Gmx v2: new low-latency chainlink feeds

They mention they will post once per block, which seems like a fixed price, which could be divided between various other DeFi apps

Why is a percentage of profits being promised over a fixed price? It does feel much more in favor of Chainlink

What are the protocol profits that can be made by switching to low latency - can this be stimulated?

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It’s $136.1m fee earn by GMX Protocol by past 365 days,
Does it means we need pay $1.6m (1.2% of protocol fees ) / year for Chainlink’s new low-latency oracles ?

That seems a little expensive.
As exclusive launch partner and especially they got help from GMX core contributors, Is the price fair ?

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Chainlink low-latency oracle is important because now we use the price from Keeper which is actually quite centralized. The mechanism of Keeper already brings lots of fuds such as “GMX team could exploit all GLP by themselves”. By using the new Chainlink oracle, the security of GMX would improve a lot. Thanks for your effort

But Chainlink is more like Saas , so it sounds more reasonable to use a fixed subscription fee. If still wanna “pay by use”, the “num of transactions” is more reasonable than “fee”, we could charge a “Chainlink fee” at each trade as the “keeper fee” for now.

So my suggestion is to discuss 2 options:

  1. Fixed price (such as $500k?)
  2. Charge “Chainlink Fee” at each trade from traders to pay Chainlink (such as $0.01/trade?)

And GMX should always get the lowest price from our contribution and bargaining power.

Summary: This oracle is very important but fee structure could be modified.

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@nulos you understand correctly the proposed 1.2% is part of the 10% allocated to the treasury, but if the treasury proposal were not to pass then this 1.2% would be a standalone fee.

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The exclusivity is specific to GMX being the launch partner of Chainlink’s low-latency oracles. GMX contributors have worked closely with Chainlink Labs on the development of the low-latency oracles since last year, this solution has been customized to fit the protocol’s needs which enables GMX to be the first using this oracle solution. GMX will work with Chainlink to deploy these feeds to address our initial set of desired assets and chains, but eventually these oracles should and will be utilized by others who are also contributing towards the cost of this infrastructure as GMX is.

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Hey guys, thank you all for the thoughtful questions and enthusiasm around the proposal. I’ll do my best to answer batches of relevant questions about this proposal periodically as they come in.

We’ll aim to address this as well as the other relevant questions about how low-latency oracles operate below.

To understand how low-latency oracles help GMX, we must first outline the unique challenges and requirements of price oracles for derivatives protocols in DeFi. Three considerations need to be made:

  1. Price oracle updates must feature extreme low-latency to ensure data made available to the platform is fresh; otherwise, traders can become exposed to stale price execution, and liquidity providers can become exposed to value extraction via MEV techniques.
  2. Oracle price data must be kept private before trade settlement; otherwise, malicious actors can extract value from traders by frontrunning oracle updates, such as by viewing data on another blockchain before it’s relayed or reading the transaction mempool.
  3. The oracle infrastructure must be decentralized, both at the node operator and data source level, to help ensure high trust-minimization guarantees and robust market coverage.

With these requirements in mind, Chainlink Labs has actively worked with contributors to GMX in developing this new low-latency oracle solution that uses a pull-based data delivery mechanism to provide GMX with access to high-frequency data, where oracle reports will be made available off-chain for every block to be used as needed to settle user trade transactions. This is in contrast to a push or trigger based model where data is continuously streamed on-chain (reference feeds). This architecture is what allows the oracles to operate in a low-latency manner and provides greater economic efficiency as data only needs to be published on-chain when required.

On the question about security, the new low-latency solution will utilize the same set of node operators and multi-layered data aggregation mechanism currently deployed in existing reference contract-based Chainlink Price Feeds. This allows the new oracles to retain the same level of manipulation-resistance but provide access to data on a higher frequency basis to meet the need of DeFi derivatives. Low-latency oracles will regularly generate oracle reports off-chain, where a decentralized oracle network cryptographically signs the oracle reports. The reports can then be fetched off-chain and validated on-chain by checking the cryptographic signatures before being consumed by the GMX protocol to settle user transactions.

In addition to providing wide market coverage, this solution helps mitigate the risks around frontrunning by keeping oracle reports private until trade transactions are settled. Both the reduction in oracle latency and the improvement in frontrunning risk mitigation can help GMX further reduce trading fees and increase both the platform’s efficiency and user experience.

I will aim to address questions about the structure of a percentage fee here.

This proposal includes the integration of Chainlink’s low-latency oracles into the GMX protocol, however, it also goes far beyond that. As the GMX protocol seeks to increase its decentralization, it will need a strong oracle partner to address and build solutions that can meet GMX’s oracle requirements both today and into the future. By offloading oracle development from core GMX contributors, they can focus on improving the core business logic of the GMX protocol to continue being a pioneer in DeFi derivatives innovation by adding new functionalities. Additionally, new and existing users are provided peace of mind regarding the oracle infrastructure used by GMX.

We are looking at this collaboration as a long term alignment opportunity between two DeFi pioneers, whereby Chainlink Labs would become the de-facto oracle team for the GMX protocol and strengthen the relationship between our two ecosystems and communities. Chainlink Labs can tackle GMX’s most pressing oracle needs, including the deployment of new additional low-latency feeds, expansion to additional blockchains, improving existing low-latency oracles with additional functionalities, and providing access to additional oracle solutions such as Chainlink Automation to enhance GMX’s usage of Keepers, and many other forms of future collaboration. Therefore, the fee structure in this proposal facilitates the creation of a win-win relationship, boosting the growth and decentralization of the GMX protocol.

The fee structure of this proposal reflects our strong belief in the future growth potential of the GMX ecosystem and the enhanced level of support that will be provided to help make the GMX protocol as successful as possible. Future usage of Chainlink’s low-latency oracles by other protocols may incorporate a different fee structure depending on the different types of integration and level of active support provided to the integrated protocols. Arbitrum is the initial chain the low-latency oracles will be deployed to, with future chain integration work occurring after validating the Arbitrum deployment with GMX.

Chainlink Labs will continue working with the GMX community and core contributors on an ongoing basis, including aligning our technical roadmaps to prioritize the chains that GMX plans to expand to. Initial work is focused on launching on Arbitrum and ensuring the protocol is operating as expected. After deploying on Arbitrum, we’ll focus on deploying Chainlink’s low-latency oracles onto new chains. Given the improvement in architecture of Chainlink’s low-latency oracles compared to existing Chainlink reference feeds, the chain integration process can be streamlined.

That is correct. The fees outlined in this proposal will only kick in after the low-latency oracles have been integrated into GMX on mainnet.

I appreciate the questions posted by the community and I know there’s more I haven’t yet addressed, I aim to post a followup in the near future.

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By Stand alone fee, you mean a fixed fee? Or 1.2% of all fees?

thanks for sharing

i) can we know more details around how 1.2% figure was calculated
ii) will a ‘pay by usage’ model be better?

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1.2% should be acceptable quantum for now. But for how long until this agreement has been reconsidered again? What is the tem of the deal last?

1.2% is very unreasonable. The income of the gmx agreement is higher than 99% of the agreements on the market. For some agreements, such as lending, the annual income is not as high as a week’s gmx. This is more beneficial for other protocols. What’s more, gmx expects its revenue to double, and the amount of commission will be very large at that time. My opinion is only for fixed amount fees

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Totally agree with CapitalismLab.
It is unreasonable to charge at 1.2%.
Does chainlink charge Apple taxes?
Given the high growth rate of GMX, this price will go higher and higher until it reaches a ridiculous level.
We should pay a fixed price.

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I have a pro-Chainlink bias, but that’s because I’ve been following them closely since they launched. I’m gonna state it bluntly but here it is: there would be no defi in its current state without Chainlink. They pioneered the oracle layer with the highest concerns for R&D innovation and security, and allowed the first wave of defi protocols to launch rapidly and grow to where we are today. I’ve witnessed too many exploits to enumerate because some teams didn’t take their oracle security seriously enough. By contrast, I’ve also in the past 5 years repeatedly witnessed what could be labeled as “the Chainlink effect”, or how a chain or a protocol starts gaining significant growth metrics post-Chainlink adoption, opening up entirely new markets for their developers leading to more growth, and guaranteeing the highest security for the end users, leading to more virtuous cycles of adoption. Chainlink as a layer should be viewed as a public good, this is no different than a % of fees going towards the maintenance of the main chain.

1.2% is more than fair and reasonable when you actually consider the critical security, peace of mind and value add that Chainlink brings to the table.

As Johann pointed out, this type of fee structure reflects a deeper win-win strategic alignment and long-term involvment/support, meaning infrastructure custom-designed and engineered for GMX’s current & future needs in close collaboration with GMX core contributors. This is a key aspect not to ignore.

Now consider that historically, the earliest and closest Chainlink adopters have gained a significant advantage in terms of overall ability to innovate and rapidly and securely deploy new markets. Because simply put, most dapps innovations derive from new oracle capabilities.

I believe this not only includes this new low-latency solution but also, potentially, all their other offerings, such as CCIP which is also promising to take dapps to a whole next level and facilitate cross-chain innovations.

I’m expressing myself here with the belief that Chainlink is a true unsung backend champion of the entire defi sector, having allowed countless projects to grow faster yet with enhanced security, but with the general understanding that DAO community members focused on frontend/dapps, and who may not be active on technical development or interested in backend concerns, but are more concerned with the treasury side of things, may sometimes fail to appreciate the value that Chainlink has historically brought to projects that developed deeper relationships with their team and adopted their innovations. All I can say in this matter is, please do some research on the complexity and critical important of the oracle layer in dapps.

Consult with actual technical contributors if you can and I believe they will all tell you the same thing: If there’s one aspect you should not underestimate, it’s the oracle layer of your protocol. Chainlink’s track record speaks for itself. They are simply the best, most professional and most committed at what they do. Do a deep dive in their architecture docs if you can. A deeper, tighter relationship with their talent can only bring brighter opportunities for GMX long-term.

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Collaborating with Link is very meaningful, but a 1.2% share is very unreasonable. If the revenue of the GMX agreement increases tenfold, Link will share 10 million US dollars, which may be expensive. The majority of people in the discussion believe that:

  1. Supporting cooperation with Chain Link, but using fixed fees;
  2. A 1.2% share is not practical and seriously unreasonable, It sows seeds for the loss of future assets of gmx
  3. What is the industry standard for the cost of cooperation with oracle machine, what kind of service I want to get, so how much does it cost and so on!
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Hey guys, have been observing this proposal for a while now and it seems that many of the concerns lie on the fact that 1.2% of the protocol revenue will be rewarded to Chainlink as a contribution for their low-latency oracle solution.

Not sure many of you have noticed but Pyth actually came out with the exact same infrastructure last year and Synthetix has been using it for their perps v2. No cut of Synthetix protocol fees are being diverted to Pyth.

Attaching some links for further details:

https://sips.synthetix.io/sips/sip-285/

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Subject: Cease and Desist - Misappropriation of Intellectual Property

Dear Johann,

I am writing this letter on behalf of community members from the SynthetixDAO (“Synthetix”), a leading decentralized financial platform focused on providing innovative financial platforms and liquidity infrastructure. It has come to our attention that Chainlink Labs LLC (“Chainlink”) is developing and implementing a “low latency oracle solution” that misappropriates the intellectual property of Synthetix.

The Synthetix community had previously ideated and shared with Chainlink the concept, specifications, and requirements for the development of a low latency oracle solution, with the understanding that Chainlink would create this solution for Synthetix. However, it has recently come to light that Chainlink has proceeded to develop and promote this low latency oracle solution as its own intellectual property, without any acknowledgment of Synthetix’s contributions or prior agreement.

This misappropriation of Synthetix’s intellectual property and violation of the implied agreement between our companies is unacceptable. Accordingly, we demand that Chainlink immediately:

Cease and desist from any further use, development, distribution, or promotion of the misappropriated low latency oracle solution;
Acknowledge Synthetix’s contributions to the concept, specifications, and development of the low latency oracle solution in all relevant materials, including Chainlink’s website, marketing materials, and any other public or private channels; and
Provide written confirmation within fourteen (14) days from the date of receipt of this letter that Chainlink has complied with the aforementioned demands.
We further request that Chainlink enter into a dialogue with Synthetix to discuss the potential for an amicable resolution of this matter. Failure to comply with the demands set forth in this letter may result in SynthetixDAO pursuing all available legal remedies against Chainlink, including, but not limited to, seeking injunctive relief, monetary damages, and attorney’s fees.

Please understand that this letter is not a complete recitation of the facts or applicable law, and nothing herein is intended as, nor should it be construed as, a waiver or relinquishment of any of Synthetix’s rights, remedies, or defenses, all of which are expressly reserved.

We look forward to your prompt response to this matter.

Sincerely,
William87
Associate, Samuel & Polik Law Partners

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@William88, the low-latency oracles put forward for the GMX v2 launch are the result of a collaboration between the GMX and Chainlink Labs contributors. This forum post is meant to discuss the merits of a long-term collaboration between two protocols pioneering new solutions for the space together. Our team was not able to find your law firm or its website anywhere, but you can contact us directly on this matter at legal@chainlinklabs.com and let’s keep this thread focused on relevant DAO discussions.

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Sure besides the flagrant theft of intellectual property, skimming 1.2% of fees for centralized price feeds is top tier grift. Hope GMX holders aren’t dumb enough to allow this robbery to pass.

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@perps thank you for your feedback. Chainlink and Pyth are two strong participants in the Oracle space but saying the pull based oracles that Pyth are providing Synthetix for their v2, are the exact same as what Chainlink has built to help support GMX requirements is simply not correct, there are multiple key differences in terms of how data is recorded, how the data is transmitted and what information is being assembled.

In looking at how GMX’s now year old, low latency pull based Oracle infrastructure could be better decentralized and supported with a protocol that could focus on the associated challenges (data quality, latency, incentives for participants and ensuring decentralization) the core contributors evaluated many groups including Pyth.

I really don’t want to take anything away from Pyth, have considerable respect for the team but their solution didn’t line up with our requirements and its possible that at the time recent partnership with Synthetix (who had moved away from their long time Oracle partner Chainlink) meant they had a design in mind that addressed Synthetix needs.

I do wonder in case you are more familiar with the Synthetix community, is there an expectation that Pyth will never charge Synthetix fees? If so how do they pay for their infrastructure, data feeds and ongoing R&D? Has Synthetix assumed that oracles will be a free service while developing their tokenomics for their v3?

No doubt Chainlink and Pyth will continue to iterate and improve their products, as the proposer my perspective is that it is clear why Chainlink will keep developing and improving their product to meet the growing and evolving needs of GMX, they are getting paid to do so.

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So everyone who makes a random account on here can comment? I thought a DAO discussion are ONLY for those who own a stake in GMX protocol.

Toxic trolls like Williams and the Pyth guy add zero contribution to this whole discussion at all, posting larps and copies pasted legal templates created by ChatGPT just to sow dissent.

Furthermore it is not a shame to just blatantly call out PYTH for their shit security, how many times have they been exploited already, how do you even dare to consider this joke of a project, do you want to put our users fund at risk?

1.2% fee is literally nothing for peace of mind and early access and help with testing on upcoming future products regarding interoperability and zero knowledge proofs.

Finally do not try to put Synthetix and Pyth as one team, nobody is a team with them except shitcoins. Snx will dump the current unsecure patched together non scalable low latency oracles in a heartbeat when Chainlink Finally releases their secure scalable version.

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Thank you for the response!

I believe the GMX community would also be interested in knowing more about the detailed evaluation done by the GMX contributors that ultimately decided why Chainlink is the better fit compared to Pyth. The comparison should give a better understanding on the oracle pricing, latency, impact on GMX fees/spreads, etc. Synthetix perps v2 have been using Pyth successfully for several months. It would do the GMX community a great disservice if the contributors don’t consider all the available options and disclose the findings in this forum.

Ultimately, as a member of the GMX community, I believe that we deserve to know that if 1.2% of the protocol revenue were to be diverted for an oracle service, we are getting a thorough analysis and comparison of possible options (Chainlink, Pyth, possibly others) so that we can objectively decide that Chainlink is indeed the best solution.

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