I’m Earning 98.94% APR on GLP (Steadefi & GMX Liquidity Providing)

Summary

The video discusses GMX, a decentralized perpetual exchange for trading cryptocurrencies like Bitcoin and Ethereum without centralized exchange risks. GMX's GLP token allows users to earn yield by providing liquidity for trades. The presenter shares their experience with Steady, a platform offering managed vaults, including a 3X long GLP position for higher yield potential. Despite market volatility, the presenter remains optimistic about the platform's potential, especially its delta-neutral vaults, and mentions upcoming rewards in the form of the Steady token.

Takeaways

• 🌐 GMX is a decentralized perpetual exchange platform that allows trading of various cryptocurrency assets directly on the blockchain.
• 🔄 Users can execute both short and long positions with leverage on GMX without the need for a centralized exchange like Binance or Coinbase.
• 🛡️ GMX's decentralized nature offers an advantage for users concerned about the SEC's crackdown on centralized exchanges and the associated uncertainties.
• 💼 KYC information and account creation are not required on GMX, promoting privacy and ease of use by allowing users to connect their wallets directly for trading.
• 💰 GMX operates a liquidity provider system, where participants can earn a share of the platform's fees and benefit from asset value appreciation.
• 🪙 The GLP (GMX Liquidity Provider) token is backed by a basket of assets including Ethereum, Bitcoin, Chainlink, Uniswap, and stablecoins, providing liquidity for traders.
• 📉 The yield on GLP has decreased from a high of 30-35% to around 13% annualized due to increased liquidity provision and reduced trading activity.
• 🚫 Risks for liquidity providers on GMX include exposure to the platform itself, market volatility of the underlying assets, and being the counterparty to all trades.
• 📈 Steadyfi offers managed vaults, including a 3x long GLP position, providing increased yield potential alongside increased market exposure.
• 🔄 Steadyfi's leverage vaults work by borrowing from lending pools to amplify positions, with automatic rebalancing to manage risk and maintain a debt ratio.
• 📊 The performance of the GLP vault on Steadyfi is closely tied to the price of GLP, with the yield being compounded into the vault token's value, providing an additional return on investment.

Q & A

What is GMX and what does it offer in the cryptocurrency market?

GMX is a decentralized, perpetual exchange that allows users to trade different cryptocurrency assets directly on the blockchain. It enables trading with leverage for both short and long positions without the need for a centralized exchange like Binance or Coinbase.

Why might someone prefer using GMX over centralized exchanges?

Some users might prefer GMX due to the regulatory crackdown on centralized exchanges by the SEC in the United States, which has created uncertainty in the crypto market. GMX provides an alternative for those looking to short the market or trade without the need for KYC information or account creation.

What is the role of liquidity providers in the GMX ecosystem?

Liquidity providers in GMX offer capital to facilitate trades on the platform. They earn a share of the platform fees and benefit from the appreciation of the assets they provide liquidity for.

What is GLP and how does it function within the GMX platform?

GLP is a liquidity token backed by assets like Ethereum, Bitcoin, Chainlink, Uniswap, and stablecoins. Holding GLP means providing liquidity for these assets. Traders borrow from the GLP pool to execute trades, paying fees and borrow costs.

What are the risks associated with being a liquidity provider for GLP?

Risks include exposure to the GMX platform, market exposure to the assets backing GLP, and the risk of being the counterparty to all trades on the platform, which can affect the GLP price based on the gains or losses of traders.

What is the current annualized yield on GLP and how has it changed?

The current annualized yield on GLP is about 13%. It used to be higher, around 30-35%, but dropped due to fewer people trading and more people providing liquidity.

What is Steadyfi and how does it relate to GMX and GLP?

Steadyfi is a platform offering managed vaults for users to deposit and earn yield. One of its vaults offers a 3X long GLP position, providing increased exposure to the market and an increased yield, currently around 28% annualized.

How does the leverage position in Steadyfi's vaults work?

The leverage position works by borrowing from lending pools to create a leveraged position. For example, a 3X long vault will borrow twice the amount deposited to create a position three times the size of the initial deposit.

What is the purpose of automatic rebalancing in Steadyfi's vaults?

Automatic rebalancing is implemented for risk management, aiming to maintain a debt ratio of about 66%. If asset prices change, the system will rebalance to ensure the position stays within the desired debt-to-equity ratio.

What are Delta Neutral Vaults and how do they differ from other vaults?

Delta Neutral Vaults, like the one offered for the Ethereum to USDC pool on Steadyfi, aim to be market-neutral, providing yield without direct exposure to market fluctuations. This differs from other vaults that may have direct market exposure.

What is the performance of the GLP Vault on Steadyfi over the past 60 days?

The GLP Vault has experienced some fluctuations, with an initial increase followed by a decrease that is proportional to the performance of the GLP price itself. The yield is automatically compounded into the position, providing an additional return on investment.