Thread by @2lambro

#12 Different ways of Farming GLP

In this thread

1) TLDR, Whats @GMX_IO & $GLP
2) GLP farming, when is it bad for you as a farmer
3) Leverage GLP farming
4) Delta Neutral GLP strategy
5) Why is it hard to delta neutral perfectly, Cost
6) Summary

TLDR of what is #GMX & GLP

GMX is a perpetual dex that allows you to leverage trade & swap. Its liquidity pool model is backed by $GLP.

GLP is a pool of tokens that liquidity providers pool together, earning fees from GMX & taking the PnL of traders.

It is marketed as an index token that farms because essentially you will be holding a basket of tokens and earning fees from GMX.

Its weighting of each token within GLP is constantly rebalancing.

GLP farming

As a GLP holder you are holding a basket of tokens and earn fees + betting traders will lose.

Here's 4 cases that bad for GLP farmer

1. Traders positive PnL over all people
2. Low trading volume on GMX

3. When #BTC, #ETH price goes up aggressively
because GLP as an index token that will rebalance.
You are constantly selling the upside of your tokens

E.g. GLP keeps it’s $ETH weighting at 25%(usd value), as $ETH price goes up, it will have to rebalance and it will sell some $ETH, making the number of $ETH less but the weighting of ETH in USD stays at 25%

4. When $BTC, $ETH price goes down
Same with the logic in case three but downwards, meaning GLP are basically constantly DCA into more tokens less USD

By entering GLP you are essentially betting on
GMX fee sharing + trader PnL > holding on ETH, BTC & USD.

The most ideal case for you as a farmer is sideways market will high trading volume of losing traders

Leverage GLP farming

You can leverage farm in
@vestafinance - 3.3x with 70% LTV
vestafinance.xyz/products/glp

@Moremoneyfi - Max leverage 2.5x with 60% LTV
app.moremoney.finance/token/0x9e295B…

@YetiFinance - 2.5x with 60% LTV
app.yeti.finance/#/vault/GLP

@tender_fi
app.tender.fi/markets/GLP

Essentially you mint GLP, use it to borrow stable coin and use the stable coin to mint more GLP.

Please double confirm on the slippage, mint fee and borrow cost if you move in size.

Delta Neutral GLP strategy

Delta Neutral basically means you have no exposure of the underlying asset.

E.g. you put 1 ETH in staking and short 1 ETH at the same time. Meaning the price movement (delta) does not affect you.

These strategy only works if ETH staking interest is > cost to short.

You can currently do Delta Neutral strategy on @rage_trade

They have a novel design of Risk-Off Vault & Risk-On Vault

Risk-Off Vault
- provide USDC serving as collateral on Aave, and earning portion of the ETH rewards from GMX

Risk-On Vault
- Earns yield on GLP with delta neutral strategy

@UmamiFinance Delta Neutral-Coming soon

There is also @DAOJonesOptions & Auto compounders @PlutusDAO_io

https://twitter.com/FroyoFren/status/1595457878357577729

Why is it hard to Delta Neutral

To delta neutral GLP essentially what you have to do is to short everything within the GLP basket
$GLP ‘s weighting is constantly changing. It changes based on

1) Position on GMX ( as all GMX perp position are backed by GLP)
Weight is the asset availability and its changes base on trader’s open & close positions

2) Also Swaps on GMX

The key difficulty of doing perfect delta neutral is whenever the weight in GLP changes to keep a perfect hedge you need to rebalance your short position, but obviously there are cost everytime you rebalance.

If you don’t rebalance regularly enough your hedge will drifts, e.g. you are shorting too much or end up having more delta exposure.

The key to a successful DN strategy is choosing the right parameters on when to rebalance, time, weight change or more.

Summary

GMX is one of my favourite protocols. it’s model allows users to safest perpetual long or short on dex, however limited pairs but its still an innovation.

I was enjoying farming on GLP for a while but slowly moved out as I was hoping for a small rebound in ETH & BTC.

Secondly, I was worried as everyone is talking about farming GLP but not trading on GMX, is there enough fees for everyone?

While on the topic of @GMX_IO
Looks like the @GBlueberryClub is doing a copy trading protocol, BULLISH.
The strong bullberry community + social trading. Making me want to buy a blueberry nft to join the gang

https://twitter.com/2lambro/status/1613685311745449986

sub me
2lambroz.substack.com

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