[xEIP] Improving the xExchange Fees Collector Mechanism

xEIP Drafts
1

Summary

This proposal introduces a powerful upgrade to the xExchange protocol by restructuring how fees are routed and distributed. It includes three major improvements:

  1. Weekly conversion of collected fees into MEX

  2. Consolidated burn/distribution logic to reduce swap gas costs

  3. Automatic redistribution of unclaimed rewards after 4 weeks

Together, these changes will not only improve the MEX buy pressure but significantly improve gas efficiency and redistribute unclaimed rewards to active users incentivising regular participation.

Description

Current Mechanism

  • Each swap that currently deposits fees into the Fees Collector incurs a 0.3% swap fee:

    • 0.2% are going to liquidity providers

    • 0.1% Special Fee split as:

      • 0.05% swapped to MEX then burned (known as MEX buyback and burn)

      • 0.05% sent to the Fees Collector (claimable by XMEX holders based on energy)

    • Some liquidity pools do not deposit any fees into the Fees Collector, nor burn MEX. All their incurred fees (either 0.3% or 1%) go to the liquidity providers.

  • The current 0.05% MEX buyback and burn mechanism brings the following disadvantages:

    • it is executed with each swap - adds up to 2 costly operations that increase the transaction cost for every user which will also be unsustainable with the Supernova protocol upgrade

    • the 0.05% MEX buy is executed with no fees - limiting the potential value generated for liquidity providers

    • requires manual interaction to be enabled for each new pair - undermines the permissionless nature of the protocol and makes it impractical to activate across all newly created pools. This induces delays that usually translate into timeframes of fees not captured into fees collector.

  • Rewards in the Fees Collector are distributed on a weekly basis:

    • xMEX Holders have up to 4 weeks to claim each week’s rewards

    • unclaimed rewards older than 4 weeks become permanently inaccessible

  • Distribution of collected fees (such as wEGLD, USDC, XOXNO, HTM, etc.) is done by transferring the collected tokens directly. The maximum number of different tokens that can be transferred from the fees collector is restricted by protocol limits:

    • maximum 250 transfers per transaction => 250 / 4 weeks (users can claim max 4 weeks worth of independent rewards) = 62 tokens

    • maximum 62 tokens can be accepted by the Fees Collector at any point in time

  • Enrolling or removing pairs and tokens into Fees Collector requires manual xExchange team interaction for whitelisting which leads to fees that are not captured timely and high maintenance costs that may be spent better somewhere else.

Proposed Changes

1. Fee Routing and MEX Conversion

  • The 0.3% swap fee remains unchanged.

  • The entire 0.1% Special Fee now goes directly to the Fees Collector:

    • no immediate burn

    • no whitelisting needed for token or depositor

  • Weekly, all collected fees (such as wEGLD, USDC, XOXNO, HTM, etc.) will be:

    • Completely used to buy MEX via open market swaps with regular fees

    • 50% of all the swapped MEX is burned

    • 50% of all the swapped MEX is distributed in MEX to XMEX holders based on their energy levels. Thus, users will get a consolidated amount of MEX instead of small amounts of many different tokens.

This preserves the economic effect while reducing per-swap gas usage by ~50% and simplifying inter-contract logic. In effect, users will receive their XMEX token share unchanged, while all the other token rewards will be consolidated into MEX tokens.

The removal of the whitelists for the fee deposits will allow more pairs to deposit tokens (also liquidity pools with 1% fees) into the fees collector simultaneously since the rewards distribution will be done only in MEX and XMEX, thus no longer reaching protocol limits.

Furthermore, the removal of pair whitelisting will also enable the possibility to route swap fees to the fees collector directly from pair creation without other manual interaction.

2. Unclaimed Rewards Redistribution

  • Any unclaimed Fees Collector rewards older than 4 weeks will now be automatically redistributed to XMEX holders who continue to claim rewards regularly.

  • This creates a positive feedback loop where inactive claimers gradually forfeit their share to active participants, reinforcing engagement and fairness.

Special One-Time Redistribution Event

  • The introduction of regular unclaimed rewards redistribution will make the first redistribution BIG. This special event will tap into all the unclaimed rewards accumulated before the fees collector upgrade and it will be:

    • Distributed with the first week post-upgrade

    • This large portion of redistributed unclaimed rewards will be available only to XMEX holders who claim their rewards during the first 4 weeks after smart contract upgrade

  • This first redistribution will be significantly larger than the next regular weekly redistributions, making it a special opportunity for proactive community members.

  • All users are especially encouraged to claim within the first 4 weeks after the upgrade to benefit from this special event.

  • All the rewards unclaimed during these 4 weeks will be redistributed along with the subsequent weekly redistributions.

Benefits

By converting all collected fees into MEX on a weekly basis, this proposal introduces powerful and sustained market demand for MEX, which has multiple positive effects on the token’s value, utility, and long-term sustainability:

1. Create Constant Buy Pressure

  • Every week, a portion of the trading fees (collected in EGLD, USDC, XOXNO, HTM, etc.) will be automatically converted into MEX, effectively increasing a perpetual buyback mechanism.

  • This recurring buy activity on the open market creates a positive price effect for MEX token.

2. Enable Synchronized Burn Amplification

  • Once the MEX conversion is complete, 50% is burned. This leads to:

    • Reduced total supply

    • Accelerated deflationary pressure on MEX

  • Unlike the current per-swap burns (which are smaller and fragmented), aggregated weekly burns are larger and more visible, which can improve market perception.

3. Increase swap efficiency

  • By eliminating the buyback and burn MEX currently happening with each Swap we achieve an efficient decoupled mechanism between depositing fees and swapping/burning them

  • The gas cost for each Swap transaction will be reduced by more than 50%

  • Increases the throughput on the number of swaps performed in a block and helps integrators to scale their solutions better

4. Open Deposits of Fees

  • The fees collector will accept any deposited token without whitelisting the depositor or the token itself

  • As long as there’s a swap route available, all the deposited tokens will be swapped to MEX and distributed to the XMEX holders

  • This will allow the extension of the number of pairs or sources that deposit tokens into fees collector

5. Reinforce the Demand-Utility Flywheel

  • Projects and users will know that holding MEX directly contributes to:

    • Protocol revenue sharing (via XMEX rewards)

    • Deflation (via the burn)

    • Governance (via energy and XMEX)

  • This builds a strong feedback loop: more swaps → more fees → more MEX bought → more MEX burned and rewarded → more demand for XMEX/MEX.

6. Neutralize Inflation Over Time

  • As emissions decrease over the years (per the tokenomics schedule), the market buy + burn mechanism becomes the dominant force driving MEX scarcity.

  • Combined with the capped max supply, this allows the ecosystem to transition smoothly from emission-based incentives to fee-based value accrual.

These mechanisms collectively enhance MEX’s attractiveness as a utility and governance token, increase its scarcity, and encourage long-term holding and participation.

Along the economic effects, it’s important to note the other upsides as well:

  • Simplified Architecture: Removes buyback & burn MEX calls done inside swap operations

  • Same Burn/Reward Economics: Weekly burn and distribution remains 1:1

  • Reclaims Locked Value: Recovers and recirculates dormant unclaimed rewards

  • ~50% Gas Reduction on All Swaps: More efficient transactions for all users

  • Encourages Active Participation: Ongoing and one-time incentives for engagement

Implementation

Smart contracts will be upgraded and adjusted to allow the following:

  • All allocated rewards will remain claimable to users for 4 weeks

  • Each week, all newly deposited fees will be swapped to MEX and allocated to the next week’s rewards

  • Each week, all unclaimed rewards older than 4 weeks will be swapped to MEX and redistributed to the next week’s rewards

In order to preserve already allocated rewards to users and avoid double burning of existent unclaimed rewards, a staggered setup will be set in place.

For the first 4 weeks after the upgrade, the following will happen:

  • All currently allocated rewards (not swapped to MEX) before fees collector upgrade will be preserved and can be claimed by users anytime within 4 weeks after the upgrade

  • Existent pairs will continue to burn 50% of Special fees and deposit the other 50% in fees collector

  • Each week, newly deposited fees in fees collector will be swapped to MEX then distributed to next week’s rewards

  • Each week, all undistributed non-MEX rewards older than 4 weeks will be swapped to MEX and redistributed towards next week’s rewards

  • Each week, all undistributed MEX rewards older than 4 weeks will be redistributed directly towards next week’s rewards

After 4 weeks, the following changes will come into effect:

  • Pairs will stop to buyback and burn MEX and they will be instructed to route 100% of Special Fees to the Fees Collector

  • Each week, newly deposited non-MEX fees in fees collector will be swapped to MEX, then the fees collector will burn 50% of the swapped amount while the other 50% will be distributed to next week’s rewards

    • Swaps will be performed in small batches distributed over time to avoid sudden and manipulable pressures and large price impacts

  • Each week, unclaimed rewards older than 4 weeks (at this point, all unclaimed rewards are only MEX) will be redistributed directly towards next week’s rewards

  • Additional pairs besides the already depositing ones will be instructed to forward their Special fees to fees collector

  • Future newly created pairs will automatically be instructed to forward their Special fees to fees collector

Questions and answers

  • Will I get less rewards?

    • No. In fact, you should start getting more. The fees collector will allow more pairs to deposit fees, which leads to more rewards. Additionally, if you claim regularly, you will also benefit from the unclaimed rewards that other users are not claiming in due time.

  • If I get only MEX and XMEX in the future, isn’t it worth less?

    • The value you receive should remain comparable (or more). All the deposited fees in other tokens than MEX will be swapped to MEX and the final total amount is distributed to XMEX holders. This frequent positive pressure towards MEX should also improve the price trend for MEX.

  • Do I need to migrate something?

    • No. Everything will transition seamlessly for you and will see no change required in your claiming activity. You will only observe that, going forward, you no longer receive a lot of different tokens, only MEX and XMEX. The amounts of MEX rewards you get will be significantly more than before while the overall value should generally be bigger than before.

  • If I haven’t claimed before the contract was upgraded, will I lose any of the rewards of the past 4 weeks?

    • No. Already allocated rewards are still kept untouched for a period of maximum 4 weeks.

  • Does this have any other effects than just weekly rewards?

    • Yes. xExchange’s technical protocol implementation will become much leaner and efficient. In effect, each swap transaction will cost ~50% less gas which in turn allows for more swaps per block.

  • Why does the 50% MEX burn move from pairs to fees collector? Will it burn more?

    • Moving the burn component from the pairs into the fees collector allows each swap to be executed more efficiently, with less gas and without any other dependency. Thus, the swap operation will remain atomic. The burned amounts will be identical, the only difference will be that instead of many smaller burns paid by the users doing swaps, we will have larger but fewer burns paid by the xExchange team.

  • Who is doing the redistribution of unclaimed rewards and swapping of fees to MEX?

    • The xExchange team will execute these operations each week.

  • Will the swaps to MEX affect the market?

    • The swaps of deposited fees to MEX will be executed in small batches spread over the duration of the week. This is intended to avoid manipulation and significant sudden price impacts.

  • Are the swaps to MEX executed at special rates than regular swaps?

    • No. All the deposited fees will be swapped via regular swaps, no special treatment. This means that 100% of the Special fees for these swaps will return into the fees collector while the liquidity providers will benefit fully from the other swap fees. This should also be more beneficial for the liquidity providers since currently, the MEX buyback and burn mechanism in pairs is buying MEX at no fees.

Voting Options

  • :white_check_mark: Yes — Approve the proposed changes to fee routing, MEX conversion and unclaimed rewards redistribution

  • :cross_mark: No — Maintain the current system with per-swap burns and non-reclaimable expired rewards

Conclusion

This proposal is a significant technical and economic improvement to the xExchange protocol. It increases efficiency, reinforces engagement, and reactivates previously locked value while maintaining fairness and the original design’s value accrual mechanisms. The one-time redistribution event alone is worth significant community attention, and ongoing upgrades will benefit all XMEX holders over time.

13 Likes
2

YES!

I beleive that will be better mecanism for $Mex price

2 Likes
3

Great proposal!
Much better for all farmers, xMex holders and for MEX token and xExchange.
Also a wise decision regarding the redistribution of unclaimed rewards.
Let’s go!

1 Like
4

GM,
The current proposal to improve the fee collection mechanism has undeniable positive aspects, but it requires a more holistic approach given the token’s history.

Positive Aspects of the Proposal

  1. Consolidation of MEX Purchases: Weekly conversion of all fees into MEX will create consistent and visible buying pressure.

  2. Technical Efficiency: Reducing gas costs by 50% improves the user experience.

  3. Redistribution of Unclaimed Rewards: An excellent incentive mechanism for active participation.

Improvement Recommendations

  1. More Aggressive Burn Mechanism

    Considering MEX’s history of massive dilution, I recommend temporarily increasing the burn ratio to 70% burn / 30% distribution for the first 12 months, then gradually returning to the 50/50 ratio. This more aggressive approach could help offset past inflation.

  2. Minimum Conversion Threshold

    Implement a weekly minimum threshold (e.g., $10,000) to trigger conversions. Below this threshold, fees would accumulate until the required amount is reached. This would prevent excessively small conversions that would have negligible market impact.

  3. “Circuit Breaker” Mechanism

    Integrate protection against excessive market impact: if weekly purchases exceed 5% of the 30-day average daily volume, spread the purchases over multiple days to minimize volatility spikes.

  4. Enhanced Transparency

    Publish a detailed weekly report including:

  • Exact amount of fees collected by token type

  • Execution price of swaps into MEX

  • Price impact and volume generated

  • Progress of cumulative burn

This transparency is crucial given the community’s historical distrust following the token’s underwhelming performance.

I hope this feedback proves useful :white_check_mark:

4 Likes
5

Any existing pair on xExchange should have some effect on MEX through swap volume, without requiring manual selection.

Converting rewards to MEX is a good idea, as it would in fact allow users to profit from any listed token, regardless of whether they belong to small or large LPs/volumes.

As a side effect, TOKEN/MEX pairs could also gain in popularity, while reinforcing the utility of having a pool to collect these rewards

3 Likes
6

Thanks for the suggestions. They are appreciated and very interesting.

I will try to say a few words on each of the mentioned point:

  1. That’s powerful and would be nice, but will have to be passed through a separate governance proposal since it messes with the rewards. It can be argued that if we would be to enroll more pairs and tokens into the fees collector with this fees collector upgrade, we may be able to sustain an increased burn rate for a while without seeing much impact in user rewards.
    I’m really curious what would be the feeling of the community here though, with this increased burn rate.
  2. The exchanging service we prepared has such limits designed where we will only exchange what’s economically feasible. If the gas costs more than the swapped value it’s clearly not worth it. The thresholds are low at the moment because the swap fees aren’t that expensive and we’ll probably adjust them in time if we see the need. One important aspect here is that whatever is not swapped in a week (for any reason) is accumulated and these values rollover for the next week’s possible rewards, so they never get lost. In the current mainnet version, rewards were becoming unclaimable after 4 weeks and it was a waste.
  3. This is an interesting threshold and a nice smoothing mechanism. We’ll have to do some math here. I’m not disregarding the proposal, it’s just that for the moment I’m not convinced the 30 days average will ever be hit for fees collector’s case, but might indeed cover some very extreme cases (catastrophic even). My quick reasoning is based upon the idea that the amounts swapped by the fees collector will always be directly dependent on the volume of swaps performed during the week since the collected fees value represents only 0.05% of the swapped volume, so it would need huge consistent moves in one direction to pass the 5% volume over 4 weeks.
    From technical point of view, the exchanging service designed for the fees collector already spreads the swaps in smaller batches spread over multiple days to minimize spikes and manipulation. It already implements some thresholds similar to this one and, if needed, can easily accommodate such a breaker or any similar rules. So it can be done.
  4. Since on-chain activity is public, everything is already transparent in my opinion and anyone is free (and encouraged) do this math. Indeed, it would be nice to have this analytics report each week and we’ll probably try to automate such a flow. We’ll have to squeeze it somewhere between our more burning tasks.
1 Like
7

Yes — Approve the proposed changes to fee routing, MEX conversion and unclaimed rewards redistribution

8

Proposal is nice!! But I want LPs must be incentivize more by allocating 25bps to them, as 20bps is not lucrative for non-aligned xExchange LPs

9

100% agreed on 4th point. There must be transparency (though power users can track on explorer) as it is manually executed.

1 Like
10

YES YES YES,

if i have some suggestions :

New Incentivized Pairs

To attract external liquidity and broader engagement, we recommend adding new incentivized pairs with competitive APYs (temporary boosted):

  • MEX/ETH

  • MEX/BTC

  • MEX/SOLor SUI

These would:

  • Help bring in new capital

  • Improve trading options on xExchange

  • Expand MEX’s utility and exposure

And maybe it’s time to list $MEX on biggest CEXs.

Thanks

11

YES - I agree with the proposal

12

YES

Keep going with ways to improve MEX value.

That’s the way.

1 Like
13

Please remove the four week restriction on fee collection. it alienates small holder like myself that would lose money trying to claim rewards, rewards are less than the transaction fees.

and what participation are you encouraging, no one likes “make work”, pointless tasks just to show you busy.

1 Like