Summary
This proposal aims to establish a Strategic Fund using approximately 714 billion unclaimed xMEX rewards (valued at ~$2.3 million USD) from xExchange’s farming system. All future unclaimed rewards, which currently become inaccessible after four weeks, would also flow continuously into the fund, creating a constant resource for ecosystem development. The fund will receive these rewards penalty-free, ensuring full value retention instead of the usual 80% unlock penalty.
The Strategic Fund will operate under a governance structure where allocations exceeding 10% of the fund require community approval through voting, while smaller amounts can be managed directly by the team for flexibility. The fund’s primary purposes include supporting developer grants, trading competitions, liquidity campaigns, marketing initiatives, and other ecosystem growth activities. All fund activities will be transparent, with its public address published in the xExchange documentation.
Detailed Description
A strategic fund is created, using unclaimed xMEX rewards. First, let’s clarify unclaimed rewards to have a better understanding of the rest of the proposal.
Every week, farmers on xExchange receive boosted rewards. If a farmer fails to claim these rewards within four weeks, they become unclaimable. These are referred to as unclaimed xMEX, originating from unclaimed boosted rewards.
Unclaimed rewards come from these sources:
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Every farmer is “allocated” part of the week’s boosted rewards. Even farmers who do not own any xMEX get some boosted rewards “allocated” towards them. - However, they cannot claim them, because they do not have any Energy. Therefore, all boosted rewards allocated to these farmers but not claimed count as unclaimed rewards.
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Each farmer that has energy gets an additional share of boosted rewards allocated based on their share of energy from the total energy of all the farmers participating in the farm. Though, some of the farmers might have more energy than necessary for their farm position, meaning that a part of these additional allocated boosted rewards won’t be claimed because their farm position is too small for the amount of boosted rewards they could be entitled to.
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Boosted rewards that eligible farmers fail to claim within the four-week window also count as unclaimed rewards.
In other words, xExchange allocates the full boosted rewards to all farmers. However, only those who own enough xMEX to boost their farm position to 100% can claim 100% of their potential boosted rewards.
If you do not own enough xMEX (and therefore lack sufficient Energy), you cannot claim 100% of your boosted rewards. Similarly, if you own a lot of xMEX but your position is too small, you’ll only claim what that position can reward.
For example, if your position is only 60% boosted, you cannot claim the remaining 40%. Similarly, if your energy could fully boost a position 20% larger than what you own, you cannot claim this additional 20% without increasing the position.
These unclaimed portions count as unclaimed rewards.
With this proposal, all the unclaimed rewards are allocated to the strategic fund, if it passes the governance vote.
As of October 9, 2024, there are a total of 714 billion unclaimed xMEX rewards, valued at approximately 2.3 million USD.
xExchange is fundamentally an open and decentralized exchange protocol, operating in a transparent way through the power of blockchain technology. We are outlining the mechanism to calculate not only the undistributed rewards as of this moment but also all future rewards eligible for collection. Each farm smart contract utilizes a series of queryable storage structures that together provide the information needed to determine undistributed rewards:
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getRemainingBoostedRewardsToDistribute: based on a week number, it provides information about uncollected undistributed rewards for that specific week
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getUndistributedBoostedRewards: it provides information about the collected undistributed rewards that are subject to this governance proposal
To emphasize our belief in decentralized and transparent blockchain technology, we will provide the public address of the Strategic Fund in the xExchange Documentation at https://docs.xexchange.com/ once the fund has been created. After consideration, the address may also be added directly to the xExchange dApp, either in the footer or in the governance section. This will be decided by the team. The documentation addition however is confirmed.
If this proposal passes, all future unclaimed rewards will be added to the Strategic Fund. Every week, all xMEX rewards older than 4 weeks are left unclaimed. These unclaimed rewards would all flow into the fund creating a dynamic inflow every week.
All funds entering the Strategic Fund will be unlocked - at no penalty. This means that the initial allocation of all previously unclaimed xMEX will be unlocked without penalty. Similarly, all future weekly inflows will also be unlocked without penalty and added to the fund (xMEX converted to MEX with a 0% fee).
This is necessary to make the fund effective, ensuring it has access to the full value of the unclaimed rewards. The current size of the fund, based on the total value of unclaimed xMEX rewards, is approximately 2.3 million USD. If the fund does not bypass the 80% unlock penalty for fully locked xMEX, it would only hold approximately 460,000 USD worth of assets instead of 2.3 million USD. All future inflow would also be reduced by 80%. Therefore, this proposal aims to bypass the unlock penalty for the Strategic Fund.
Although the fund’s assets would primarily constitute MEX, they may still be distributed in xMEX depending on the need. If the fund is used to incentivize activities like liquidity provision or marketing, the MEX may ultimately be distributed as xMEX (for example, as prizes in campaigns) to avoid any negative effects over the MEX economics. Future proposals involving the Strategic Fund will provide case by case details on this matter.
Removing sums exceeding 10% of the fund requires a governance proposal outlining the intended use and approval through voting. For example, if 80 billion MEX were to be removed from the fund, which currently holds 700 billion MEX, a governance proposal and vote would be required.
The team can independently allocate and remove sums up to 10% of the fund’s current holdings without requiring a governance proposal and vote. The 10% threshold also allows for rapid reaction times when necessary, providing much-needed flexibility in the opportunistic and fast-paced DeFi space.
Additionally, 10% of the initial funds and the upcoming claims will be reserved for covering ongoing operational costs and ensure the continued existence of xExchange.
All allocations exceeding 10% require a governance proposal, a subsequent vote, and approval to be successfully implemented.
Potential use cases for the fund can include:
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Grants - Part of the fund can be allocated for developer grants, to incentivize building on top of xExchange. Handing out grants and having more builders build on top of xExchange can lead to increased awareness in xExchange and a growth of the userbase but also new innovative solutions in regards to capital efficiency and liquidity provision.
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Campaigns - Part of the fund may be used for various campaigns, such as:
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Trading competitions - to increase awareness and volume
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Liquidity Campaigns - to promote BTC/ETH/stablecoin liquidity provision, resulting in higher TVL, more tradable liquidity, and higher volumes
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Awareness and Marketing campaigns - such as “Energy League Awareness Campaigns” with tasks revolving around xExchange, aiming to attract new users, new liquidity, and reach a wider audience.
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Other interesting use cases will be discussed and determined (potentially including hackathons, grants, campaigns, incentives, liquidity, marketing, bridging, trading, development, features, and more).
All these use cases have yet to be fully defined in proper proposals. For now, these serve as drafts for the Strategic Fund’s core uses.
Detailed proposals for such campaigns, including a governance vote if necessary, will be presented once ready. Once the Strategic Fund is approved and established, the team can begin working on these campaigns immediately. The community can naturally discuss any proposed changes to the Strategic Fund before voting on them on the governance page.
The fund will be established as a multisig wallet secured by xExchange, similar to how the MultiversX Foundation secures its wallets.
Upon approval through governance voting, the team will initiate all necessary steps to create the fund, including the development of smart contracts and redirection of unclaimed rewards. All necessary changes to smart contracts and the redirection of unclaimed farm rewards to the Strategic Fund will be initiated.
The allocation of an initial portion ($200,000 in MEX tokens) from the Strategic Fund will also be used to support a series of campaigns aimed at driving further growth and expansion.
In case the proposal gets rejected, nothing will happen. The unclaimed xMEX will remain inaccessible as they are at the moment.
If we were to instead, propose burning those unclaimed xMEX, it would have no positive impact on MEX and add no value to xMEX holders. Creating a Strategic Fund instead will give more power to xMEX holders and open up monetary possibilities through governance proposals.
The Strategic Fund will exist, if approved, as laid out in this proposal, until a future approved proposal overwrites the rules of the existing Strategic Fund.
There is no specific timeline for the use of the funds. The Strategic Fund will act as a perpetual wallet, holding funds to be used for various initiatives, outlined in future proposals.
Frequently Asked Questions
What happens to unclaimed rewards currently?
Currently, unclaimed rewards become inaccessible after four weeks. These include rewards allocated to farmers without xMEX (thus no Energy), rewards allocated to farmers with too much xMEX, rewards not claimed within the four-week window, and partial rewards that couldn’t be claimed due to insufficient Energy.
Why do we need this fund instead of just burning the tokens?
Creating a Strategic Fund instead of burning tokens provides more value because:
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Burning would have no positive impact on MEX and add no value to xMEX holders
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The Strategic Fund gives more power to xMEX holders
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It opens up monetary possibilities through governance proposals for various initiatives like grants, campaigns, and development that should bring a positive effect on MEX economics
Can I still claim my old rewards through this fund?
No. Unclaimed rewards outside the 4 week claim window are no longer accessible to farmers.
How often will the fund receive new unclaimed rewards?
The fund will receive unclaimed rewards continuously, with a dynamic inflow every week. These are rewards that become unclaimed after the four-week claiming window expires.
How can the community track the fund’s usage?
The community can track the fund through:
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The public address that will be published in the xExchange Documentation (docs.xexchange.com)
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Possibly through the xExchange dApp (either in the footer or governance section)
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Through queryable storage structures in the farm smart contracts
Can the community suggest new use cases for the fund?
Yes! The community can discuss any proposed changes to the Strategic Fund before voting on them on the governance page. All use cases are yet to be fully defined in proper proposals.
How will the fund’s activities be coordinated with other xExchange development initiatives?
The fund’s activities will be coordinated through:
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Governance proposals for amounts exceeding 10% of the fund
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Team management for amounts up to 10% of the fund
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The fund will be established as a multisig wallet secured by xExchange
