GMX is a decentralized spot and perpetual exchange that supports low swap fees and zero-price impact trades. It is live on Arbitrum and Avalanche, having over 150k users and surpassing $85B in trade volume with over 400M$ in TVL.
Olive is a DeFi platform offering option vaults and structured products on Ethereum, Polygon & now Arbitrum. We are the first to launch principal protected GLP vaults on Arbitrum.
Olive combines DeFi’s composability with structured products to amplify yields without exposing underlying assets to any principal or credit risk.
Proposal
Seeing the magnanimous growth of GMX and its ecosystem, we wanted to congratulate the team on its success and propose to help in its growth trajectory by creating a value add growth component to its ecosystem.
Specifically, we propose GMX to do native / sdk-level integration with Olive GLP vault where in GLP holders can stake their GLP tokens and earn higher, sustainable & real yield in GLP tokens with no lock-in.
GLP Vault bull thesis:
Real, sustainable Yield: Olive generates real, sustainable yield by composing GLP yield with structured products. Since it is generated by going long/short volatility, it’s real and sustainable in nature compared to other forms of token based yield farming, which are typically unsustainable in nature. More on working mechanism here.
Higher Yield: Olive vaults amplify and optimise the yield by harvesting rewards and reinvesting them in the vault to auto-compound. Our backtest results show a typical yield amplification of 1.5x. Here are the backtested results from Oct’21 to Oct’22.
Liquid Yield Bearing Token: We are working to launch liquid yield bearing oTokens. It should be live by March’23. We will be working to create a vibrant oToken ecosystem. As a result, all GLP vault investors will get oGLP tokens which they can use for further yield farming such as in lending, borrowing, trading etc while earning juicy GLP Vault yields.
Instant Liquidity: Unlike other option vault protocols, GLP vaults don’t have lock-in. Users can deposit and withdraw anytime without any lock-in.
Most Innovative Team: Olive is the first protocol to launch composable principal protected structured products like GLP Vault on Arbitrum. We were also the first team to launch structured products like FCN on Ethereum. With this proposal, we commit to bring more innovation to GMX and Arbitrum ecosystem.
Generous Referral Incentives: We are building referral incentive program wherein anyone can create their vanity referral code and share their referral link. Referrers are paid 0.5% to 1.0% of referred TVL as incentives, paid out in USDC, while referees will be paid 5% to 15% discount in management fees along with liquidity mining incentives. Same referral code will work for protocols like GMX also, earning net revenue, which can be further shared with GMX and GLP stakers. Tentative timeline for launching it is Feb’23. You can read more about it here.
Conclusion:
The synergies between the two projects are apparent for all the reasons explained above, and it makes much sense for the GMX community to support GLP vault integration.
We have been highly interested in GMX and its ecosystem, and this is the best time to propose as we are keen on ensuring that the proposal passes. Olive is convinced that this collaboration is an obvious win-win and firmly believes that now is the time to bring forth power of composability and core value of DeFi with the GMX community.
We are looking forward to your questions and feedback. Happy to discuss with the community more ideas on how specifically Olive can collaborate with GMX community.
This is very cool, I didn’t know about all those features. I usually hop between GMX on Arbitrum & Avalanche depending on GLP yield, funding rates & assets I want to trade, would be super nice to see this deployed on both chains for continuity
Not sure why you really need the community support here, you said a “native / sdk level integration” would be required - what kind of work does that require from GMX team?
Does that mean the Olive GLP pool would receive direct unlocked GLP rewards on top of existing rewards?
Overall I think you guys should definitely work together, but it would be great if you could share more information about what that native GLP vault integration entails specifically
Few ways to distribute GLP vault would be: a) listing on GMX ecosystem page, 2) Invest GLP widget next to buy GLP in Buy section to show user what they can do with their GLP tokens, 3) similary, GLP Vault APR next to GLP APR in earn section. This can actually be done to support all principal safe strategies.
Could you pls explain more as to what you mean by direct unlocked GLP rewards?
By native GLP vault integration, I was referring to GLP Vault widget via which users can directly deposit and redeem GLP tokens into GLP vault without leaving GMX interface. Provides for a clean experience.
Hope I was able to answer your queries. Thanks for asking the same.
Thanks @Jonezee. Glad you liked it. GMX has the best defi ecosystem out there and GLP tokens hold a lot of potential to create an entire real yield industry around them, offering different risk return profiles, if done right.
thanks @Xer. We are using range of structured products to go long / short volatility. Few examples include:
Range Accrual
Twin Win
Ascent
Summit
Digital
Highland, etc
A brief description of first two and their payoffs is given on official docs at docs.oliveapp.finance.
And yes, the principal protection is on the asset which you have deposited, which in this case is GLP tokens. So, if you deposit 1000 GLP tokens, your balance will never drop below 1000 GLP tokens. It can only go up!
That makes sense, I definitely misunderstood hence my previous question
Yeah from a users’ perspective it would be amazing to have this functionality built into the GMX interface. I’m assuming GMX team would need to do some risk assessment and look at the implementation before listing which requires some work on their end but if that goes well then I’m all for it
Great to hear that you’re looking to deploy on Avalanche as well. I’ll try it out with the link you sent
Just checked Olive’s GLP vault & saw the vault is offering up to 60% APY. No-LockIn & Referral Rewards make it even more promising. Looking forward to this interesting collaboration.
Yes, Olive has a Liquidity Mining Program. All investors in Olive vaults earn it. Know more.
Olive’s PPNs are different from other options protocols in the sense there is never any risk to the principal in the form of a credit or a principal risk. Other options protocols that try to do something similar still depend on centralised market makers for generating yields. With Olive, everything is on-chain, and you can withdraw anytime. Olive’s PPN seems similar to AAVE in mechanism, but it manages to generate high double-digit returns, whereas, in AAVE, it is mostly low single digits.
I would like to correct you here. There is no locking on the vault. You can deposit and withdraw anytime.
APY for GLP vault = GLP APR + Olive APR + Rewards. Because GLP Yield dropped from ~35% to 19.25%, Olive GLP Vault yield also dropped from ~60% to ~33%. Below is the APY calculation for full understanding.
No worries fren. We are fixing the terminology on vault specs for make it clearer. By expiry, we meant that vault has weekly cycles from Monday to Monday 8am UTC.
Disclaimer: initially voted yes on this proposal but after checking I have second thoughts which I hope the team can clarify.
The strategy is to take GLP yields for reinvestment, hence the max a person can lose is the yield, therefor the term “pricipal protected”, which I am fine. So far the guys at Olive are making a return from the reinvestments, however there is no documentation on how the reinvestment is made, nor if its on-chain. This is important to clarify before GMX should proceed with Olive.
Noted your point on the need for improvements in documentation. We are working on significant improvements in documentation which will be rolled out in a couple of days.
Currently, only the auctioning part, which is needed to gain exposure to strategies such as range-accrual and twin-win, is carried out via the OTC route. The rest of the entire yield amplification operations are on-chain and automated via smart contracts.
Here is how the yield amplification works:
User deposits GLP
Our smart contracts make use of Beefy’s auto-compounder to amplify the base yields further
The yield component is harvested every week and passed onto the winning market maker
On the settlement date, the market maker returns the borrowed yield component and pays the net settlement amount
The yield and the net settlement amount received are automatically reinvested in the GLP vault, which is automated at the smart contract level, further increasing the vaults NAV
We will be rolling out a build by the end of February, which will do away with the need to pass on the yield component to market makers for running these strategies. Once the roll-out is done, a market maker’s potential default or insolvency will only affect the potential net settlement amount for that cycle. Even with the current architecture, if a market maker becomes insolvent, only the weekly yield earned on GLP and the potential net settlement amount are at risk.
After reading over again in the weekend, i summarize that Olive is actually a GLP yield auto compounder (nothing wrong with that). Instead of compounding it back to GLP they use the yield to make investment strategy such as letting market makers.
Hi @j4jeswin Olive had a sleek UI and it looks like a product that can get nice traction, my suggestions is that u dumb down the fancy elaboration a little, I believe it will be helpful for degens to know strait forward what ur DApps is I say it will good intentions, and good luck!.
I say it will good intentions, and good luck!.