Summary
- In the last 24 hours, the global cryptocurrency market cap declined by approximately 12.73% as geopolitical tensions and tighter monetary policies impacted market sentiment. This resulted in Ethereum dropping by 12.4% and Bitcoin down 9.4%.
- GMX V2 markets have shown strong resilience during these exceptionally volatile markets. There have been no significant drawdowns to LPs from trading (though they did suffer from underlying asset depreciation), and they remain profitable in most markets.
- The utilized markets maintained reasonably balanced OI and performed well even during extreme volatility.
- The volume on Arbitrum was 33% higher this week than in the three weeks prior, with an average of $196M traded daily.
- Due to the large reduction in OI observed across the protocol, we recommend adjusting OI caps in a few select markets.
Recommended Actions
- Update the following Arbitrum OI Caps:
| Asset | OI | Current OI Cap | Recommended OI Cap | Pool Size * 0.5 * RF |
|---|---|---|---|---|
| ARB | $600k | $10M | $5M | $2.5M |
| BNB | $50k | $10M | $5M | $0.5M |
| NEAR | $50k | $2.5M | $1M | $900k |
| WAVAX | $50k | $2.5M | $1M | $250k |
| PEPE | $0.5M | $2M | $1.5M | $360k |
- Monitor BTC.b market - token amount imbalance on Avalanche; if this doesn’t decrease over the following days, we will recommend increasing the swap parameters.
Open Interest
Arbitrum
Both long and short OI has declined significantly over the past seven days — culminating in a >50% drop week-over-week as of today — as investors have begun to take a risk-off approach to navigating the current market volatility.
Avalanche
Unlike Arbitrum-GMX’s more gradual seven-day OI decline, Avalanche-GMX experienced a sudden, steep decline (78%) concentrated within the last 24 hours. The $1.1M in liquidations that took place during this period were certainly a factor. However, liquidations alone explain just 15% of the drop in Avalanche OI, reinforcing the “risk-off” thesis.
Volume
Arbitrum
High volumes were noted on the platform, with average daily volume between 07/30-08/05 was $196M, a 33% increase compared to the $147M on the three weeks prior.
Avalanche
Average daily volume between 07/30-08/05 was $8.5M, a 18% increase compared to the $7.1M on the three weeks prior.
PnL
Arbitrum
Below, we analyze the impact of that on the PnL of the traders across different GMX Arbitrum markets. Broadly, we observe that while PnLs did rapidly ratchet downwards in a few select pairs (e.g. LINK, PEPE, BTC-BTC, ETH-ETH, and wstETH-USDe), the remainder continued a more steady, stable downward trend.
BTC-USD:
ETH-USD:
SOL:
ARB:
LINK:
XRP:
LTC:
UNI:
DOGE:
NEAR:
AAVE:
WAVAX:
ATOM:
WBNB:
OP:
GMX:
BTC-BTC:
ETH-ETH:
PEPE:
WIF:
wstETH-USDe:
As can be seen, in most markets, traders realized PnL were negative, indicating traders’ losses. In a few markets, PnL was positive over the past week (though negative in cumulative terms), as was the case for WIF; however, it was not significant.
It can be seen below that in the majority of the markets, pending traders’ PnL are positive, with BTC, ETH, and SOL standing out with larger amounts. That is because losing positions were liquidated or closed, while profitable traders might keep their trades open.
Avalanche
WAVAX-USDC
BTC.b - BTC.b
BTC.b-USDC
SOL
WETH.e-USDC
WAVAX-WAVAX
WETH.e-WETH.e
DOGE
LTC
XRP
On Avalanche, similar to Arbitrum, Realized PnL across all markets was overall negative, while some had brief moments of positive PnL.
Much like with Arbitrum, some markets show positive PnL due to losing positions being liquidated or closed whilst profitable traders keep their trades open.
OI Imbalance
Arbitrum
Below, we will look at the OI imbalance in various markets:
The more utilized markets had a solid imbalance, with a possible spike that decreased quickly to more desired values, as happened in the wETH-USD market, in which the imbalance reached ~25% and decreased to ~15%.
Avalanche
Similarly to Arbitrum, the more utilized markets had some spikes on the imbalance levels but already recovered to healthy values. However there are some smaller markets that remain imbalanced.
Funding Rates
Arbitrum
Funding rates held fairly steady on the vast majority of Arbitrum markets, with the exception of some smaller markets.
Avalanche
Outside of a stray LTC wick and persistently elevated XRP funding rates, Avalanche market funding rates also held steady throughout the recent volatility event.
Liquidations
Arbitrum
Arbitrum-based liquidations spiked to a height of $8.3M over the last 24 hours. 75% of these liquidations were denominated in USDC, 18.3% denominated in WETH, and the remainder split primarily between WBTC, LINK, and ARB.
Avalanche
Avalanche-based liquidations spiked to a height of $1.1M in the same period, with 46% denominated in USDC, 42% denominated in WAVAX, and the remainder split between BTC.b and WETH.e.
Unique Daily Users
Arbitrum
Unique active traders on Arbitrum rose to a one-month high in the last 24 hours, likely driven by an influx of traders looking to resize their bets, open/close their positions, and/or prevent liquidation.
Avalanche
On Avalanche, the number of unique active traders reached a three-month high, with user counts not seen since mid-April this year.
Fees
Arbitrum
GMX’s fees on Arbitrum held steady over the past seven days, deviating little from the three-month average.
Avalanche
On Avalanche, fees grew to slightly above-average level, though they continue to pale in comparison to spikes seen in May 2024, which were likely catalyzed by the unexpected approval of ETH ETFs, concrete details becoming known about Mt. Gox’s distributions, and other major market events.
Conclusion
The GMX V2 markets have demonstrated exceptional resilience during recent market turbulence, effectively safeguarding LPs’ funds. This commendable track record speaks volumes about the protocol’s reliability and should significantly bolster user confidence and participation as LPs.