Observing GMX & GLP Patterns on Avalanche

9 min readAug 13, 2022

# Intro

GMX is a decentralized exchange that offers perpetual futures trading. GMX is currently live on Arbitrum (Ethereum layer 2) and Avalanche. The protocol was spawned from an earlier project called Gambit which ran on BSC. BTC, ETH and AVAX are few of the tokens available to trade with up to 30x leverage. In less than a year it has achieved a total trading volume of over $50 Billion ($40 Billion on Arbitrum and $13 Billion on Avalanche).

Source: https://twitter.com/GMX_IO/status/1552412089242861572
Source: https://stats.gmx.io/
Source: https://stats.gmx.io/avalanche

# RealYield

Compared to its biggest competitors like PERP and dYdX, GMX exchange has a model where it passes through the trading fees to its token holders. Sharing in trading fees allows users to capture upside from their preferred platform. If volumes grow, then yield will scale accordingly.

This model has started to prove really popular among users as the #RealYield has become the most dominant narrative in the current crypto bear market. The market is now seeking fundamental value instead of chasing promises of economic perpetuum mobiles where you get stuck holding the bag once the music stops. This represents a shift from the earlier DeFi model where most DeFi projects incentivized liquidity by providing inflationary tokens as rewards. People LOVED it but it meant the governance token of the protocol became a farm token that was on one-way to $0.

# GMX and GLP tokens

GMX: Governance Token

GMX is the utility and governance token of the platform which allows stakers to receive 30% of the fees collected from across the platform. It is available on Arbitrum and Avalanche and can be bridged using Synapse Protocol.

Users can stake their GMX on either Arbitrum or Avalanche and earn 3 different types of rewards:

  • Escrowed GMX (esGMX)
  • Multiplier Points
  • ETH fees (Arbitrum) and AVAX fees (Avalanche)

The following illustration by @eli5_defi makes it easy to view how GMX can be used.

GLP: GMX’s Liquidity Provider token

GLP is an index of the large-cap assets (think SP500) supported by the GMX protocol that auto-rebalances every week. This is used for swaps and for traders to margin trade — when leverage traders win, GLP holders lose, and when traders lose, GLP holders profit.

GLP needs to be bought by minting by depositing any of the supported assets, but fees will be lower for tokens that the GLP has less of compared to its target weight. On Avalanche, the following assets — USDC.e, USDC, WBTC, WETH and WAVAX— can be used to buy (mint) GLP.

Furthermore, GLP can be staked to earn 70% of the platform fees (30% fees go to GMX stakers). The rewards are in ETH (on Arbitrum) and WAVAX (on Avalanche) and esGMX as shown below.

The following illustration by @eli5_defi makes it easy to view how GLP can be used.

# Analysis

Together, GMX & GLP offer a way for everyone to participate in the success of the platform and earn #RealYield. In this analysis, I’m taking a look at how users have been using these two tokens.

The following illustration by @eli5_defi makes it easy to view how GMX+GLP work together.


NOTE: I am using Flipside Crypto’s new Avalanche data for this analysis. These tables are only backfilled to May 2022 so we’re looking at the May-August 2022 time-frame.

## Key Findings

  1. More amount of GMX has found its way to Avalanche than Arbitrum through the Synapse bridge.
  2. Almost 3x more times (transactions) GMX and GLP have been staked than unstaked but the difference in staked and unstaked amounts is much smaller.
  3. GLP staking has shown consistently more than 100 Daily Active Users (DAUs) while GMX staking is not as popular (less than 100 DAUs).
  4. GMX staking has become more popular in the end of July 2022 as we say more DAUs and staking transactions.
  5. We saw a large amount of stablecoin outflows form the GLP index. Overall, WAVAX was the most deposited token with around $17M net deposits.

# Synapse Bridging Patterns

GMX can be bridged between Arbitrum and Avalanche using Synapse bridge. The features on both the chains are the same so the only reason someone would bridge GMX between the chains would be to bet on AVAX or ETH rewards.

GLP is specific to the network you mint it on. Therefore, it is not directly transferrable between networks and the price / rewards to the tokens will differ between networks.

## Number of Transactions

Looking at the number of transactions we see 10–30 bridging transactions daily in both directions (To Avalanche and To Arbitrum).

When we look at the overall total number of transactions per direction, we can see that mid-June, Avalanche took the lead for more number of transactions for GMX being bridged. Overall, GMX has been bridged to Avalanche 978 times compared to 890 for Arbitrum.

## Daily GMX Bridged Amount

Looking at the amount of GMX bridged amount we can see a peak around the crash of Terra on May 9th. Since then, the daily amount has been consistently less than 10K GMX on most days.

Looking at the total amount bridged, we can see that a total of 325K GMX has been bridged to Avalanche compared to ~285K bridged to Arbitrum.

Daily share of GMX bridged shows the Avalanche domination on most days. It’s likely that we’re seeing more GMX bridged to Avalanche as users are more bullish on AVAX recovering previous highs from current price of around ~$25 and thus more upside from AVAX rewards.

# GMX Staking

Now, we’re focusing on how the staking patterns for GMX have evolved over the last 3 months.

## Number of transactions

We can see the number of staking transactions have increased for GMX around the end of July and beginning of August. The daily staking transactions have increased beyond 50 and reaching as high as 75–100 on some days in August.

Overall, the number of staking transactions outweigh unstaking transactions by around ~3x (~4300 vs ~1480).

## Staked GMX Amount

Comparing the staked GMX amount, we observe that on most days staking amounts outweighs unstaking. Although, during the end of July and in August, we notice some days where more GMX has been unstaked.

Looking at the share of daily staking vs unstaking, we can see that the amount of unstaking start to dominate towards end of July and in August.

Overall, the difference between staked and unstaked GMX is not that large — 387K vs 267K. Both the amounts show different slopes of increase.

# GLP Staking

## Number of GLP staking transactions

Unlike GMX, the number of GLP staking transactions don’t show a meaningful increase at the end of July and in August. The daily staking transactions have remained largely the same over the last few months.

Overall, we see a similar 3x delta between the number of staking and unstaking transactions.

## GLP Staked Amount

The daily GLP staked amount chart shows a balance between the staked and unstaked amount as on many days we see peaks in staked amounts and on the next few days we see peaks in unstaked amount of around 10M GLP for both.

The daily share of staked/unstaked amount shows that staked amount dominates most of days.

We can confirm that the overall staked amount of GLP is larger from below chart by only 20M! Until, July 3rd both the amounts were neck and neck and staked amount of GLP only pulled ahead in July.

# Daily Active Users (DAUs)

  • Comparing the DAUs for the three actions above, we can see that Staking GLP is consistently attracting the most number of users to the platform — around 100–150.
  • Staking GMX in comparison is yet to break the 100 DAU number consistently.
  • Bridging on the other hand is the least active activity with around 10 DAU which is to be expected.

# GLP Deposit Types

Remember from above that GLP can be bought (minted) using one of the tokens below in the GLP index. Now, we’re looking at what users are using to mint GLP.

## Only Deposits

Observing the daily deposit patterns, we can see that USDC.e and USDC are the most amount of tokens deposited daily. The daily deposits peaked at around $5-7M around beginning of July.

Overall, we’re see around $45M deposits of USDC.e and USDC each. The other 3 tokens (WAVAX, WETH, WBTC) saw deposits of less than $17M.

## Only Withdraws

Doing an analysis on withdraws, we see an interesting pattern where we see few days with peak withdraws of around $4–7M. In June we saw a larger amount of USDC.e being withdrawn but in July, this pattern flipped and we see larger amounts of USDC being withdrawn instead.

We can see the shift in USDC/USDC.e patterns using the total amount withdrawn chart as the USDC.e withdraw amount stagnates after June 19th while the USDC amount accelerates after July 17th.

## Net Deposits

Calculating the daily net deposits, we can observe the patterns over the past 3 months better. Here we observe that:

  • During the crash of Terra and 3AC contagion between May and June, we saw large amount of net withdraws from the GLP index vault.
  • Between June 19th and July 17th, there was a period of net deposits and even days with large deposits around $4–5M.
  • But since July 17th, we’ve seen some of the largest peaks for net withdraws around ~$4M.
  • Despite ~$45M deposits for USDC and USDC.e, WAVAX leads for the most amount of token deposited in the last 3 months at around $17M. This is because the stablecoins have also seen large outflows while WAVAX has largely only seen inflows.
  • My hypothesis is that as this bear market rally has continued, users are exiting their stablecoin positions from the GLP index to buy into the rally.
  • WETH and WBTC overall saw net outflows from the GLP index.

# Appendix




Product strategy by day. On-chain crypto analyst by night.