Mark, I'm curious to hear more on why you have suggested that ETH2.0 would possibly make an L2 like MATIC obsolete. Ive not near the knowledge you do but from what gleaned from what I've read, it would seem that even if and once 2.0 happens, the amount of traffic that exists would mean we will still need L2 solutions like MATIC.
Looking at the support Polygon, Immutable X (the two im most keen on) receive I feel we will end up with a sort of symbiotic relationship between them...whilst using something like Metamask to make it possible...would love to hear your thoughts!
Once people build all the functionality of L2s on ETH they won't need L2s. People will not want to split liquidity and usage onto separate blockchains that emulate Ethereum, they'll just use and build on Ethereum.
But that assumes ETH 2.0 happens, works the way people think it will, and some L2 doesn't grow such powerful network effects that the liquidity and usage flows to the L2, not Ethereum. We'll see.
Why does the amount of traffic need L2 once ETH 2.0 comes?
With so many delays and last news it seems ETH 2 is months away at best. In the meantime Polygon and other L2 ETH killers are out there building their ecosystems. So which ones you see more prominent than others?
Among ETH L2s MATIC LRC SKL tho we could end up with an EVM platform that runs on ETH 1.0 (no token). CTSI might compete in this space too, not directionally where the projectтАЩs aiming but functionally that platform can handle similar tasks that donтАЩt demand robust security at the base layer.
$GMX gmx.io on L2 Arbitrum chain. I've been using the platform and growing a stack in GMX since Oct '21 and have been very impressed w its reward and Earn structure, specifically since it pays in ETH.
What: GMX is a decentralized spot and perpetual exchange.
Trading supported by a multi-asset pool (GLP) that earns liquidity providers fees from market making, swap fees and leverage trading.
I don't leverage trade often but when I have (tiny, well protected positions), this is the best decentra place I've found
But mainly I stake GMX and GLP to earn great APR from the serious traders who use the service, which is paid in $ETH + esGMX.
Tbh, it's alot to explain. Gitbook link below.
The thing that I like the most about GMX is it seems to exist in its own market. Its been ranging predictably for as long as I've held it. Also earns more rewards than any other project for me and love that it's in ETH (+more GMX)
You'll have to look up the chart on Dex Guru but it's worth it if only for the interesting behavior.
-Recently expanded to Avalanche chain
-Released an NFT that boosts earnings (was able to mint for just gas)
Tbh I don't understand every nuance of the tokenomics but what I do get is very solid. After 8 months I've never had a reason to change my confidence in it yet. It's not a 100x type of alt, but it's a steady earner that's for sure.
I think it might be too small. Also it's one of the few cryptos for cryptooers projects. No hype behind it bc perps aren't really a retail product. But OG traders and large volume players that wish to speculate on chain/decentralised and stay off CEX use it frequently.
I think that's why it's been so steady as a fee earner for me. Sure it pumped to $60 during bull but it basically ranges between $18 and $36 in big arcs that follow BTC/ETH sentiment, even a bit of a leading edge on them.
(Not shilling tho lol - it's not a get rich coin but it's a nice place to earn high APY in ETH)
Disclaimer: I was orig going to just paste the Gitbook link here with the details of the tokenomics but I decided to see if I could verbalize it myself and see how it sounds at the end.
I'm doing this not only to share it with CIE peeps but also to see how well I understand something I've invested in. So this will probably be long and dense and as usual, I'm using your platform for a public attempt to back up why I think GMX is "gud coin".
I don't expect anyone to read all this but I'm sort of trying to hold myself accountable instead of just browsing some docs and nodding "yep looks good". This is complex stuff I don't care if you're a banker or not. Feeling confident in my exposure to risk and reward is probably way off and underestimated as we saw with Terra Luna. I knew Terra was off in some way (didn't trust the 20% APR on Anchor) but until it collapsed I couldn't tell you without a lot of help exactly why it collapsed. Like the raw metrics etc.
So anyway I'm going to try and see if I can dissect GMX.io and have tangible reasons I think it's a good project with value. It has been valuable for me thus far but that could just be luck after all.
I hold a decent size bag of it but will be as honest as possible since if I find out something doesn't add up it will benefit me to know esp going forward in this market and judge if GMX is sustainable. It has been profitable for me since I've been involved (going back to Oct '21) but I was in no way an early investor, insider or recipient of hugely discounted tokens. I'm not connected with anyone involved on the project. I slowly built up my stack anywhere from $12 to $40 a token, and everything in between. Avg of ~$18/token which I sold chunks of when it was over $40 and bought back lower.
It's not a 100x kind of project but I was specifically looking for something like this that was a steady earner, didn't have (relatively) crazy volatility, and had a specific use case that isn't dependent on some "aiming to change the world and save the rain forests".
My overview thesis was something like: Traders gonna trade, they gonna leverage trade, they gonna like to leverage trade on a decentralised-ish Ethereum based platform (aka no CEX or KYC or fiat required) , and for every trade win or lose, they will generate fees. And traders will like that it runs on an L2, Arbitrum which I'm personally bullish on since they are pretty much the only chain that said "we are not issuing a token just for the sake of it. If we see a use case for an Arbitrum Token in the future, we'll consider it but as of now, we don't expect a token, ETH for gas is enough"
Arbitrum is significantly cheaper regarding gas fees and is very fast for an L2 built on ETH. It hasn't had massive adoption yet (nor have any of the true L2s yet) but I randomly ended up on it, using it steadily for 8 months and I've been able to completely circumvent Mainnet. No L1 crazy gas fees or bridging for me. I have a relatively direct way to get value on Arbitrum via fiat to CEX to CEDEX to ETH/USDC to Arbitrum. Haven't spent a dime on Mainnet fees in months.
That was my overall thesis for zeroing in on $GMX. Thru APY, token appreciation and strategic profit taking I was aiming to beat the APY I was earning other places like Celsius and Hodlnaut on stablecoin, preserve capital and engage in a community. I left the moonshots for other coins. Just wanted to earn a risk adjusted return.
So that's my long but general thesis here and next will be the specific breakdown of the platform. Hope this gives some value to someone. It def will help me in gauging what I actually know and don't about GMX.
I'm usually not competent enough to take the info from a rewards scheme, look at the TVL and other metrics available on a platforms dashboard page and then calculate exactly what I should expect to earn and how. I can ballpark it sure, but I often just get a vibe from others, judge the "ponzi-ness" of the Gitbook myself, check out the team distribution, send a few emails or tweets to see if they reply and how and then pop in the community channels/governance areas. I'm usually the one reading the Twitter threads, not writing them. But I'm giving it a shot here.
So back to the social channels, I'll gauge the activity level and how many ppl are screaming in the discord "WHERE'S MY MONEY!" or not, and then look at the chart for any Indicators of pump and dump behavior and general trend and performance over time. Ofc, for a new project there isn't any time to review, except for the P&D. But once I like the overall, I'll keep up with the chart as I did with GMX back in Nov.
But today I decided to see if I could take my understanding a step further- after all I've been reading hundreds of whitepapers and Gitbooks for over a year now so I probably should be able to figure out what I *should* earn based on the numbers provided and a hypothetical frozen price of all assets involved and APY quotes. Then assess the risk exposure to underlying asset price swings and the level of shitcoin expectations.
(NOTE: This might be a work in progress I add to)
The basics:
GMX is a perp futures and swaps trading platform on Arbitrum L2. $GMX can be purchased via swap on the Arbitrum layer of UniSwap. It can then be staked on the GMX.io Earn page.
Earn:
30% of swap and leverage trading fees collected are distributed to stakers of $GMX in ETH (if staked on Arbitrum) or AVAX (if staked on Avalanche).
Staked $GMX also earns Multiplier Points at an APR of 100% (100 GMX earns 100 MPs in a year). The MPs accrue every second and are treated as if they were GMX tokens so they increase the size of your GMX stake thus the % of the 30% fees earned. The incentive here is that everytime you compound your non-ETH GMX rewards, you are adding these MPs to your GMX stack. They aren't tokens but they incentivize you to keep your GMX staked since they boost your amount of GMX that is earning.
If you decide to unstake your GMX, you can, but you then lose a proportional amount of your MPs. If you unstake all your GMX you burn all your accrued MPs. Which make for a strategic decision when and why you're unstaking GMX. Maybe the GMX token has gone up in price and you want to take profits. You can but you lose a portion of your earn potential. In effect they are paying you not to sell your GMX tokens. But since it's a sliding scale based on how many you unstake, it makes for an interesting decrease in selling pressure. I personally would unstake a small batch of my GMX to sell when I felt it was a good time to take profit but I'd leave the bulk so as to retain my MP earning potential (which if you remember is earning me ETH which I might find more valuable than GMX at certain times). So there seems to be periods of mild selling in GMX but I haven't seen any major dumps in 8 months.
2. GMX also earns Escrowed GMX (esGMX) at a variable rate decided in community governance votes (every 3 months I think) and is currently at ~25%. esGMX can thus be staked and adds to your overall GMX stake count. Interesting thing is that GMX --> esGMX + ETH. Staked esGMX --> more GMX. esGMX cannot itself be redeemed or swapped into another token however. It's just an earning mechanism. However, you can vest your earned esGMX at any time and it will be converted to normal GMX tokens at a continuous rate which can be redeemed and either re-staked as GMX or swapped into another asset like USDC. More details to come re: vesting. Still working it out.
Finally, there is a GMX Liquidity Provider token , namely GLP, and it is a platform only token that is representative of the protocol Treasury basket of assets used for swaps and leverage trading (ETH, USDC, BTC, DAI, USDT, AVAX). By buying GLP w any of the assets that the pool accepts on the dApp, you are in effect gaining exposure to that entire basket of assets. GLP behaves kind of like an ETF in that way where its price is dependent on the prices and mix of assets in the Treasury.
Holding GLP is an earner also. It earns 70% of platform fees, paid in esGMX. (Which earns GMX if u remember). GLP can be redeemed at any time for any single asset from the pool. In my exp since Oct '21 the price has ranged btwn $0.85 - $1.25. Obvs the risk is the exposure to the cumulative price movements of the basket of crypto. GLP is burned when redeemed, which I had been taking profits off my principle during uptrends in ETH and BTC AVAX.
It has behaved kind of like a variable stablecoin since more than half of the pool is USDC/USDT/DAI stables and the rest is BTC ETH AVAX. So it does fluctuate but within a moderate range. When ETH BTC are doing well I'll sell my GLP into USDC. When there are pullbacks I'll rebuy the GLP to continue earning esGMX.
CONCLUSION - in progress -
So ya know, your basic multi rung ponzi. Lol. Seriously tho, I'm not great at analysing the tokenomics and precisely how the yield is sustained on any project (maths are complicated) but with GMX I know at least that there are a healthy amount of leverage traders on Arbitrum creating fees regardless of their position. And the protocol takes its cut and then distributes the rewards to GMX & GLP stakers in the ways discussed above. Their dashboard page is very transparent and detailed in what is in the Treasury, how much in fees is generated, and what the basket of assets allocation is.
And I assume that the initial purchase of GMX tokens on UniSwap via USDC (or whichever pair) contribute to the pool that gives the platform value.
Ha Arthur Hayes just mentioned GMX in his latest post. I may have to sprinkle some dust in there. Thanks so much for the mention and all the helpful info!
Thoughts about Polygon MATIC?
I like it. ETH 2.0 may make it obsolete but nobody knows when or if ETH 2.0 will happen.
Mark, I'm curious to hear more on why you have suggested that ETH2.0 would possibly make an L2 like MATIC obsolete. Ive not near the knowledge you do but from what gleaned from what I've read, it would seem that even if and once 2.0 happens, the amount of traffic that exists would mean we will still need L2 solutions like MATIC.
Looking at the support Polygon, Immutable X (the two im most keen on) receive I feel we will end up with a sort of symbiotic relationship between them...whilst using something like Metamask to make it possible...would love to hear your thoughts!
Once people build all the functionality of L2s on ETH they won't need L2s. People will not want to split liquidity and usage onto separate blockchains that emulate Ethereum, they'll just use and build on Ethereum.
But that assumes ETH 2.0 happens, works the way people think it will, and some L2 doesn't grow such powerful network effects that the liquidity and usage flows to the L2, not Ethereum. We'll see.
Why does the amount of traffic need L2 once ETH 2.0 comes?
With so many delays and last news it seems ETH 2 is months away at best. In the meantime Polygon and other L2 ETH killers are out there building their ecosystems. So which ones you see more prominent than others?
Among ETH L2s MATIC LRC SKL tho we could end up with an EVM platform that runs on ETH 1.0 (no token). CTSI might compete in this space too, not directionally where the projectтАЩs aiming but functionally that platform can handle similar tasks that donтАЩt demand robust security at the base layer.
$GMX gmx.io on L2 Arbitrum chain. I've been using the platform and growing a stack in GMX since Oct '21 and have been very impressed w its reward and Earn structure, specifically since it pays in ETH.
What: GMX is a decentralized spot and perpetual exchange.
Trading supported by a multi-asset pool (GLP) that earns liquidity providers fees from market making, swap fees and leverage trading.
I don't leverage trade often but when I have (tiny, well protected positions), this is the best decentra place I've found
But mainly I stake GMX and GLP to earn great APR from the serious traders who use the service, which is paid in $ETH + esGMX.
Tbh, it's alot to explain. Gitbook link below.
The thing that I like the most about GMX is it seems to exist in its own market. Its been ranging predictably for as long as I've held it. Also earns more rewards than any other project for me and love that it's in ETH (+more GMX)
You'll have to look up the chart on Dex Guru but it's worth it if only for the interesting behavior.
-Recently expanded to Avalanche chain
-Released an NFT that boosts earnings (was able to mint for just gas)
Tbh I don't understand every nuance of the tokenomics but what I do get is very solid. After 8 months I've never had a reason to change my confidence in it yet. It's not a 100x type of alt, but it's a steady earner that's for sure.
https://gmxio.gitbook.io/gmx/
Sweet. I hope somebody else comments on GMX, too!
I think it might be too small. Also it's one of the few cryptos for cryptooers projects. No hype behind it bc perps aren't really a retail product. But OG traders and large volume players that wish to speculate on chain/decentralised and stay off CEX use it frequently.
I think that's why it's been so steady as a fee earner for me. Sure it pumped to $60 during bull but it basically ranges between $18 and $36 in big arcs that follow BTC/ETH sentiment, even a bit of a leading edge on them.
(Not shilling tho lol - it's not a get rich coin but it's a nice place to earn high APY in ETH)
How do you earn yield?
Glad you asked.
Disclaimer: I was orig going to just paste the Gitbook link here with the details of the tokenomics but I decided to see if I could verbalize it myself and see how it sounds at the end.
I'm doing this not only to share it with CIE peeps but also to see how well I understand something I've invested in. So this will probably be long and dense and as usual, I'm using your platform for a public attempt to back up why I think GMX is "gud coin".
I don't expect anyone to read all this but I'm sort of trying to hold myself accountable instead of just browsing some docs and nodding "yep looks good". This is complex stuff I don't care if you're a banker or not. Feeling confident in my exposure to risk and reward is probably way off and underestimated as we saw with Terra Luna. I knew Terra was off in some way (didn't trust the 20% APR on Anchor) but until it collapsed I couldn't tell you without a lot of help exactly why it collapsed. Like the raw metrics etc.
So anyway I'm going to try and see if I can dissect GMX.io and have tangible reasons I think it's a good project with value. It has been valuable for me thus far but that could just be luck after all.
I hold a decent size bag of it but will be as honest as possible since if I find out something doesn't add up it will benefit me to know esp going forward in this market and judge if GMX is sustainable. It has been profitable for me since I've been involved (going back to Oct '21) but I was in no way an early investor, insider or recipient of hugely discounted tokens. I'm not connected with anyone involved on the project. I slowly built up my stack anywhere from $12 to $40 a token, and everything in between. Avg of ~$18/token which I sold chunks of when it was over $40 and bought back lower.
It's not a 100x kind of project but I was specifically looking for something like this that was a steady earner, didn't have (relatively) crazy volatility, and had a specific use case that isn't dependent on some "aiming to change the world and save the rain forests".
My overview thesis was something like: Traders gonna trade, they gonna leverage trade, they gonna like to leverage trade on a decentralised-ish Ethereum based platform (aka no CEX or KYC or fiat required) , and for every trade win or lose, they will generate fees. And traders will like that it runs on an L2, Arbitrum which I'm personally bullish on since they are pretty much the only chain that said "we are not issuing a token just for the sake of it. If we see a use case for an Arbitrum Token in the future, we'll consider it but as of now, we don't expect a token, ETH for gas is enough"
Arbitrum is significantly cheaper regarding gas fees and is very fast for an L2 built on ETH. It hasn't had massive adoption yet (nor have any of the true L2s yet) but I randomly ended up on it, using it steadily for 8 months and I've been able to completely circumvent Mainnet. No L1 crazy gas fees or bridging for me. I have a relatively direct way to get value on Arbitrum via fiat to CEX to CEDEX to ETH/USDC to Arbitrum. Haven't spent a dime on Mainnet fees in months.
That was my overall thesis for zeroing in on $GMX. Thru APY, token appreciation and strategic profit taking I was aiming to beat the APY I was earning other places like Celsius and Hodlnaut on stablecoin, preserve capital and engage in a community. I left the moonshots for other coins. Just wanted to earn a risk adjusted return.
So that's my long but general thesis here and next will be the specific breakdown of the platform. Hope this gives some value to someone. It def will help me in gauging what I actually know and don't about GMX.
PART 2ЁЯСЗЁЯП╝
GMX thread Part 2
Where earn come from?
I'm usually not competent enough to take the info from a rewards scheme, look at the TVL and other metrics available on a platforms dashboard page and then calculate exactly what I should expect to earn and how. I can ballpark it sure, but I often just get a vibe from others, judge the "ponzi-ness" of the Gitbook myself, check out the team distribution, send a few emails or tweets to see if they reply and how and then pop in the community channels/governance areas. I'm usually the one reading the Twitter threads, not writing them. But I'm giving it a shot here.
So back to the social channels, I'll gauge the activity level and how many ppl are screaming in the discord "WHERE'S MY MONEY!" or not, and then look at the chart for any Indicators of pump and dump behavior and general trend and performance over time. Ofc, for a new project there isn't any time to review, except for the P&D. But once I like the overall, I'll keep up with the chart as I did with GMX back in Nov.
But today I decided to see if I could take my understanding a step further- after all I've been reading hundreds of whitepapers and Gitbooks for over a year now so I probably should be able to figure out what I *should* earn based on the numbers provided and a hypothetical frozen price of all assets involved and APY quotes. Then assess the risk exposure to underlying asset price swings and the level of shitcoin expectations.
(NOTE: This might be a work in progress I add to)
The basics:
GMX is a perp futures and swaps trading platform on Arbitrum L2. $GMX can be purchased via swap on the Arbitrum layer of UniSwap. It can then be staked on the GMX.io Earn page.
Earn:
30% of swap and leverage trading fees collected are distributed to stakers of $GMX in ETH (if staked on Arbitrum) or AVAX (if staked on Avalanche).
Staked $GMX also earns Multiplier Points at an APR of 100% (100 GMX earns 100 MPs in a year). The MPs accrue every second and are treated as if they were GMX tokens so they increase the size of your GMX stake thus the % of the 30% fees earned. The incentive here is that everytime you compound your non-ETH GMX rewards, you are adding these MPs to your GMX stack. They aren't tokens but they incentivize you to keep your GMX staked since they boost your amount of GMX that is earning.
If you decide to unstake your GMX, you can, but you then lose a proportional amount of your MPs. If you unstake all your GMX you burn all your accrued MPs. Which make for a strategic decision when and why you're unstaking GMX. Maybe the GMX token has gone up in price and you want to take profits. You can but you lose a portion of your earn potential. In effect they are paying you not to sell your GMX tokens. But since it's a sliding scale based on how many you unstake, it makes for an interesting decrease in selling pressure. I personally would unstake a small batch of my GMX to sell when I felt it was a good time to take profit but I'd leave the bulk so as to retain my MP earning potential (which if you remember is earning me ETH which I might find more valuable than GMX at certain times). So there seems to be periods of mild selling in GMX but I haven't seen any major dumps in 8 months.
2. GMX also earns Escrowed GMX (esGMX) at a variable rate decided in community governance votes (every 3 months I think) and is currently at ~25%. esGMX can thus be staked and adds to your overall GMX stake count. Interesting thing is that GMX --> esGMX + ETH. Staked esGMX --> more GMX. esGMX cannot itself be redeemed or swapped into another token however. It's just an earning mechanism. However, you can vest your earned esGMX at any time and it will be converted to normal GMX tokens at a continuous rate which can be redeemed and either re-staked as GMX or swapped into another asset like USDC. More details to come re: vesting. Still working it out.
Finally, there is a GMX Liquidity Provider token , namely GLP, and it is a platform only token that is representative of the protocol Treasury basket of assets used for swaps and leverage trading (ETH, USDC, BTC, DAI, USDT, AVAX). By buying GLP w any of the assets that the pool accepts on the dApp, you are in effect gaining exposure to that entire basket of assets. GLP behaves kind of like an ETF in that way where its price is dependent on the prices and mix of assets in the Treasury.
Holding GLP is an earner also. It earns 70% of platform fees, paid in esGMX. (Which earns GMX if u remember). GLP can be redeemed at any time for any single asset from the pool. In my exp since Oct '21 the price has ranged btwn $0.85 - $1.25. Obvs the risk is the exposure to the cumulative price movements of the basket of crypto. GLP is burned when redeemed, which I had been taking profits off my principle during uptrends in ETH and BTC AVAX.
It has behaved kind of like a variable stablecoin since more than half of the pool is USDC/USDT/DAI stables and the rest is BTC ETH AVAX. So it does fluctuate but within a moderate range. When ETH BTC are doing well I'll sell my GLP into USDC. When there are pullbacks I'll rebuy the GLP to continue earning esGMX.
CONCLUSION - in progress -
So ya know, your basic multi rung ponzi. Lol. Seriously tho, I'm not great at analysing the tokenomics and precisely how the yield is sustained on any project (maths are complicated) but with GMX I know at least that there are a healthy amount of leverage traders on Arbitrum creating fees regardless of their position. And the protocol takes its cut and then distributes the rewards to GMX & GLP stakers in the ways discussed above. Their dashboard page is very transparent and detailed in what is in the Treasury, how much in fees is generated, and what the basket of assets allocation is.
And I assume that the initial purchase of GMX tokens on UniSwap via USDC (or whichever pair) contribute to the pool that gives the platform value.
Platform numbers to come next.
Cheers
Ha Arthur Hayes just mentioned GMX in his latest post. I may have to sprinkle some dust in there. Thanks so much for the mention and all the helpful info!
Wow! Nice summary. A lot of DEX tokens aim for self-sufficiency, this is a really interesting approach. I'll check it out.