Overall, the rebalancing strategy functions as a short-term cyclical adjustment of GLP, boosting exposure during bull markets and decreasing exposure during bear markets.Ī major innovation in the way transactions are executed is the dual use of the GLP pool by GMX as the counterparty to traders and the oracle pricing mechanism. The possibility exists that the market would turn bearish before rebalancing can occur, which would result in heavier losses for LPs because of a greater exposure to cryptocurrencies. Rebalancing can help GLP make money in volatile markets. Once a week, rebalancing enables GLP to maintain a healthy exposure without overtrading and scaling out of wins. GLP and swap minting and redemption fees are dynamically modified to provide LPs and traders with an incentive to move actual asset weights in the direction of desired weights. Once a week, GLP does a passive rebalance by updating asset prices to determine new target weights. Before being redeemed, minted GLP tokens must be kept for at least 15 minutes.įigure 6: AVAX Escrowed GMX APR Composition (source: ) Rebalancing and price feeds
GMX ORDER MANAGER PLUS
GLP holders receive escrowed GMX plus 70% of platform fees in the form of ETH tokens on Arbitrum, whereas they receive escrowed GMX plus 70% of platform fees in the form of AVAX tokens on Avalanche. It is crucial to remember that GLP on Arbitrum and Avalanche cannot be transferred or used with one another.
Any index asset may be deposited to create GLP, or any index asset may be redeemed by burning GLP. The GLP token, which is presented in the graphic below, is an index of assets that the exchange uses for swaps and leveraged trading. GLP, the protocol’s liquidity provider token, is used for this.Īuthors: Christian Viehof, Valentin Kalinov Instead of using an AMM or orderbook model like other decentralized derivatives protocols, GMX has developed a novel strategy for encouraging and bootstrapping liquidity on its exchange. The exchange uses Chainlink oracles to create dynamic pricing. GMX also provides spot trading on the same assets. On BTC, ETH, LINK, UNI, and AVAX, traders can use leverage of up to 30x. The decentralized perpetual futures exchange GMX, formerly known as Gambit on Binance Smart Chain (BSC), is operational on Arbitrum and Avalanche. ITSA DeFi insight - GMX on-chain perpetuals and GLP
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