Deployment of Surplus Funds in the Price Impact Buckets into the DAO Treasury

Introduction

Following the successful deployment of GMX V2.2, this proposal recommends transferring to the GMX DAO Treasury the accumulated Price Impact Buckets from the GM pools that are in surplus to their isolated risk requirements. This reallocation will allow for both better functioning of the pools and ensure that funds potentially allocated for risk or other DAO priorities are more easily accessible across the protocol.

The Price Impact Buckets in GMX V2 were designed to store funds collected from traders who incur negative price impact. These are subsequently used to compensate traders who receive positive price impact, helping to rebalance the pools. However, several factors have led to significant fund accumulation beyond operational requirements.

Recommended Actions

• Maintain sufficient operational balances within each GM pool to support the ongoing function of the price impact mechanism.
• Transfer the surplus funds currently held in Price Impact Buckets to the GMX DAO Treasury.
• Execute the transfer via a time-locked transaction under Security Committee oversight to ensure transparency and proper oversight.
• These funds are segregated from LP assets and will not affect GM token pricing, GLV backing, or vault calculations.

Strategic Deployment Framework

Following the establishment of a formal Treasury Committee, these funds can be strategically allocated toward:

GMX Safety Reserve Fund - Enhanced protocol security and risk management Umbrella Risk Framework - Dynamic allocation instead of GM-specific allocation Liquidity and Trading Incentives - Driving ecosystem growth and user engagement GM Pool and GLV Bootstrapping - Supporting deeper liquidity across the platform

Next steps

Phase 1 - Immediate Actions

• Approval of the price impact fund transfer

• Execution of a time-locked transaction overseen by the Security Committee

• Transfer completion within one week of approval

Phase 2 - Governance Evolution

• Separate proposal for the creation of a formal Treasury Committee

• Development of a framework for fund management and allocation

• Strategic deployment toward risk management, incentives, and liquidity initiatives

Conclusion This proposal is based on community feedback and has been reviewed by the Security Committee. It suggests transferring surplus funds from the Price Impact Buckets into the DAO Treasury. This transfer can enhance the efficiency of individual GM pools, resulting in better overall capital performance and utilization. Once these funds are allocated to the DAO Treasury, a Treasury Committee will be established and elected by the DAO to manage them. The Treasury Committee will utilize these funds to improve protocol safety, support liquidity and trading rewards, and support the growth of the GMX ecosystem in line with the DAO's priorities.