Dynamic BB&D Adjustment: 5-15% APR Band with Buffer (1-Year Trial)

Introduction

Increased competition and lower protocol activity have created a prolonged GMX token price downtrend and persistent negative sentiment. Token price matters — it affects reputation, marketing effectiveness, and ecosystem confidence.

We are now in a crypto bear market where GMX and many other coin trade at historically low levels. That creates an opportunity: when solid fees are generated, buybacks executed at these prices are materially more impactful and beneficial for future distributions (at higher price).

With a recently approved marketing initiatives and upcoming protocol development/expansion such as MegaETH deployment and RWA markets, this is an appropriate moment to strengthen value accrual mechanics. The combined effect of all these forces could create a strong foundation for improved long-term token value alignment.

The proposed 5–15% APR band with capped buffer refines reward distribution to enhance sustainability, reduce volatility, and ensure future growth translates into disciplined buy pressure for GMX token.

Proposal Overview

This proposal introduces a 5-15% APR reward distribution band to the current Buy-Back & Distribute (BB&D) mechanism to smooth reward volatility, improve sustainability, and strengthen long-term value alignment. Instead of distributing all rewards to GMX stakers immediately in all conditions, the system becomes adaptive:

• Above 15% APR excess rewards are accumulated in a buffer
• Within 5-15% APR current BB&D operates unchanged
• Below 5% APR accumulated GMX is released to support rewards

This is proposed as a 1-year tokenomics experiment, after which governance will vote to adjust parameters or remove the mechanism.

Mechanism Details

APR Band: 5-15%

Buffer Cap: 1.325M GMX (10% of max total supply)

• Rewards above 15% APR are cut and accumulated in in a protocol-controlled buffer
• If the buffer reaches 1.325M GMX all rewards flow directly to stakers as usual
• If APR falls below 5% the buffer supplements rewards up to 5% APR
• After 1 year governance re-evaluates and votes on continuation, adjustment or removal

Why a 5-15% Band

• Meaningfully above conservative blue-chip yields (e.g. ETH staking ~3%)
• Below historically unstable fixed high-yield models (20% "stable" APR TerraUSD collapses)
• Revenue-anchored rather than emission-driven
• Adaptive range not a guaranteed fixed return

This design prioritizes durability over short-term yield optics.

Key Benefits

• Smoother more predictable staking returns across market cycles
• Counter-cyclical reward mechanism (save in strong periods support in weak ones)
• Reduced mercenary capital and yield-chasing volatility
• Revenue-anchored sustainability instead of emission-driven incentives
• Hard buffer cap (1.325M GMX) preventing indefinite reward withholding
• Stronger staking stickiness: Long-term stakers are disincentivized from unstaking, as they would forgo accumulated buffer rewards. New stakers gain immediate participation in previously accumulated rewards, improving entry attractiveness.
• Minimal disruption to existing tokenomics. Historically, many weeks fall within the 5%–15% range, meaning BB&D continues unchanged in normal conditions.
• Simplicity. Minor parameter adjustments without protocol redesign, audits or 3-rd party integrations break risk
• Complements the recently approved marketing initiative. Increased marketing may raise protocol activity and fees, but does not guarantee GMX price appreciation. This mechanism ensures that higher fees translate into stronger and more consistent buy pressure via the BB&D system.
• Governance-controlled 1-year trial ensuring flexibility and accountability

Summary

This proposal does not overhaul GMX tokenomics.

It introduces a controlled capped and reversible reward smoothing mechanism designed to:

• Protect long-term sustainability
• Strengthen value accrual
• Reduce reflexive yield behavior
• Preserve governance flexibility

After one year the DAO decides whether to adjust or discontinue the mechanism based on real-world data.