You right but as i see it, it will just bring mercenary capital who whill leave after this liquidity event is over.
But i hope i’ll be proven wrong, we will see …
Mercenary capital is needed. The only question is how to retain it (and make it non-mercenary).
To do that, you need marketing and newly focused farms, and today the xExchange team posted a tweet and already showed some plans how to increase farm rewards for tokens like Bitcoin
Im not approving those change that will increase selling pressure on MEX
This is not direct selling pressure. Read the proposal it’s about creating a DAO-governed community fund used for different purposes. Everytime the team wants to request something from the fund equal or greater to than 10% of the fund, a DAO vote must be held to approve the funds for the voted-upon usecase
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The new Head of Growth of xExchange just announced an AMA next week, and to drop more information. I think we will get more info about that next week as well
So in the end, only the XMEX unlocking is the problematic part & I admit this one’s controversial.
But the reason why it would be necessary to be unlocked rather than locked is that any program that uses XMEX is technically complicated as it involves at least the use of additional 2-3 more laborious smart contracts which complicates software architecture, development & testing => leads to long months of work that in the end is only eating away from leeway and opportunity.
For example, if you would want to open new lending markets with MEX but only XMEX is available, the software stack will need to become shared between different companies and it becomes so complicated to do that we might be more tempted to just drop the entire idea.
In the end it’s not about dumping that specific MEX on the market. Team doesn’t want that because it means suicide. It’s about technical feasibility and flexibility to use it fast and punchy where it most makes sense.
- Incentivising using MEX as rewards are targeted to drive Liquidity, Trading which would bring many more times return than the rewards itself.
- Using xMEX as incentives would neither be attractive, productive or efficient as xMEX are locked for 4 years.
mercenary capital is always present. Key is retaining the capital, and thats what the strategy objectives will aim for.
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Pros:
- Innovation Boost: This fund could be the rocket fuel for developers and innovators to build cutting-edge dApps, enhancing the xExchange ecosystem.
- Liquidity Lift: More liquidity means better stability and attractiveness for traders, potentially increasing volume and reducing slippage.
- Decentralized Decisions: Governance voting on major fund allocations empowers the community, ensuring decisions reflect collective interests.
- Continuous Funding: Seeding from undistributed rewards provides a self-sustaining model for growth without external funding dependency.
- Marketing & Expansion: Initial funds for campaigns can increase visibility and user adoption, creating a virtuous cycle of growth.
Cons:
- Complexity in Management: Governing a strategic fund requires oversight, which could lead to bureaucratic slowdowns or contentious decisions.
- Dilution Concerns: Unlocking all rewards as MEX might lead to initial dilution of token value if not managed carefully.
- Risk of Misallocation: If not strategically managed, funds might go into less impactful projects, potentially wasting resources.
- Community Division: Differences in vision for the fund’s use might lead to community splits or dissatisfaction.
vs 
debates! - Operational Costs: Reserving 10% for operational costs might seem high to some, potentially seen as overhead rather than investment.
It is so great that everyone is starting to talk about this. This is the idea of any xEIP, to gather feedback, to open it up for debates.
A few points to mention:
- This does not change the overall tokeneconomics of the MEX/xMEX tokens.
- Those rewards were not allocated, as people would have needed higher energy - like everybody to completely claim all the rewards from all the farms.
- The rewards are unclaimed since end of 2022 - when xExchangeV2 was launched.
- The xMEX economics resembles the general ve3,3 model - with a few differences - allowing early unlock of xMEX with penalty and allowing xMEX as liquidity in pools (the 2nd was not the best decision)
- The proposal is only to create the strategic fund - which will be later used completely transparently. Every decision outside of the 10% operational costs will be put up for vote. Most probably some decisions from the 10% will be put up for vote as well - like features and grants for teams developing those.
- This is the start for the Great Decentralisation of xExchange
- The strategic fund requires oversight, but the community can grow, the team can explain its decisions, its proposals.
- Simply burning tokens does not really bring any value to the community, nor for the projects. Reinjecting into the economy the unclaimed rewards will have tons of benefits.
The basic idea again, only to reiterate, is to claim the unclaimed rewards and move those into a strategic fund, from which any allocation will go through voting. This proposal does not state anything about spending/using those funds, pretty similar as how Curve and Curve DAO does those things.
What are the exact wordings you would like to add to the proposal? @cottoneyejoe and everyone else who gave good feedback ? 
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I already said, it needs to be more detailed, the proposal.
It lacks many details.
Still not all of the questions i posted are answered and Claudiu doesn’t seem to comment anywhere
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Responding to the questions above, others will do as well. Having the conversation going and explaining every single aspect of this is important.
- Yes. It is meant forever, or until a new proposal overwrites this one. This does not pose any permanent tokenomics change, those are rewards which are in those contracts and can’t be claimed as users do not have enough energy. But the usage of these funds will go through Governance votes.
- Yes. Clear categorisation of what the funds can be used for, initial distribution chart can be added, as a guideline.
- No, the 714bn xMEX unlocked is not given to the company, but it is moved into the strategic fund, from where usage of it will be driven by governance proposals and votes.
- 10% is reserved for operational costs (development, maintanance, infrastructure, integrations, listings). Sums with <10% will be used to expand the ecosystem, this mean extra rewards for new farms, new growth engines, new dynamics. These will be presented as well, but if the allocation needs to happen in a few hours, you do not have time to vote it. An example → rewards for a new token pair, LP which has super good volumes/TVL and it is expanding the ecosystem. All other sums will be put up for votes. Even for sums <10%, most of those will be put up for those.
- It is a proposal only to move from undistributed rewards to a strategic fund, not how the fund is used, as usage will be supposed to votes.
- If something is not voted, the things go on as they were before. No changes.
- No. This is the first step of only moving the undistributed rewards to a strategic fund. Usage of the funds will go through proposals.
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Thank you. These are the answeres I wanted.
Now someone needs to write this into a proper proposal that can be voted on.
As of from me, no more open questions - the final proposal should address everything and anything to ensure it leaves no room for interpretation when being voted on through Governance
Thank you all for the feedback. It is very much appreciated and well though from my side. I tried to take into account all the messages and respond in this post for all the open questions remained from the initial proposal.
Allocation of undistributed rewards will not change the current MEX tokenomics
- This governance proposal doesn’t aim to bring any change to the current MEX tokenomics regarding the way tokens are distributed to liquidity providers and energy holders. The allocated rewards will always be subject to full distribution.
Use of funds is subject to governance voting
- I will state it again that this Strategic Fund and the funds available for it will be subject to community decision via governance voting. The purpose of these funds is not to be used right away in any case and in any short term plans, including the small spendings that could be done without a governance call. Our goal is to use these funds only for initiatives that will contribute to the growth of the xExchange ecosystem, always taking market conditions into account.
Specific timelines for use of funds and distribution
- The end goal for this governance proposal would be to create this Strategic Fund and have an initial funding for it. The scope for this fund and how the funds will be used is part of the ongoing governance proposals and will be aligned for a long term use of funds.
How funds could be allocated
- xExchange operational costs: moving to a more independent project, we would require to maintain and keep the current infrastructure involving backend services, databases for analytics and persisted data; integrations with other providers and analytics should be also covered as operational costs; listing costs
- Funds that can be allocated to specific initiatives and could be covered from the 10% threshold allocation: sponsoring the DeFi track of a hackathon, KoL activations and campaigns, brand awareness and marketing initiatives
- Funds that can be subject to governance call beyond 10% allocation: growth campaigns as the ones proposed: liquidity bridging, locking MEX tokens; trading competitions; development grants;
$200k selling pressure on current market conditions
- Specifically for this amount of MEX tokens, if all of them were to be sold immediately (which will not be the case), it would result in a roughly 5% price impact. To emphasize more on the selling pressure, the aim for the Strategic Fund is to distribute prizes, rewards or other forms of incentivization in the form of MEX tokens. Depending on the use of funds, and where it can be applicable, there is still the possibility to distribute them in a form of locked tokens
Use of funds and mitigation of sell pressure
- The purpose of the Strategic Fund is to increase the TVL, volumes and adoption for xExchange and the entire ecosystem. There are a few other options to consider for these undistributed rewards, including keeping them idle as before or burning them. These approaches would maintain the current status without the possibility of creating a positive flywheel for the growth of xExchange. Allocating these funds to a Strategic Fund and trying to grow the TVL and volumes would create even more benefits for all the parties involved in the xExchange ecosystem, mainly liquidity providers and energy holders. Increased TVL and volumes would mean more fees directly distributed to energy holders and more MEX burned through the buyback & burn mechanism. This mechanism already helps mitigate the potential sell pressure on MEX token, with the benefits far outpacing any downside.
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Awesome thanks for clearing it up.
I think (AT MOST!!) you can give it one more week if more questions arise, and if not you can create a real xEIP post (in the correct section this time 
) using the final-final-final version of the proposal that also addresses all questions.
And then you can start the voting process.
I really dont see any more possible questions now, seems everything is addresses (including from my side).
Don’t wait too long - we want to move fast now. We waited too long for years - let the community vote (takes a week anyways) and we will see what everyone says
I’m fine with the proposal other than the fact that xMEX in this fund should NOT unlock automatically.
- Paying the energy fee to unlock xMEX benefits existing holders: 50% of the fee is burned, reducing inflation, while the other 50% is redistributed to xMEX holders, creating a win-win for team & investors.
We’re in a DEX, the same rules apply to all. If you want to reduce the fees that’s fine, but it has to be done for everyone. I’d also suggest you first improve the value of xmex to ensure existing investors do not walk out and newcomers find value in locking their mex/ increasing energy.
Kimura said so himself
“Using xMEX as incentives would neither be attractive, productive or efficient as xMEX are locked for 4 years.” and he is 100% correct.
Xmex holders are benefiting from:
- swap fees (which are insignificant for all energy levels),
- metabonding, which was announced to being abandoned/phased out. (The team mentioned a replacement for it in March, we’re reaching November and still haven’t heard about it),
- launchpad tickets, which are also slowly being viewed as insignificant due to token price drop, far bellow ticket sale.
From what i sensed during the call, the intent is to also remove lps&farms created with xmex.
If the team is offered locked tokens (xmex) for operational costs and rewards, it will be one more incentive to find solutions and improve the value of xmex/energy, which is a win-win for the entire ecosystem.