Thread by @WinterSoldierxz

1/ If you’re a $GLP RealYieldooor & you’re not using a delta neutral strategy

Your gains are at risk. Unnecessarily.

Protocols now offer automated strategies to offset GLP’s inherent risks & the APRs are just as remunerative.

A 🧵 on how to earn risk-minimized #RealYield

2/ First, a recap of how $GLP works and why delta neutrality is a big deal.

3/ $GLP is @GMX_IO’s liquidity token. It is a basket of assets comprising 50% volatile assets ($BTC / $ETH / $LINK / $UNI) and 50% stablecoins. It acts as a counterparty to traders on #GMX.

If traders lose, $GLP stakers win. And vice versa.

4/ Although the token design of $GLP has been historically lucrative (25% - 40% #realyield APR), it exposes holders/stakers to the volatility of its underlying assets.

This is where delta neutral strategies come into play.

5/ In the context of $GLP, delta neutrality can be achieved by offsetting the price risk of underlying assets with a corresponding short position or through hedging on @AaveAave.

6/ Protocols are now building on top of $GLP, creating innovative, fully automated strategies for users to earn yield depending on their risk appetite.

These three stand out:
@GMDprotocol
@UmamiFinance
@RageTrade

7/ First up - @GMDprotocol

#GMD is a yield optimizing & aggregating platform on @GMX_IO. They utilize vaults that mimics GLP’s composition, which allows users to farm a portion of $GLP rewards through a single sided deposit

8/ You can deposit $USDC, $ETH, or $BTC and receive gmdUSDC/gmdETH/gmdBTC in return.

#GMD uses these deposits to mint $GLP.

9/ The supply cap of each asset resemble the ideal asset mix of $GLP, & the protocol incentivizes rebalances through dynamically adjusting deposit fees (similar to mint/burn GLP)

10/ In other words, you can earn a portion of $GLP yields without having to directly convert your assets into GLP!

11/ @GMDprotocol currently pays

~16% on $USDC
~13% on $ETH
~13% on $BTC

When entered a position, users receive gmdTokens which appreciate in value against the underlying assets.

12/ $USDC, $BTC & $ETH vaults have reached maximum capacity, but you can soon buy gmdUSDC/gmdBTC/gmdETH directly on Uniswap v3.

The team has also indicated that vault limits will be increased for more deposits over time as the team monitors vault performance and yield.

13/ Next Up is @UmamiFinance

Umami is another yield optimizer built on @arbitrum, and they recently announced a $USDC vault which will utilize @GMX_IO and @TracerDAO

https://twitter.com/UmamiFinance/status/1544320386015404032

14/ You can deposit $USDC into the vault and receive usdGLP, a tradable receipt token. That $USDC is then split into two portions:

(i) To mint $GLP and earn GLP rewards
(ii) To hedge out the $BTC / $ETH exposure in GLP with shorts

15/ $ETH rewards from $GLP and $TCR rewards from hedges are converted back to $USDC and paid out to depositors.

The vault is rebalanced daily, and targets ~0 market exposure - perfect for a bear market.

16/ Backtested results suggest 20+% APR in $USDC, with ZERO market exposure.

Very impressive.

17/ V2 vaults are set to release in Q4 2022, alongside other exciting products.

Keep your eye on @UmamiFinance. It is touted by quite a number of #DeFi OGs.

18/ Last but not least, @RageTrade

Rage is building an on-chain ETH-perp, as well as a stablecoin farm, utilizing – you guessed it, @GMX_IO

19/ Rage offers two forms of delta-neutral stablecoin farms utilizing $GLP:

Risk-off vaults: low risk delta-neutral strategy

Risk-on vaults: more yield for the degens out there

20/ Risk-on Vault: The risk-on vault provides a delta neutral GLP strategy. Users can deposit $USDC or $sGLP (which is converted to $USDC).

The vault hedges $GLP’s $ETH and $BTC exposure based on their target weights by opening short positions on @AAve + @Uniswap

21/ Here’s the full rundown of the strategy:

(i) Take a $BTC + $ETH flash loan on @Balancer
(ii) Swap $BTC + $ETH to $USDC on #Balancer (effectively shorting $BTC / $ETH)
(iii) Deposit $USDC + add additional $USDC from Risk-off vault to @AaveAave

22/

(iv) Create short position on Aave by borrowing ETH+BTC against USDC collateral
(v) Repay flash loan on @Balancer

23/ Backtested data is showing ~20-25% APR.

This is certainly a riskier strategy compared to others I’ve listed today, so be sure to DYOR and check out their docs:
docs.rage.trade/NRQd-overview

24/ The Risk-Off Vault is a low risk USDC lending vault.

It lends USDC to the Risk-On Vault which uses the $USDC to short the $ETH &$ BTC exposure in GLP.

It earns lending interest, as well as a portion of the $GLP yields from the risk on vault

25/ Risk is much lower here, and from backtested data we can expect ~6-8% APR

26/ Delta Neutral GLP Vaults will be launching Dec 12

Keep @RageTrade on your radar as well. ~25% #realyield on stables is no joke.

https://twitter.com/rage_trade/status/1599783274897104897

27/ Here’s a list of threadooooors you should follow:

@rektdiomedes
@ViktorDefi
@safetyth1rd
@DefiIgnas
@OnChainWizard
@defi_mochi
@ThorHartvigsen
@milesdeutscher
@the_advisor_btc
@VentureCoinist
@0xCrypto_doctor
@crypthoem
@Dynamo_Patrick
@TheDeFinvestor
@JackNiewold
@alpha_pls

28/ In addition, I'm proud to announce that I’m working with @defi_mochi on a comprehensive research deck on @GMX_IO that covers the full protocol architecture, metrics & yield strategies of @UmamiFinance, @GMDprotocol & @rage_trade.

Look out for that!

29/ Like RT & follow if you enjoy my content.