GMX <> Yield Yak Collaboration

Disclaimer: I’m a Yield Yak contributor

TL;DR

If this proposal passes, the GMX DAO will:

  1. Transfer up to $100k of esGMX to the Yield Yak GLP vault on Avalanche and an additional chain, in two two tranches of $60k on Approval of this proposal and $40k at the time of deploying on a second agreed chain.
  2. Receive an equivalent value of YAK tokens staked on Yield Yak.

These tokens are intended to be permanently staked by Yield Yak and GMX to accrue yield and governance rights.

Why are we proposing a treasury swap?

The Yield Yak team has been the leading native yield and swap aggregator for the Avalanche ecosystem since its inception. We have worked with GLP since it deployed on Avalanche, developing both GMX and GLP Vaults on Avalanche. Moreover, Yak Swap was the first aggregator to incorporate GMX.

This treasury swap is designed to better align the two protocols, specifically Yield Yak’s GLP vault and our future GMX integrations that will help expand the GMX ecosystem.

What has Yield Yak contributed to the GMX Ecosystem, and why should GMX holders support this proposal?

Yield Yak is a yield-optimizer and DEX aggregator native to Avalanche; they have been strong supporters of the GMX ecosystem since the beginning.

DEX Aggregator:

Yak Swap was the first aggregator to integrate GMX into its trade routing. As a result, Yak Swap has routed $300,000,000 in volume to GMX, all while collecting zero fees itself in the process.

GLP Vault:

  • Yield Yak’s GLP vault was the first vault built on top of GLP, and the first to take the approach of auto-staking esGMX in perpetuity to boost rewards for all vault participants. Currently, with ~$800K TVL, it has the lowest fee structure of products built on GLP, with a fee applied only to yield and no entry/exit fees. Their displayed APY is net of fees.

  • The vault has also been integrated across the Avalanche Ecosystem; as collateral on Moremoney and Arable Finance, and with an integration underway with DeltaPrime.

  • The vault has been running for over 9 months and has recently undergone an extensive audit by CoinFabrik. The recent audit was performed to better support third-party integration of the GLP Vault with DeFi partners on Avalanche.

GLP Adapter:

Yield Yak is building a novel upgrade to Yak Swap, which benefits the GMX ecosystem by optimizing trade routing to GLP: it’ll route trades to the most under-balanced assets if slippage is less than fees. This feature will allow GLP mint and redeem to better align these actions with the rebalancing of the GLP pool towards its target index weights, and provide liquidity providers with better overall price execution.

The GLP adapter will be available on Yak Swap, pending the upcoming update to GLP to remove the 15-minute cooldown period. The adapter can be integrated into any front-end (including GMX.io), and will be available to any protocols that integrate GLP. This will be especially useful for those building delta-neutral vaults, as they tend to deposit and withdraw only in stables.

GLP Vault & Adapter

These two building blocks combine to create a near-frictionless integration for GLP within the DeFi ecosystem on Avalanche. This enables fluid, efficient integrations, and Yield Yak can potentially expand its offerings to other chains to support GMX.

What will Yield Yak do with esGMX?

The esGMX will be locked into and increase Yield Yak’s GLP Vault’s staked esGMX balance on Avalanche, resulting in a boosted APR to stakers from this investment. In the event that Yield Yak launches vaults on other chains, including Arbitrum, GMX will assist Yield Yak with in potentially bridging esGMX on a one-off basis to support additional vaults.

What will GMX do with YAK?

GMX DAO’s received YAK will be staked, earning a pro-rata share of 70% of Yield Yak’s platform fees, which are automatically distributed daily in AVAX rewards. GMX will stake their YAK to earn these AVAX fees, for a minimum of two years. In the event that YAK moves to multi-chain YAK staking, it will assist GMX with bridging YAK if desired.

How can we price the YAK and esGMX?

Pricing of both YAK and esGMX would use the 30-day trailing average price for GMX and YAK, taken from Coingecko at the time of approval of this governance proposal.

Lockup / Vesting

Yield Yak and GMX intend to hold the tokens received from the swaps indefinitely, with them deployed in accordance with the principle of this proposal. The swap is intended to support protocols building on GMX through sustainable yield generated from esGMX and not the selling of the principal from the swap as the esGMX are not vestable.

After two (2) years, if there has been a material change in the tokenomics or intended utility of the tokens that result in the protocols being unable to use them as had been planned, the protocols may mutually review and come to governance to seek equitable adjustments.

13 Likes

Reserve for comment.

YieldYak was one of the first protocols to integrate with GMX as it entered the Avalanche ecosystem with both swap integration and GLP auto-compounder. Excited to be able to keep having YieldYak build out products (the GLP connector) and help us grow and integrate deeper with other protocols.

The esGMX tokens are locked forever supporting GMX vaults with boosted yield and helping to increase our sticky deposits.

5 Likes

All up for it.

One of the first OG protocols building on top of GMX.

5 Likes

Love to see it! Fully support the above proposal from the yak team. Moremoney also leverages the yield yak vault for GLP used as collateral on our protocol.

Conclusion: The above proposal is a win for gmx, yy, and mm along with every other protocol (currently 2 I know of) integrating this vault.

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I support that one. Up vote it.

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I think its good idea but i think we should calm down on giving esGMX to every project

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Extremely well thought out proposal. As YAK has already accumulated a decent stack of esGMX to date, it makes sense to continue supporting their efforts in return for a revenue generating asset.

YAK currently sitting at $2m market cap with all tokens released on the market, this would be a bargain. Already have close to $1m deposited in their GLP vault so I feel this could be a good collab.

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I don’t think it’s a good idea to give too much esGMX away.
Yik Yak is even on Arbitrium…

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Proposal also have a commintment to deploy another chain which is arbitrum. It’s not that hard to deploy on second chain for YY devs and they have a great experience from their Avalanche product.

As an early supporter of both protocol i would love to see more deal between YY and GMX.

I have some suggestions and questions about proposal:

  1. Topic of “Yied Yak deployment on Arbitrum” needs more details. Yield Yak is a great product and it proved itself for over 1 years. However it’s not just autocompound protocol and i would like to know which YY products going to deploy on second chain.

Why this is important?

  • Token swap deals seems fair at first check however $esGMX APR is 15% (%7.5 is esGMX) while $YAK APR is %5 at now.

  • ̶Y̶a̶k̶S̶w̶a̶p̶ ̶i̶s̶ ̶o̶n̶e̶ ̶o̶f̶ ̶t̶h̶e̶ ̶g̶r̶e̶a̶t̶ ̶f̶e̶a̶t̶u̶r̶e̶ ̶o̶n̶ ̶Y̶a̶k̶S̶w̶a̶p̶ ̶a̶n̶d̶ ̶b̶i̶g̶ ̶p̶o̶r̶t̶i̶o̶n̶ ̶o̶f̶ ̶$̶Y̶A̶K̶ ̶A̶P̶R̶ ̶i̶s̶ ̶c̶o̶m̶i̶n̶g̶ ̶f̶r̶o̶m̶ ̶t̶h̶i̶s̶ ̶f̶e̶a̶t̶u̶r̶e̶.̶ ̶S̶o̶ ̶t̶h̶i̶s̶ ̶f̶e̶a̶t̶u̶r̶e̶ ̶s̶h̶o̶u̶l̶d̶ ̶d̶e̶p̶l̶o̶y̶ ̶o̶n̶ ̶s̶e̶c̶o̶n̶d̶ ̶c̶h̶a̶i̶n̶ ̶t̶o̶o̶ ̶g̶a̶t̶h̶e̶r̶ ̶m̶o̶r̶e̶ ̶f̶e̶e̶s̶.̶ (This statement is wrong, YakSwap is currently free.)

  • $YAK token is not multichain and i’m willing to know if it’s going to be multichain? If it’s not going to be a multichain then there should be a some kind of design for routing Arbitrum fees to the Avalanche side while $YAK staking option is just on Avalanche.

  • Avalanche TVL bleeding for months and ofc this is effecting YY’s platform revenue. We can’t know if this situation continues or not, even so YY should be fully deployed to the Arbitrum to maximise it’s platfrom revenue so GMX can earn more staking rewards from $YAK token.

  1. YY’s GLP vault has almost 1 million $ TVL. This is almost 0.5% of all GLP on Avalanche. Thanks to their autocomopound feature Moremoney and Arable protocols enabled lendign GLP which is great for adoption of GMX and liquidity tokens. And all of this handled by YY without any incentives. Incentivising GLP vault on YY with esGMX token may also bootstrap liquidty for GMX which is a gud deal imo.

  2. The GLP Adapter is mostly bond to GMX’s zero price impact feature imo. Would GMX serve zero price impact feature on future or is there any negotiations for it on risk management side?

  3. Gathering big portion of the liqudity to a YY contract could also incentivise some hackers. Those contracts needs to audited via 3rd party protocol at least to prevent unwanted future loses for both parties.

  4. GMX’s zero price impact policy also needs to be discussed while it might triggered some unwanted events and lose on GLP.

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Regarding the Yield Yak part of your Qs:

  1. I suggest we have the discussion of YY’s chain expansion on a YY channel for a more nuanced discussion as there’s a lot to cover in your points. With regards to the Treasury Swap reserved for another chain, the agreement is dependant on Yield Yak deploying a GLP strategy on another chain, with the esGMX used towards that new strategy.

Also just clarifying that Yak Swap doesn’t charge any fees at the moment, it’s a free DeFi tool built for users, not yet a revenue generator.

  1. Yield Yak’s GLP vault has been audited already in preparation for the increased expected TVL, the audit has been released here: https://blog.coinfabrik.com/smart-contracts/smart-contract-audit-smart-contracts/yieldyak-audit/
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Looks good. what are the collateral req’s on transferred esGMX? Bc its normally a function of amount staked / time to accumulate.

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Hey, yeah I see your concerns here…

Want to address them:

  1. It’s not given away but swapped for another protocols token, which is also yield generating. GMX would become the largest stakeholder in YY if this goes through and would allow them to heavily influence the direction of the project. The upside for YY is substantial and there are no more token emissions.

  2. The esGMX is going directly to a vault to boost yields, incentivizing more deposits and also compounding those rewards. This is a win-win-win for GMX, YY and depositors.

  3. esGMX wars. This looks to be the start of the wars to accumulate as much esGMX as possible. YY are in the best position (today) as they’ve already accumulated a decent stack. Makes sense for GMX to have a stake in them.

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Supporting this.
Together, the whole is greater than the sum of its part.

GMX stands to benefit a lot since there are no longer emission of YY. With YY holding esGMX, both will work together to build a better ecosystem.

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wondering same question

I think that we should use esGMX to get into the new innovative project. Space is growing so fast and we should use our research skills and invest in the right part of this sector.