What does this mean? It means DeFi 3.0 protocols like @GMX_IO, that are low or non-inflationary, pay protocol revenue to stakers in non-native tokens like $ETH.
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Derivative exchanges like @GMX_IO & $GNS benefit token holders because trading profit thrives in volatility.
The House 🃏generally wins.
Consider the $GMX net P&L below. This results in a 70% revenue distribution to $GMX's collateral vault, $GLP, & 30% 💰 to $GMX stakers.
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During a 🦀, @GMX_IO loses value bc traders are unlikely to open new positions due to lack of volatility. This can lead to ⬇️ token price short term.
However, as volatility goes up, for example, around release of the US FOMC minutes 7/6/22, trading volume + OI ⬆️=💰
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Revenue over the last 3 months has been in a down trend for $GMX stakers compared to a bull market. However, periods of high volatility have resulted in high fees to stakers with APR ranging consistently between 20-40% in $ETH & $esGMX.
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Although OI is $GMX's primary source of revenue, growing secondary revenue sources include: 1) #Arbitrum swaps via DEX aggregator integration 2) MEV shared with @Keeper_DAO
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Future revenue sources for $GMX include synthetic derivatives & the launch of X4 for greater capital efficiency. Work on synths has already begun by the dev team w/X4 currently pending development after synths. medium.com/@gmx.io/x4-pro…
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It is worth noting that the $GMX circulating supply is around 7.7m & max supply is 13.25m. There are approx 2.2m escrowed $GMX tokens.
Supply on exchanges is diminishing w/only 400k $GMX on @Uniswap & net outflows increasing daily per @nansen_ai.
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As $esGMX tapers thru the remainder of 2022, expect a supply crunch to continue to develop as long term stakers are incentivize to hodl thru the 🐻 market to earn lucrative multiplier points to ⬆️ their $ETH revenue share.
Notably, price & volume are seeing a recent uptrend.
I expect the rise of hedging strats + ⬆️ awareness of hedging for the @GMX_IO collateral vault, $GLP, is likely to result in ⬆️ OI as the platform grows. Strats include:
1⃣ Stop Loss/Limit orders
2⃣ @dopex_io Atlantic Options
3⃣ @TracerDAO Power Perpetuals - nonliquidatable
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TLDR pt1: I believe @GMX_IO is a base layer DeFi dApp on #Arbitrum that is likely to see ⬆️ revenue & trading activity as the year progresses.
👉Tapering emissions by Dec is likely to result in a supply crunch w/price appreciation.
👉Tokenomics encourage long term accumulation
TLDR pt2:
👉Launch of synths & X4 + growing secondary sources of revenue via swaps/MEV is bullish for long term protocol sustainability.
👉The L2 narrative is likely to benefit $GMX on #Arbitrum greatly after the launch of Nitro this summer. $AVAX $GLP growth is also at an ATH.
🎗️Disclosure: As always, DYOR & NFA.
I am biased bc I am long $GMX. I started DCA'ing at $28 & bought the bottom at $12. I continue to buy bc I believe $GMX will outperform even in the 🐻.
I also hodl $UMAMI which is a delta minimized yield aggregator built ontop of $GLP. 🍌
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Bears are for building & I’ve noticed A LOT of dApps sprucing up their front ends.
Appearance matters. There is a legit need to make UIs more user friendly w/objective analytics.
➡️ If you are a web3 protocol looking for a refresh, the best UI guy in the biz is @Tendeeno_
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If you are a @CurveFinance or @ConvexFinance maxi like myself, you may recognize @Tendeeno_'s work from Llama.Airforce. His UI for @0xAlunara + Benny arguably helped ignite the Curve Wars by providing a beautiful front end to demonstrate historic APR & bribe revenue.
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@UmamiFinance is a risk hedged delta neutral dApp on #Arbitrum that pivoted from being a waifu infested shit $OHM fork to a legit future DeFi Blue Chip. @Tendeeno_ graciously accepted the monumental task of combining 2 💩 UIs into 1 gorgeous front end that launches next week.
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RIP $OHM forks are dead. 💀
Lets pour one out for the fallen: @squiddao, @snowdog, @KlimaDAO etc.
However, some $OHM forks still survive in name only bc they have pivoted to a stronger narrative & deforked.
Sit down, let me tell you the story of @UmamiFinance.
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In 2021, a waifu infested 💩 $OHM fork called @UmamiFinance launched to great acclaim on #Arbitrum.
It had 2 different hideous front ends & +1000% APR. As the market became disenfranchised w/ $OHM forks, value plummeted from an ATH of $161 to an ATL of $6.51.
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In February 2021, a change in $UMAMI leadership resulted in a plan to pivot from its obviously failing roots. Reorganization of tokenomics was approved in March 2022 by the DAO. Rebasing was eliminated & a new strategy for delta neutral, yield farming was devised.
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Speculation abounds but the fact that @marshmello is well affiliated with @FortniteGame, owned by @EpicGames is extremely interesting.
Is "Metaverse Acquisitions Corp" a SPAC created to carve out a piece of Epic for developing an on chain open metverse for the gaming giant?
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On #Ethereum, @CurveFinance acts as a DeFi lynchpin w/20+ protocols that are built ontop of or around $CRV.
On #Arbitrum, I see @GMX_IO as an evolving defi primitive that will act as a base layer as well. 10+ protocols are building ontop of it w/more every day. 👀
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IMO, we're going to s👀n start seeing a @cosmos -like effect begin to develop on the #ETH L2s: Modularity at its finest.
Microcosms of dApp communities will evolve on specific rollups: #Arbitrium for DeFi, @polygonhermeztr for GameFi, @starkware for centralized services, etc
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Among the present rollups, #Arbitrum is uniquely positioned to take avg of alt L1 volume moving back to the safety of #Ethereum.
Degens who have gotten used to cheap fees & fast txns will benefit greatly from @OffchainLabs's Nitro w/fees now $0.25-$0.50...ideal for DeFI
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The intersection of DeFi🏦 & NFTs🎨 continue to blur.
In the coming months, I expect to see growing use of a shared revenue model w/tokenization of assets denominated by NFTs thanks to the new integration of EIP-4626.
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EIP-4626 by @joey__santoro et al. was authored on 12/22/21. EIP-4626 implements a standard API for tokenized Vaults representing shares of a single underlying ERC-20 token. This EIP paves the way for distribution of yield to end users via treasury DAOs or lending platforms.
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Now defunct $ETH based OHM-fork, @SquidDAO, helped pioneer the concept of using an NFT to denominate a percent of treasury holdings. By holding a Squid NFT, owners received a % of fees generated + governance voting rights.
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