Introduction

HMX is on a mission to revolutionize on-chain decentralized trading. With innovative features like Cross Margin, Multi-Asset Collateral, Gas-Free Trading, and industry-leading low fees, the platform has achieved over $50 billion in trading volume.

As outlined in the journey to one piece, the protocol is entering a new era with three transformative pillars: New Product, New Tokenomics, and New Branding. This proposal focuses on the “New Tokenomics,” presenting key changes designed to enhance token sustainability, improve user incentives, and align the HMX token with the protocol’s long-term growth strategy.

Challenges Addressed

Despite HMX’s success as a leading perpetual DEX on Arbitrum since its Token Generation Event (TGE) in August 2023, its token has underperformed, with market capitalization declining from $15 million to $5 million. This is due to:

• Low Circulating Supply: With only 3.2 million out of 10 million HMX tokens in circulation, liquidity is constrained, and investor concerns about sell pressure limit the token’s attractiveness.
• Complex Tokenomics: A fragmented ecosystem of multiple tokens (HMX, esHMX, HLP, and Dragon Points) creates confusion, reducing retail participation and broader interest in the token.

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Proposal Overview

The proposal outlines a revamped tokenomics framework designed to simplify the token model, improve user incentives, and align the token with HMX’s long-term strategy. Key elements include:

1. Launch of a New Token ($[REDACTED])

To address the limitations of the current token, a new token ($[REDACTED]) will replace HMX. The tokenomics will adopt two key principles:

• Full Float Tokenomics: The new model ensures a fully circulating supply, reducing dilution and selling pressure, and fostering a community-driven ecosystem.
• Simplicity: The token model will be straightforward, improving accessibility for retail and institutional investors.

2. Updated Token Allocation

• Total Supply: 1 billion $[REDACTED] tokens.
• 38% Airdrop Allocation: Dedicated to an airdrop program to reward loyal HMX holders and enhance liquidity.
• Team Allocation Reduced: Team and investor allocations cut by 50%, now representing only 7.5% of the total supply, with a structured vesting schedule.
• Community-Driven Governance: A community-governed inflation model with a 0% rate in the first year and a cap of 5% for subsequent years, ensuring stability.

3. Enhanced Utility Through New Revenue Models

• Central Limit Order Book (CLOB): The introduction of CLOB will unlock new revenue streams, complementing the existing pool-based trading model.
• Revenue Distribution:

1. Pool-based and CLOB trading fees will flow into a Central Revenue Pool (CRP) to fund staker rewards and operational costs.
2. 50% of CRP revenue will go to $[REDACTED] stakers, with the remaining 50% allocated to development, insurance funds, and market-making operations.

4. Migration Details

• HMX Holders: Direct migration at a 1:100 ratio to $[REDACTED], preserving the value of their holdings during the transition.
• esHMX Holders: esHMX tokens can be converted to a locked version of $[REDACTED] (b$[REDACTED]). Holders can:
  1. Stake b$[REDACTED]: Earn yields from protocol rewards.
  2. Unlock b$[REDACTED]: Vest over three years to gain fully transferable tokens.
• Dragon Points (DP):
  1. DP will remain a core element of governance and incentives.
  2. DP accumulation will be capped at 2x the staking position in $[REDACTED].
  3. A snapshot of all DP holders will be taken, and a special reward will be announced for long-term participants.
• Unconverted Tokens: After the 1-year migration window, any unconverted tokens will be burned, reducing the overall supply and benefiting active holders.

5.Wind-Down of HMX Tokenomics

• Emission of esHMX tokens will end by January 2025.
• Migration to $[REDACTED] will commence in Q2 2025, alongside the rebranding launch.

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Anticipated Impact of CLOB and New Tokenomics

The CLOB model will significantly enhance revenue opportunities for $[REDACTED] holders. Three scenarios highlight potential outcomes:

• Optimistic Case: 100% of pool-based volume leads to a 100% increase in staker revenue.
• Base Case: 50% of pool-based volume results in a 32% revenue increase.
• Pessimistic Case: Even 30% of pool-based volume delivers a 5% revenue uplift.

These scenarios illustrate the CLOB model’s ability to drive protocol growth, attract new users, and enhance ecosystem sustainability.

Make an Informed Decision: Read the Full Proposal

This document is a summary of the proposed changes and aims to provide a clear overview of the key points. For a comprehensive understanding of the rationale, mechanics, and implications of the proposed tokenomics overhaul, we strongly encourage you to read the full proposal [linked here]. The full proposal contains all necessary details to help you make the most informed decision when voting.