GMX Ecosystem: An Overview of Active Projects
Key points: GMX had a great 2022 and consistently delivered over 20% APR in ETH. Let’s take a look at all featured projects. They can be divided into five categories: vaults and lending, social trading, options, etc. GMX will be a leader in the story about how its ecosystem projects will thrive. Composability is the key feature of DeFi. This allows programmers to quickly create new projects by merging existing protocols. GMX is a current protocol that has a phenomenal 2022. GLP, the LP token of GMX, has consistently produced more than 20% returns in ETH, resulting in the widely accepted “real return” theory. As a result of developers creating new GMX projects, there are now 28. This page will describe each project in detail and assess the most important. They can be divided into five categories: options, lending, Treasury, social trading, options and other. Vaults Treasurys is the largest category. There are 13 projects that range from basic auto-compounding to more complex structured financial products to increase GLP returns. Compound interest was considered the eighth wonder of the universe by Einstein when auto-compounding was first introduced. If you’re like me, and forget to put your GLP proceeds into the GLP pool every month, you’re missing out on some great money. Roll interest means that $100 you invested at the beginning of a year will only turn to $120 at the end. This assumes a return of 20%. If you run two days per day and put the proceeds into the GLP pool at the end of each year, your $100 will turn into $122.14. The rewards are even greater when you consider the multiplier points boost. GLP’s unique multiplier points feature is designed to reward long-term users. GLP holders can enjoy automatic compounding with a number of products so that they don’t miss potential compounding benefits. Abracadabra Abracadabra has a TVL worth $15.47 million and is the largest GLP-rolling pool. To obtain magicGLP, users deposit GLP. MagicGLP automatically reinvests the earned earnings into the GLP pool twice daily to maximize returns. Like other vault tokens magicGLP will increase over time. This will cause the ratio of magicGLP and GLP to increase. Abracadabra charges a fee of 1% on the proceeds of the service. There are no entry/exit fees. This is the lowest rate in the automatic roll pool. Plutus Plutus has a TVL value of $7.86million and is the second largest rolling pool. Users can deposit GLP to receive plvGLP. It is automatically compounded every eight hours, and there is a 2% exit fee. There is also a 10% vault fee. PlvGLP holders get a 15% PLS liquidity miner reward, which is equivalent to 2.25million PLS, over 2 years. The first few months are the most rewarding, as the rewards are the highest. PLS can be locked to receive a portion of the Plutus protocol’s revenue and have control over the Plutus veTokens. Plutus has plvGLP and a number of other governance rights aggregation products. Yield Yak Yield Yank is a GLP farm located on Avax, with a TVL value of $7.31million. Abracadabra and Plutus are similar. Yield Yak automatically stakes AVAX Rewards into GLP and earns the esGMX for higher rewards. Yield Yak charges a 9.5% management fee and no exit or entry fees. Beefy Finance Beefy Finance’s TVL is $1.36 Million. Its treasury is rolled over at least once per day and rolls over each time a deposit has been made. Interest rate operations are performed between 10-20 times per day. It also charges a management charge of 9.5% of proceeds. There are no entry/exit fees. This is exactly the same as Yield Yak. Redacted Redacted offers a variety to the vault offerings. Redacted releases Pirex to provide liquidity for pledged GMX or GLP on the basis a compound interest. There are two modes: easy mode and standard. The Easy mode is identical to the other rolling pools. They also have a GMX vault. To get apxGMX and apxGLP, users can deposit GMX/GLP. Holders of Vault Tokens are rewarded with a 1% withdrawal fee by Easy Mode. It also charges 10% as a platform fee, and 0.3% as reward fees. The standard model offers liquidity for GMX or GLP in pledge. To get pxGMX or pxGLP, users must deposit GMX or GLP. GLP and GMX deposits are the same as natively staked on GMX. The difference is that pxGMX/pxGLP can be traded at any time. pxGMX also has pools on Camelot and Arbitrum, and Trader Joe and Avax. The esGMX obtained by staking through GMX protocol are not transferable. The esGMX acquired through Pirex is marked as “pxGMX” and can be transferred. Earned multiplier points cannot be lost. Users can sell pxGMX on open markets, but their underlying GMX is not affected. Users will not be penalized if they do not have multiplier points or sell pledged GMX. Standard model users pay a 1% exchange fee, and 10% of the proceeds. Pirex’s GMX vault, which is an innovative innovation, charges a 1% exchange fee and 10% of proceeds. The GLP vault, however, is similar to other compound-interest vaults, but with a higher fee. The TVL for Pirex’s GMX vault is $404,555, while it is only $38,557 for the GLP vault. Mugen Finance Mugen Finance has a GLP vault TVL of $3.23 million. It claims to be a multichain aggregator that generates yield by using sustainable protocol revenue. Mugen currently supports only one protocol on GMX. Mugen’s mechanics differ from the GLP vaults discussed above. MGN is the protocol token. Mugen vaults are used to mint MGN. Users can also deposit USDC in Mugen vaults, which Mugen then uses to purchase GLP. To receive the GLP income, users pledge MGN. What is the difference between buying MGN or buying GLP directly? MGN buying is 3x more expensive. When you buy MGN, the Mugen team will subtract 10% from your GLP returns. You can redeem GLP assets from the GLP pool but you cannot withdraw assets from Mugen vaults. MGN can only be sold on the open market. The current market price for MGN is $81, with a corresponding Treasury value of $126. This means that early users must accept a 35% loss if they want to exit. Mugen has a special design that “prevents users from opening and unstaking prior to and after reward distribution.” This design allows for the agreement to defer payment GLP rewards for a period of 30 days. If Mugen receives 100 ETH today, each Mugen staker will be paid 1/30 of the 100 ETH they receive every day for the next 30 Days. You will lose any remaining rewards if you withdraw too early. Why would anyone buy MGN then? They can also benefit from the loss early users. The price of MGN is much lower than its actual value because early users cannot sell it on the open market. You can purchase $126 worth GLP for $81 if you buy MGN today. Only 84% of MGN can be staked. Stakers are thus rewarded more as 16% MGN holders are willing give up their GLP yield (though it is important to note that GLP is automatically staked). Smart contract risk is increased by using any rolling pool. Users believed that smart contracts should automatically distribute income. Mugen had previously stopped income distribution without explaining to users. The project uses a community-developed frontend to allow users to interact with its contracts. Although the project has its own website, its functionality is limited. Advanced strategy Many projects have developed more complicated GLP strategies than the basic rolling interest. The Delta Neutral strategy is the most popular. GLP is made up of 50% stablecoins, 50% BTC+ETH, and GLP holders have long positions in crypto with 0.5x leverage. They are therefore exposed to price changes in BTC/ETH and the GLP pool. There is also slight exposure to smaller coins such as UNI and LINK. In a bull market, that’s fine. However, bear markets can be problematic. To hedge these risks, Delta Neutral vaults were introduced to the market. The Risk On Vault, Rage Trade Rage Trade’s Delta Neutral vault, is the most well-known. Rage Trade’s Risk On Vault deposits USDC into the GLP pool and allows users to establish short positions in ETH or BTC via flash loans. We have previously explained the mechanics behind Rage Trade. Rage Trade automatically hedges long exposure while you have GLP. Rage Trade also offers a Risk Off Vault that can be used in conjunction with the Risk On Vault. Risk Off Vault lends USDC for Risk On Vault to open a short-term position. Risk Off Vault receives Aave lending rates as well as a portion the GLP rewards that Risk On Vault receives. The TVL for Risk On Vault stands at $7,330,180 while the TVL is for Risk Off Vault at $3,799 645. The TVL for both is $11.13 Million.
Neutra Finance Neutra Finance realized Delta Neutral by using a different approach. It opened a leveraged short position on GMX to hedge its long exposures to GLP. Through a unique rebalancing process, it maintains Delta Neutral. It currently has a TVL value of $1.16million. Source: Neutra Finance Umami. Umami’s Delta neutral strategy, similar to Neutra, also includes hedging trades in GMX. To minimize hedge costs, it also uses an internal neting strategy that redistributes Delta between Umami vaults. The algorithmic rebalancing of the hedged amount takes place periodically. Umami originally planned to launch a beta program in March. Its CEO ran away and disposed of all his tokens. The rest of the team decided that Umami would continue to be developed as a DAO. However, this unfortunate interruption could lead to product delays. Vovo Finance Vovo Finance offers another interesting Delta Neutral solution. Vovo allows users the ability to hedge manually rather than automatically. The treasury receives 10x leveraged positions on GMX every week and collects the staked GLP proceeds each week. Users can choose their preferred asset and direction, including ETH up, ETH lower, BTC up, and BTC lower. After one week, the vault closes the leveraged position and reinvests any profits to buy more GLP. Vovo has a total TVL of $66,013 across all four vaults. GMD GMD offers a variant on the Delta Neutral strategy. GMD allows users to hedge against price movements in GLP’s underlying assets. Instead of having to directly hedge against them, GMD allows users exposure to one asset and not all GLP assets. GMD can be created with three vaults. GLP is a combination of BTC and ETH. However, GMD allows users to have a GLP that only includes one of BTC or ETH. Protocol revenue is also used to protect users against trader PnL. As I have already mentioned, most GMX traders lose their money. GMD’s GLP TVL stands at $4.27 million. Olive Olive has added financial alchemy and a higher level of competition. It offers principal protection vaults that increase yields while reducing principal risk. This is done by combining structured and composable products. Olive trades weekly returns on GLPs deposited through various complex strategies. It trades weekly and charges a prorated 2% management fee. If the period is positive, a 10% performance fee. Its TVL is currently $299,000. Jones DAO Jones DAO is the last player in GMX wars, with a TVL at $10.75 million. This leveraged interest rate pool consists of two vaults: a GLP vault and a USDC vault. We have already discussed the mechanism in detail in our previous article. The Jones DAO GLP vault purchases GLP and mints JGLP. Next, it borrows USDC from its USDC vault to purchase more GLP. Market trends determine the amount of leverage. USDC vault depositors earn interest and a part of GLP rewards as lenders. jGLP can also be used to provide liquidity across the Arbitrum ecosystem and on the Jones DAO platform. Users can, for example, provide liquidity in the jGLP/USDC pool on Camelot. GMX War: The GMX War is underway, and vault players built on top GMX are competing for more GLP shares. Basic compounding features are attractive, but further innovations could improve GLP yields. Treasury products are a strong investment. GLP AUM currently stands at $443 million. However, treasury products together represent only a small portion (15%) of total GLP. GLP is currently sitting in holder wallets and waiting to be captured from vault providers. GLP has great potential to be a revenue-generating product. Anchor (the one that is on Terra) promised 20% returns from the Ponzi scheme and managed to amass $17 billion in AUM. GLP has outperformed the benchmark of 20%, and its gains are derived from real transaction fees. There is a significant gap between $443 million to $17 billion. A better vault product would also help attract more people to mint GLP. There is one caveat. We are at the bottom of a crypto-cycle. We’re at all-time highs, and Delta Neutral has been a great strategy for the GLP over this past year. The downside effect of going up is that all the gains from price increases are covered by the strategy. Lending Vault products aside, lending is the second largest ecosystem of GMX. Users can borrow against their GLP assets to increase their yield farming leverage. Jones DAO Vault, a yield product that includes built-in lending, is also available. Vesta, Sentiment and Rodeo are the main players in this lending space. Tender.fi, Delta Prime, Yeti, Moremoney on Avax and Delta Prime are also key players. All allow users to borrow against their GLP for collateral. Sentiment allows you to use GMX as collateral. Rodeo also has its own GLP rolling-interest vault. Options Perp trading on GMX works well with options exchanges. Lyra Lyra can be used as a DEX to trade options. The protocol is designed so that liquidity providers are not exposed to Delta Neutral. This is done by opening long or small positions on GMX and Synthetix. Dopex Dopex, also an option DEX that integrates GMX in 2 ways, is also available. The GMX traders are protected by the Atlantic Perp Protection. When a trade is near liquidation, the stablecoin collateral to the option on Dopex is automatically transferred from the Dopex contract into the trader’s GMX account. Dopex allows users to hedge against GLP price fluctuations. Settlement benefits will be offered to users whose GLP price falls below the option strike price. Users can keep their GLP positions and still receive the price rise benefits if GLP prices rise. Social Trading Social Trading gained momentum with the recent launch of Perpy and STFX. It allows users copy trades from highly profitable traders. STFX The full title of STFX can be referred to as Single Trade Finance Exchange. It offers short-term, non custodial, active asset manager vaults that are dedicated to one transaction. STFX traders use GMX for execution of their trades. The platform charges a flat 20% performance fee. Perpy Finance Perpy Finance is conceptually identical to STFX, but has a different setup. Perpy says the Perpy Vault is continuous and charges variable fees. There is no fundraising period. Privacy is protected. Puppet Finance Puppet Finance will soon be a copy trading feature for GMX Blueberry Club. Based on their intent, users can deposit funds into different pools. You can deposit USDC or ETH into an ETH short pool, or deposit USDC in an ETH long pool. Puppet tracks each trader’s performance and allows users to match their trades. This product is still under development. More details will be available when the GMX synthetics product launches. Others DappsOS DappOS, an operating protocol that aims to lower barriers to cryptographic infrastructure interaction, is also available. DappsOS is a way to access GMX via the BSC wallet. It’s quite cool and will attract more users to GMX. Demex Demex connects GLP to Cosmos via smart contracts and offers automatic compound interest services. This allows Cosmos users to access GMX, and earn income from GLP. MUX Renamed MCDEX, MUX can be used as an independent transaction aggregator and perp DEX. MUX perpDEX is the same as GMX. It also allows MUX traders open positions directly on GMX, for lower fees. All projects benefit from the GMX ecosystem’s synergy. A Vault product, for example, could be used with a lending protocol to allow degens to increase their GLP farms’ leverage. GMX can increase its trading volume by using social trading products. This will also help to generate higher returns for GLP through higher fees. The Arbitrum airdrop could occur at any time. We expect that most of the airdrop proceeds will be reinvested in the Arbitrum project. The GMX ecosystem is the most active on Arbitrum at the moment. Arbitrum will provide airdrops to one or more of these projects. DeFi will also benefit from the “real yield” narrative, despite regulatory risks. Revenue-sharing protocols will replace the existing revenue-sharing protocol leaders like Uniswap. Uniswap cannot compete with a similar revenue-sharing protocol, if their product experience and product quality are as good. GMX will be more prominent in the “real revenue” narrative and its ecosystem projects are likely to flourish. DISCLAIMER – The information on this website is intended to provide general market commentary but does not constitute investment advice. We encourage you do your research before investing. Join us to keep track of news: https://linktr.ee/coincu Harold Coincu News