GMX replace Gambit V2

This article is a follow-up to my first one which described all the features of Gambit V2. In the meantime, a new proposal of tokenomics and operation have been made and will certainly be adopted thanks to all the advantages it offers and that I will describe here. Before we start, Gambit is now the DAO, named "Gambit DAO" and GMX is the name of the upcoming exchange https://gmx.io as well as the ticker of the token.

What are the majors differences ?

• USDG is replaced by GLP (GMX Liquidity Provider) token

• The fees distributed to GLP are up to 80% instead of 20% when it was the USDG

• GMX can be stacked to boost yield

• Liquidity Mining is changing

💧 How GLP works :

• Users can provide liquidity using any whitelisted asset, but instead of receiving USDG in return, they will receive GMX liquidity provider (GLP) tokens. After providing liquidity, the user will own a percentage of the AUM proportional to the amount of capital provided.

• Fees distributed to GLP holders are 40% but can go up to 80% with GMX staking

• Since the value of the AUM will be calculated based on price feeds, there will be an 8 hour cooldown period after a deposit is made before a withdrawal can be executed. This will guard against manipulation of the pool.

Let’s say the whitelisted assets for GLP tokens are BNB, ETH, BTC & USDC. Liquidity providers would own an index of these assets with all assets being fully utilised to generate yield through swaps and 30x leverage trading.

• Let's do an example :

A user buys 1 GLP for $1000 when the AUM is $10 million. If the total value of the assets increases by 10%, he gets back $1100, if it decreases by 10%, he gets back $900.

The risk he takes in purchasing this index as a GLP is mitigated by the fees he receives, which are much higher than a normal Uniswap style LP due to the capital efficiency of GMX.

🎯 Efficiency of GLP compared to USDG :

In my other article, we saw that Gambit has generated over $740,000 in profits with $4.5M in average liquidity. However, of these profits, 50% had to return back into the system to ensure the peg of the USDG. GLP allows to get away from the slowdowns that stablecoin added because of its peg and can now distribute more fees. This change brings more volatility to GLP holders because the value is now pegged to the total AUM¹ rather than the dollar, but it allows for a much more efficient flow of profits.

To compare with the numbers in my other post, if GLP was adopted from the Mainnet, up to $624,000 would have been distributed in 60 days to $4.5M LPs giving them 84.36% APR in BNB² instead of 19% with the USDG, a growth of 4.4x !!

♟ GMX Staking :

Liquidity providers would receive 40% of fees which can be boosted by up to 2x by staking GMX. The boost in fees will be (2 * daily average price of GMX * GMX staked) / (USD value of liquidity provided).

For example, if the average price of GMX for the day is 5 USD and 1000 USD of liquidity is provided, then 100 GMX can be staked to boost the fees received by 2x.

🌾 Liquidity Mining :

For GLP :

• 100,000 vested GMX will be distributed with rewards decreasing by 5% each month in proportion to the amount of liquidity provided and taking into account staked GMX.

For LPs :

• 50,000 vested GMX will be distributed to GMX-ETH liquidity providers for the first month, with rewards similarly decreasing by 5% each month.

For GMX :

• 20,000 vested GMX will be distributed to staked GMX

1. Assets Under Management

2. At the launch on Arbitrum the fee distribution will be in ETH