This proposal seeks the approval of the GMX DAO for (i) updating the gmx-interface codebase to work with the new GMX V2 open-source contracts developed by Labs (gmx-synthetics/README.md at main · gmx-io/gmx-synthetics · GitHub), and (ii) establishing fee parameters for GMX Markets within these V2 contracts.


The updated gmx-interface codebase will integrate both GMX V1 and GMX V2 contracts, with the possibility of gradually sunsetting GMX V1 once V2 gains appropriate market adoption. The DAO is requested to confirm support for Labs integrating the current GMX V2 contracts, as well as any future versions of these, into the gmx-interface codebase found at GitHub - gmx-io/gmx-interface.

Currently, we rely on the generosity of community members deploying IPFS hosted version, which after being verified to match the current GitHub, are linked to redirect from app.gmx.io

The protocol will benefit from a diversity of front ends utilizing the V2 codebase as a base but potentially include customization, improvements, and regionalization for various communities. A separate proposal and discussion will occur to seek support to incentivize the creation and maintenance of these front ends by establishing (i) a Front End Fee collectible by deployers, (ii) licensing framework including open source requirements, and (iii) a methodology which the GMX DAO would follow if it chooses to highlight reputable deployers of front ends.


GMX V2 handles a more robust set of parameters when creating markets, which requires a broader set of base and dynamic parameters, including a richer dataset from our new oracles. Below are the proposed range and initial fees for testing; a final range should be confirmed by governance closer to full deployment.:

Action / Parameter Approved Range Initial Parameters
Increase / Decrease Position: 0.00% - 0.10% of trade size. 0.05% of trade size.
Price Impact Adjusted based on liquidity on reference exchanges.
Swap Fees 0.00% - 0.50% on crypto assets. 0.05% on crypto assets.
0.00% - 0.50% on stableswaps. 0.01% on stableswaps.
Fund Fee Based on the difference between long and short open interest for a market and a multiplier value.
Borrow Fee Based on the utilization percentage of the pool and a multiplier value. Borrow Fee help mitigate attacks with a trader or competitor consuming both long and short capacity at low net cost.
Multiplier Value Funding and Borrow Fee have multiplier values that need to be configured such that they don’t overly reduce the effect of positive funding fees but are a sufficient incentive to minimize OI imbalance. Over time Funding fees may start to approximate levels for existing centralized exchanges.

GMX V2 contracts combine a proposed lower swap fee with the implementation of price impact (both positive and negative) along with oracles that aggregate best bid and best ask pricing from the reference exchanges. This setup is aimed to ensure deep liquidity is secured with liquidity providers having a less volatile exposure, as net OI will be more effectively balanced through economic incentives when a large directional exposure occurs. More details on the price impact calculation: https://github.com/gmx-io/gmx-synthetics#price-impact

In GMX V2, swaps are now a two-step process similar to increase/decrease position transactions. This setup greatly reduces toxic flow (as was seen when GMX moved to two-step transactions) and should allow lower fees, which combined with price impact, will create efficient markets without running into front-running issues. This would make it convenient for traders to swap in and out of different collateral when increasing or decreasing positions. The lowered swap fee may also help make the protocol a preferred platform for swaps once aggregators can integrate this novel approach (discussions are already ongoing).


The Approved Range and Initial Parameters are for testnet and a limited testing deployment of V2 code to mainnet. It is expected that these parameters may change before the completion of these trials. The updation and management of parameters in V2 are proposed to move to a Risk Committee of the GMX DAO, along with the guidance and feedback of professional risk managers and interested community members.

Such a committee and associated community multi-sig and executor delegations with implementing such changes should be formed by the GMX DAO within 90 days of deployment to ensure community governance can guide V2.


The information, content, and materials provided in this proposal or associated governance discussion are for general informational purposes only and do not constitute financial or investment advice, nor a legally binding agreement.

Note that discussions and voting involving contributors may occur on GMX DAO social media platforms, but contributors are independent actors, and nothing discussed or proposed should be understood as an obligation for an individual contributor to act.

Please conduct your own research and consult with appropriate professionals before making any decisions based on the information provided in this proposal or any associated discussions.


Reserved for responses by proposer

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I am concerned about setting the trade fee at 0.05%

LP yield will already be reduced by 30-40% due to the funding rate mechanism.

If you were to cut trade fees by half, then the final LP yield would be about one third of the GLP yield today (assuming the volume remains the same).

At an average LP yield of ~25%, that would mean about 8-9% for LPs in v2 (these are rough numbers ofc).

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I would be interested to see if the team has done projections on fees, I.e. to maintain the same LP yield average as before (around 20%) would the volume have to be x amount higher or lower and is this a viable number

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Main reason for these lower fees is to indeed get more volume and be cheaper than competition. Borrow fees afaik will also go to the LPs, and in general LPs take fewer risks in v2 than in the current GLP implementation, so I don’t think they should be rewarded as much as GLP.

Also this is for testnet, parameters can still change.


Those market fees are in line with my expectations. I feel the general aim should be to increase protocol fees by attracting more volume and being more price-efficient than competing platforms.


Should the fees be different based on the type of crypto asset (e.g. BTC/ETH vs rest)?

My strong bias is that for v2, the goal should be to grow the pie by expanding outside of BTC/ETH. While v2 won’t be a perfect substitute for sophisticated v1 traders (b/c price impact difference), we should still try to implement this in a way that grows the pie in other assets more so.

I’d like to candidly point out to elephant in the room here, Kwenta which is becomeing hot in our heels. I am seeing them as contender for our biggest threat i.e. their fee has been consistently lower, while also successful in liquidity bootstrapping. We need to respond for the cheapest fee/ most efficient trade.

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Hmmm Im not sure if lower fees = more volume

I believe OI Caps and Volume are positively correlated. For GMX to handle more OI it would need more liquidity. And better yield is the best way to incentivize more liquidity providers.

That being said, I do agree that LPs should be compensated less than v1 since they are taking less PnL risk.

In regards to competitors taking market share. GMX’s moat is liquidity (not fees) imo. Kwenta may have lower fees but the primary LPs (SNX stakers) comes from a small basket of SNX holders. Whereas GLP has a far wider distribution of LPs (primarily due to the high yield).

For all of the above reasons, I am suggesting we start with 7.5bps trade fee (0.075%) and scale it down from there.


Not sure if I understand you correctly, if you are saying that at the higher or comparable volume or in the long run, KWENTA’s lower fees will be deteriorate due to our superior liquidity funding strategy, then I am happy about it.

As a manual trader, considering the various risks associated with centralized exchanges, if your derivatives trading fees are equal to or lower than those on an exchange like Binance, and you also have the advantages of decentralization and zero slippage, it’s hard to think of any reason to continue trading on centralized exchanges. This implies that there’s basically no reason why trading volume wouldn’t increase significantly under these circumstances.

Zero slippage is only a characteristic of GLP and can be only used with very liquid assets otherwise it causes risks for manipulation. So v2 will not support zero slippage, but provide positive/negative price impacts to balance out to short/longs.


thank you for the correction.

Our goal should be increasing the capital efficiency of GLP v2, while setting the base fee somewhere in 0.05…0.07% range and removing OI caps.

  • traders get lower fees;
  • GMX and GLP holders get ~same yield (lowered fees balanced by price impact and increased volume).

Keeping GLP yield 20%+ long term is important for GMX growth. It’s easy to say that GLP holders should get a lower yield for taking fewer risks in v2, but in reality, liquidity providers perceptions of risk won’t change too much.
And there is an additional risk of depositing assets to a new contract, which is not time-tested yet.

Crypto itself is very risky, and while we know that 20%+ APR is enough for long-term GMX liquidity growth, we can’t know the possible output of 10% or 15% GLP APR.
I remember December 2022, when we got a week of 8% APR and 50 million $ of GLP were burned.

So let’s appreciate the core edge of GMX, its robust liquidity, and don’t fuck up.


the biggest complaint about GMX tends to be the fees. Lets attract even more users to the platform and leave the competition in the dust. Love the overall ideas and can’t wait to see how it looks in testnet.

Last months GLP has been maxxed out most of the time so even though some complain, there are clearly users willing to pay current fees. As many have pointed out, a big part of GLP success was attracting big sticky liquidity with high APRs compared to other farming opps, this should be also the case with v2.

On very rough numbers, 72% of total fees in Arbitrum were accrued due to the 0.1% fee on opening/closing being the other 28% due to the borrow fee mechanism. So lowering the base fee to 0.05% for all the volume could mean losing 1/3 of fees per unit of volume traded. Adding the effect from the funding fee balance it could even mean halving the fees per unit traded.

On the other hand, I understand that to attract certain players fees need to be more competitive with other venues, that is why I believe could be helpful to implement a fee reduction system based on the 30d volume traded and amount of GMX staked, similar to what most players in the industry are doing atm. The more you trade, the less you pay per unit.

Personally I would not try to compete on fees so hard till needed, because that is a one way alley that usually drives fees to zero, erodes margins and effectively kills the pricing power of the protocol going forward. Best to compete on liquidity & security imo.


@mistapie it is possible for us to maintain different fees and parameters for each market, which creates immense flexibility.

@noodles I think some modelling during testnet will help us to see how the market compares in terms of available capacity to trade, and while we can’t exactly model how much induce demand lower fees will bring it is safe to assume volumes per $ of TVL will average higher. The idea of establishing higher intial fees and then maybe moderating or going lower but stabilizing higher if required for the proper functioning of the market are both viable options.

@natgmx while there isn’t zero slippage in this model, trading on GMX V2 should provide for crypto markets a price execution comparable to doing so across the biggest and most deep liquidity markets in Crypto. So you are able to achieve the same pricing while having the ability to trade sovereignly from your own wallet and with the privacy that DeFi allows.


GLP / Liquidity Provider Returns

Where the protocol is today with liquidity, was not driven by any single decision, but over the last 1.5 years built step by step with optimizing the protocol, notably:

  • Support by the DAO in the form of esGMX until natural volumes developed.
  • The DAO decided to reallocate the 20% of fees to the Treasury (floor fund) towards liquidity providers.
  • Phasing out the minimum holding period, which unlocked a greater velocity of activity across the platform per $ of available open interest.
  • Adjustment of swap fees and Implementation of the pull-oracle framework, which virtually eliminates potential toxic flow and oracle frontrunning.
  • Introduction of the on-chain referral program, which created greater visibility, creating volume and fees
  • Removal of redeem cooldown on GLP, creating greater composability for GLP as a collateral asset.
  • Implementation of dynamic O/i caps, to free up capacity for trading while monitoring open interest skew.
  • Countless other individual PRs designed to improve the safety, security, stability, and usability of the protocol.

This post was the starting point of the discussions for structuring GMX V2 Markets, including concepts like isolated liquidity provision, potentially new fee structures, implementation of price impact, and funding rate opportunities to balance open/interest skew and drive greater volumes, which should be validated in testnet and optimized in the protocols early release. Optimizing these settings is proposed to come under a permanent economic risk committee focused on ensuring we have safe, efficient markets. Additionally, the now-posted proposed collaboration with Chainlink provides GMX V2 with a new robust set of advanced data feeds that enable more efficient pricing.

The combination of the features above means that once V2 has proven itself, it should provide a lower risk profile than GLP and be optimized for creating a robust market that attracts liquidity providers and traders. To my mind, it is too early to say it will provide a lower return, but if it does, the risk committee, DAO, and contributors will need to continue to adjust the market to achieve the right balance as was done with V1 and many other protocols. For example, Binance recently re-introduced trading fees on select BTC & ETH spot markets, fees are not necessarily down only.


It sounds like GMX V2 should be treated as an experiment for now. The GLP model has made GMX the success that it is. If V2 provides less APR, its a no go and V1 should continue to be the flagship product.

GLP is not being closed and will continue to operate. If V2 achieves the type of product market fit that GLP has and can grow GMX position as a core liquidity layer it would be natural for the protocol and DAOs efforts to shift in that direction and unify activity under a single deployment.

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