Original source: TokenInsight

Composability isGMX, it has achieved brilliant results in 2022. Its LP token GLP stably provides more than 20% of the$ETHdenominated returns, sparking the popular "real rate of return"(real yield) narrative.

As a result, developers started building new projects on top of GMX, and today there are 28 of them. This article introduces all the projects and analyzes the key ones. They can be divided into five categories, treasury, lending, social trading, options and others.

Vaults

Treasurys are the largest category, with 13 programs ranging from basic auto-compounding to complex structured financial products designed to enhance GLP returns.

Auto-compounding

Einstein considered compound interest the eighth wonder of the world. If you're like me and keep forgetting to put your GLP proceeds back into the GLP pool, we're all missing out on some free money.

If you don't roll interest, the $100 invested at the beginning of the year will only become $120 at the end of the year, assuming a return of 20%. However, if you operate twice a day and put the proceeds back into the GLP pool, your $100 becomes $122.14 at the end of the year. If you take into account the boost in multiplier points, the rewards are even higher. Multiplier points are a unique feature of GLP to reward long-term users.

Quite a few products offer automatic compounding for GLP holders so they don't miss out on potential compounding benefits.

Abracadabra

AbracadabraIt is the largest GLP rolling pool with a TVL of US$15.47 million. Users deposit GLP to obtain magicGLP, and magicGLP automatically reinvests the earned income into the GLP pool twice a day to maximize returns. Like other vault tokens, magicGLP will increase in value over time, causing the ratio of magicGLP to GLP to increase.

Abracadabra charges a 1% fee on earnings from the service and has no entry/exit fees, which is the lowest rate in the automatic rolling pool.

Plutus

PlutusIt is the second largest revolving interest pool with a TVL of 7.86 million US dollars, and users can deposit GLP to get plvGLP. It is automatically compounded every 8 hours and has a 2% exit fee and a 10% vault fee.

In exchange, plvGLP holders receive 15% of $PLS liquidity mining rewards, equivalent to 2.25 million allocated to plvGLP holders within 2 years$PLS. Rewards are weighted in the first few months, meaning the rewards are highest in the first few months. $PLS can be locked for a portion of the revenue generated by the Plutus protocol and gain control over the veTokens locked within Plutus. In addition to plvGLP, Plutus also has a series of governance rights aggregation and liquidity related products.

Yield Yak

Yield Yakis a GLP farm on Avax with a TVL of $7.31 million. Similar to Abracadabra and Plutus, Yield Yak automatically$AVAXRewards invest in GLP and get esGMX to increase rewards. Yield Yak charges 9.5% of proceeds as a management fee with no entry/exit fees.

Beefy Finance

Beefy FinanceThe TVL is $1.36 million. Its treasury rolls over at least once a day and rolls over every time a deposit is made. Therefore, interest rate operations occur 10-20 times a day. It also charges a management fee of 9.5% of the yield with no entry/exit fees, exactly the same as Yield Yak.

Redacted

RedactedAdded some variety to vault products. Pirex released by Redacted provides liquidity for pledged GMX and GLP on the basis of automatic compound interest. It has two modes, easy mode and standard mode.

Easy mode is the same as the other rolling pools above. The cool thing is that they also offer a GMX vault. Users deposit GMX or GLP to obtain apxGMX or apxGLP. The easy mode charges a 1% withdrawal fee, which is rewarded to the holders of the vault pass. In addition, it charges 10% of the proceeds as a platform fee and 0.3% as a reward reward fee.

The standard model provides liquidity for GMX and GLP in pledge. Users deposit GMX and GLP to get pxGMX and pxGLP. The deposited GMX and GLP are the same as the original pledge on GMX.

The difference is that pxGMX and pxGLP are negotiable, users can sell them at any time, pxGMX is available on ArbitrumCamelotThere is a pool, on AvaxTrader JoeThere is a pool.

When staking through the GMX protocol, the esGMX obtained is non-transferable. While depositing through Pirex, the esGMX obtained is marked as pxGMX and can be transferred. Additionally, earned multiplier points can never be lost because when users sell pxGMX on the open market, their underlying GMX remains staked. Therefore, users will not be penalized for lack of multiplier points or selling staked GMX.

The standard model charges a 1% conversion fee and 10% of the proceeds.

Pirex's GMX vault is an interesting innovation, while the GLP vault is similar to other compound interest vaults, but at a higher cost. Therefore, the TVL for the Pirex GMX Vault is $404,555, while the TVL for the GLP Vault is only $38,557.

Mugen Finance

Mugen FinanceThe TVL of the GLP treasury is US$3.23 million. It claims to be a multi-chain aggregator that uses sustainable protocol revenue to generate yield. However, Mugen currently only supports one protocol on one chain, namely GMX.

Mugen's mechanics are different from the GLP vaults described above.$MGNIt is a protocol token. user will$USDCDeposit into Mugen vaults to mint $MGN, and Mugen uses its vaults to buy GLP. Users pledge $MGN to obtain the income generated by GLP.

What is the difference between buying $MGN and buying GLP directly? Buying $MGN is 3 times worse.

The Mugen team will deduct 10% from your GLP return when you buy with $MGN.

While you can burn GLP to redeem assets from the GLP pool, you cannot withdraw assets from Mugen vaults. You can only sell $MGN on the open market. Currently, the market price of $MGN is $81, and its corresponding treasury value is $126, which means that if early users want to exit, they must accept a 35% loss.

Mugen also has a special design to "prevent users from opening and unstaking before and after the reward distribution". This design allows the agreement to defer the payment of GLP rewards within 30 days. For example, if Mugen received 100 $ETH from today's GLP earnings, each Mugen staker would receive 1/30 of their share of the 100 $ETH per day for the next 30 days. If you attempt to withdraw early, you will forfeit your remaining rewards.

So why would anyone buy $MGN? They can benefit from the loss of early users. Because early users can only sell $MGN on the open market, the price of $MGN is lower than its actual value. If you buy $MGN today, you can buy $126 worth of GLP for only $81.

Furthermore, only 84% of MGN is staked. As a result, stakers are rewarded more, as 16% of MGN holders are willing to forego their GLP yield (though, it should be noted that GLP is automatically staked).

Using any rolling pool comes with additional smart contract risk. When users believed that the distribution of income should be done automatically through smart contracts, Mugen had previously suspended the distribution of income without explanation.

Finally, the project relies onCommunity-developed front endFor users to interact with their contracts. The project has its own official website link, but its functionality is very limited.

The table below summarizes the basic information of the six rolling pools mentioned above.

advanced strategy

In addition to the basic rolling interest, many projects have also designed more complex GLP strategies.

The most common is the Delta Neutral strategy. Since GLP consists of 50% stablecoins and 50%$BTC+$ETHand$UNIand$LINK). That's fine in a bull market. But there is a problem in a bear market. Therefore, Delta Neutral vaults appeared on the market to hedge these risks.

Rage Trade

Rage TradeThe Delta Neutral vault is the most popular and it's called the Risk On Vault. Rage Trade's Risk On Vault deposits $USDC from users into the GLP pool, and at the same time establishes short positions in $ETH and $BTC through flash loans.Our previous article explained the mechanics of Rage Trade in more detail.The end result is that Rage Trade automatically hedges your long exposure while you hold GLP.

Rage Trade has also designed a Risk Off Vault to accompany the Risk On Vault. Risk Off Vault lends USDC to Risk On Vault to establish a short position. Risk Off Vault getsAaveLending rates and some of the GLP incentives earned by Risk On Vault.

The TVL for Risk On Vault is $7,330,180 and the TVL for Risk Off Vault is $3,799,645. The total TVL is $11.13 million.

Neutra Finance

Neutra Financeimage description

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Umami

Similar to Neutra,UmamiThe Delta neutral strategy also involves hedging transactions on GMX. It also implements an internal netting strategy that redistributes Delta among Umami vaults to minimize hedging costs. The hedged amount is periodically rebalanced algorithmically.

image description

Source: Umami

Vovo Finance

Vovo Financeis another interesting Delta Neutral solution. Vovo allows users to hedge manually, rather than automatically.

Every week, the treasury collects the proceeds of the pledged GLP and uses these proceeds to open a 10x leveraged position on GMX. Users can choose their favorite asset and direction from ETH up, ETH down, BTC up and BTC down. After one week, the vault automatically closes the leveraged position and reinvests the profits to buy and stake more GLP.

Vovo's combined TVL across the four vaults is $66,013.

GMD

GMDA variant of the Delta Neutral strategy is provided. Instead of directly hedging the price changes of GLP's underlying assets, GMD allows users to have exposure to only one asset, rather than all assets in the GLP pool, by creating three separate vaults. For example, holding GLP means holding both BTC and ETH, but GMD allows users' GLP to only include one of BTC, ETH or USDC. It also uses protocol revenue to protect users from trader PnL. but,As discussed in my previous article, but in most cases GMX traders are losing money.

GMD's GLP TVL is $4.27 million.

Olive

OliveAdded more financial alchemy to the competition. It provides principal protection vaults that increase yields without putting users' principal at risk by combining composable and structured products. Olive deposits GLP's weekly earnings through various complex strategic transactions. It trades on a weekly basis, charges a pro rata 2% management fee, and charges a 10% performance fee if the period's returns are positive.

Its TVL is currently $299,000.

Jones DAO

The last player in the GMX wars isJones DAO, with a TVL of $10.75 million.

This is a leveraged interest rate pool consisting of two vaults, a GLP vault and a USDC vault.Our previous article discussed its mechanism in great detail.In simple terms, the Jones DAO GLP vault buys GLP and mints jGLP, then borrows $USDC from the USDC vault to buy more GLP. The amount of leverage is dynamic and determined according to market trends.

Depositors in USDC vaults earn interest and a portion of GLP rewards as lenders.

jGLP can be used to provide liquidity on the Jones DAO platform and across the Arbitrum ecosystem. For example, users can provide liquidity in the jGLP-USDC pool on Camelot.

GMX War

The GMX War has begun, and vault players built on top of GMX are vying for more GLP shares. While basic compounding features are already attractive, further innovations could further improve GLP yields.

I am very bullish on treasury products. GLP AUM is currently $443 million, and all treasury products combined represent only a small fraction (15%) of total GLP. Most GLP is still sitting idle in holder wallets, waiting to be captured by vault providers.

Furthermore, GLP itself has great potential as a revenue-generating product. Anchor (the one on Terra) that promised 20% returns from the Ponzi scheme managed to amass over $17 billion in AUM. GLP, on the other hand, has consistently outperformed the 20% benchmark, and its revenue comes from real transaction fees. There's a big gap between $443 million and $17 billion, and a better vault product would also attract more people to mint GLP.

borrow money

borrow money

In addition to Vault products, lending is the second largest ecology on GMX, enabling users to use their GLP assets as collateral to borrow money to increase leverage for yield farming. Jones DAO Vault is also a yield product with built-in lending.

options

options

Perp trading on GMX also synergizes well with options exchanges.

Lyra

LyraorGMXorSynthetixThis is achieved by opening a long or short position on the stock.

Dopex

DopexAlso an options DEX, it integrates GMX in two ways.

Their Atlantic Perp Protection protects traders on GMX from liquidation risks. After purchasing an option, when a trade is close to liquidation, the stablecoin collateral for the option on Dopex will be automatically transferred from the Dopex contract to the trader's GMX collateral account.

Dopex also helps users to hedge the risk of GLP price changes. If the GLP price is lower than the option exercise price, the user will receive settlement benefits. If the price of GLP rises, users can maintain their GLP positions and get the benefits of the price increase.

Social Trading

Social Trading has gained momentum recently with the launch of STFX and Perpy. It allows users to copy trades of highly profitable traders.

STFX

STFXThe full name is Single Trade Finance Exchange. It provides short-term, non-custodial, active asset management vaults dedicated to one transaction. STFX traders use GMX to execute their trades. The platform charges a flat performance fee of 20%.

Perpy Finance

Perpy Financeimage description

Source: Perpy Finance

Puppet Finance（GMX Blueberry Club）

Puppet Financeother

other

DappsOS

DappOSis an operational protocol designed to lower the barriers to interacting with cryptographic infrastructure. On GMX,DappsOS allows users to directly access GMX through the BSC wallet.It's pretty cool and will bring more users to GMX.

Demex

DemexBridge GLP to Cosmos through smart contracts and provide automatic compound interest services, allowing Cosmos users to access GMX and earn income from GLP.

MUX

MUXwrite at the end

write at the end

The synergy provided by the GMX ecosystem benefits all its projects. For example, the Vault product could work with a lending protocol, enabling degens to add leverage to their GLP farm. Social trading products can drive GMX's trading volume and bring greater returns to GLP through increased handling fees.

Also, the Arbitrum airdrop could happen at any time, and I expect most of the airdrop proceeds to be reinvested into the Arbitrum project. The GMX ecosystem is currently the most vibrant on Arbitrum. One or more of the above projects will benefit from the Arbitrum airdrop.

Additionally, I believe that despite the regulatory risks, the “real return” narrative will sweep DeFi. Existing top projects like Uniswap will be replaced by revenue-sharing protocols. As Bezos famously said, "Your success is my opportunity." Uniswap must not be able to compete with a similar protocol that shares revenue with users if their product experience is as good. GMX will also receive more attention as a leader in the "real revenue" narrative, and its ecosystem projects will flourish.

Therefore, the projects mentioned in this article are worthy of continuous attention, which may include 100-fold projects during the next bull market.