. wBLT-BMX and wMLT-BMX incentives)
• 20% to BMX Classic’s liquidity token (e.g. BLT/MLT)
• 10% to BMX single-staking
• 5% to Treasury for the sole purpose of acquiring $SYMM
• 5% to acquiring BMX on-market and burning it

As a reminder, the distribution percentages for BMX Classic are (and remain):

• 60% to liquidity token (e.g. BLT/MLT)
• 30% to native liquidity incentives (e.g. wBLT-BMX and wMLT-BMX incentives)
• 10% to BMX single-staking

Discussion: Here is an example scenario to better understand the yield earned through different scenarios:

John has $100,000 USDC and wants to maximize yield in the BMX ecosystem.

• Step 1: John goes to Kyber and swaps 50,000 USDC to wBLT.
• Step 2: On Kyber, John swaps 50,000 USDC to BMX.
• Step 3: John goes to Aerodrome and deposits $50k worth of wBLT and $50k worth of BMX to form the native liquidity pair: wBLT-BMX
• Step 4: John deposits his wBLT-BMX LP token into Aerodrome’s gauge, earning AERO emissions directly.

Analysis of yield in this example:

Through UI/UX abstraction presented as a simple swap, John has deposited $50,000 into the BMX Classic liquidity pool. Traders utilize this liquidity when trading on BMX Classic markets. When traders win, their profits come from this liquidity pool and when traders lose, their money goes into this liquidity pool, paying liquidity providers.

Then, in the same single swap, John has deposited his $50k worth of BLT into a vault which gives John the equivalent amount of wrapped-BLT tokens (wBLT). The purpose of this vault is to remove John’s need to claim BLT rewards manually. Instead, the wBLT vault claims rewards on his behalf and auto-compounds the yield into BLT, increasing the value of wBLT.

Because John holds wBLT, he receives his share of all yield directed to BLT by design. However, by pairing his wBLT with BMX, he can now earn additional rewards for providing native-protocol liquidity on Aerodrome.

For example, say John’s $50,000 worth of wBLT is earning an APR of 25%. He then deposits his $100,000 worth of wBLT-BMX LP into the Aerodrome gauge to earn AERO, and the APR is 50%. John is earning rewards on $150,000 worth of capital, using only $100,000 worth of capital.

• $50k x 25% = $12,500/yr divided by 365 days = $34.25/day or $240/week.
• $100k x 50% = $50,000/yr divided by 365 days = $137/day or $959/week.

Combining the weekly values in this example, John would have earned approximately $1,199 for the week. $1,199 x 52.14 weeks in a year = $62,515 divided by $100,000 = 62.5%.

The result is a combined yield APR of approximately 62.5% on his actual capital committed ($100k). What percentage of revenue distribution is John earning in this scenario?

From BMX Classic, John would be benefitting directly from 90% out of 100%, as his wBLT would auto-compound the 60% of rewards distributed to BLT and the 30% to wBLT-BMX incentives on Aerodrome, he would earn as AERO emissions.

From BMX Freestyle, John would be benefitting directly from 50% out of 100%, as his wBLT would auto-compound the 20% of rewards distributed to BLT and the 30% to wBLT-BMX incentives on Aerodrome, he would earn as AERO emissions.

Indirectly, John benefits from the 5% directed to Treasury to acquire SYMM tokens, because as the protocol increases its SYMM holdings, BMX will be able to retain a greater percentage of total revenue in regards to the revenue share SYMMIO takes.

John also indirectly benefits from the 30% directed to trader incentives, as this helps scale users and volume on BMX Freestyle, hopefully generating more revenue than the amount directed.

Of course, John also benefits from the 5% directed to buying back BMX and burning it.

And a critically important design feature that should be highlighted here, is that John himself is NOT providing liquidity to traders utilizing BMX Freestyle. Thus, he has ZERO exposure to trader profits or losses on BMX Freestyle. This helps offset any potential trader profits on BMX Classic, reducing LP risk including reducing impermanent loss (IL).

How does this work for Base and Mode?

Revenue is not aggregated nor evenly split between chains. BMX Classic and BMX Freestyle on Base distribute to Base only. BMX Classic and BMX Freestyle (launching soon) on Mode, distribute to Mode only. BMX is used on BOTH chains to pair with the associated BMX Classic wrapped liquidity token, either wBLT or wMLT.

What does BMX total supply look like now, after the last governance proposal to end all emissions as well as the burns?

BMX total supply was initially scheduled for 10,000,000 tokens. Due to sufficient protocol revenue and a previous governance proposal passing, emissions were ended with a total supply figure at approximately 3,000,000 or 30%.

Since then, approximately 150,000 tokens have been burned, taking place through various means such as previously generated option-revenue, treasury burning oBMX it had earned from yield, and treasury buying back oBMX and burning it.

At the time of writing, there are 2,740,752 BMX circulating and approximately 110,000 oBMX circulating (this figure deducts all oBMX burn amounts), giving a total supply of approximately 2,850,000 BMX.

What are sinks and where are they?

Sinks are a term used to describe a yield-generating opportunity that requires liquidity and/or a specific token to access. BMX as a protocol has tons of sinks, both native and non-native. Here is a non-comprehensive list:

1. BMX single-staking on Base
2. BMX single-staking on Mode
3. BMX staking within PeaPod Finance’s “Pods” on Base
4. BMX staking within PeaPod Finance’s “Pods” on Mode (soon)
5. wBLT-BMX staking on Aerodrome on Base
6. wMLT-BMX staking on Velodrome on Mode
7. wBLT as a collateral asset on Astaria on Base
8. wMLT as a collateral asset on (TBD) on Mode (soon)
9. wBLT staking into pwBLT within PeaPod Finance’s “Pods” on Base
10. wBLT-BMX vault on Yearn Finance on Base

That’s a lot of sinks.

What’s next for BMX?

• Contract a marketing agency to support growth; currently in discussions
• Continue to scale users and liquidity providers on Base and Mode
• Continue to scale integrations, sinks, and partnerships on the Superchain
• Continued improvements on the UI such as displaying all sinks
• Launch referral program for BMX Freestyle on both Base and Mode
• Launch BMX Freestyle on Mode (currently in development with SYMMIO and Mode team; ETA 2-3 weeks)
• Lobby SYMMIO to support development on Optimism for BMX Freestyle to launch, without a Classic market —revenue would support trader incentives and the rest would be directed to mutually benefit token holders (a future vote would determine this more precisely.)

DISCLOSURE: There are many factors that can influence yield earned, positively or negatively. Examples include, but are not limited to: changes in weekly revenue, BMX Classic traders’ profits or losses (a direct impact on BLT), veAERO votes directed to the wBLT-BMX gauge (which determines how much AERO will flow to the gauge for the epoch), BMX price increasing or decreasing. It is important that users do their own research and understand the risks associated with providing liquidity and using the platform. The above is for illustrative purposes only, to better understand the flow of protocol revenue, and is NOT FINANCIAL ADVICE.

VOTING:

• YES approves the proposed BMX Freestyle revenue distribution percentages/allocations as listed above.
• NO disapproves the proposed BMX Freestyle revenue distribution percentages/allocations as listed above.