Implementation of GMX Liquidity Vaults (GLV) for Enhancing Liquidity

Proposals
1

Summary
GLV (GMX Liquidity Vaults) offers a new way for users to easily provide liquidity to GMX, using a single vault instead of directly to individual GM Pools. Each vault is configured to include various GM pools that all have the same underlying long token and short token. Utilizing the recently introduced SHIFT function, GLV’s dynamically allocate liquidity to their target GM pools based on factors including but not limited to pool utilization, fee generation, OI.

By consolidating multiple GM pools into a single GLV, liquidity providers (LPs) will benefit from enhanced rebalancing and improved liquidity management, which should deliver a more optimised return profile.

GLV helps GMX to:

  • improve the overall capital efficiency of liquidity
  • boost available liquidity for traders through periodic active rebalancing
  • more easily bootstrap sufficient liquidity for newly launched trading pairs

The proposal recommends integrating GLV vaults alongside existing V2 GM pools.

Motivation

The implementation of GLV is a natural evolution of GMX V2. It combines the more granular market parameters and safety gains that V2’s isolated markets provide to LPs, with a more cohesive and accessible liquidity product like GLP introduced to the perp DEXs.

This combination can unlock more capital-efficient liquidity, and support for greater volumes / Open Interest across a broader set of markets.

Rationale

Currently, liquidity providers (LPs) contribute to individual GM pools, each containing a specific long and short token pair. GLV introduces a unified mechanism for pooling liquidity across multiple GM pools with identical token pairs. This system enables:

  1. Enhanced Capital Efficiency: GLVs allow for aggregated liquidity, reducing fragmentation and increasing the overall efficiency of capital deployment.
  2. Improved Liquidity for Traders: Active rebalancing within GLVs helps maintain optimal liquidity levels, resulting in a better trading experience for traders.
  3. Simplified LP Experience: By consolidating liquidity into GLVs, LPs can manage their investments more effectively without tracking multiple individual pools.
  4. Streamlining listing of new markets: Markets determined to be safe can be directly integrated into an appropriate GLV, ensuring access to sufficient liquidity without needing to initially bootstrap these markets individually.

Specifications

Buying and Selling GLV:

Buy GLV: Users can select either Single or Pair options. GLV tokens will be purchased using long, short, or eligible GM tokens. The UI will capture which underlying pool the funds will go to.

Sell GLV: Users can only select Pair options. The UI will capture which underlying pool the funds will be withdrawn from.

Fees and Price Impact:

Buy GLV: Fees and impacts will mirror those of buying GM tokens. No additional fees are incurred for using GM tokens.

Sell GLV: No price impact. Close fees apply for exiting the GM pools.

The DAO may subsequently add fees to GLV, as an independent action or potentially combined with reducing fees on underlying GM markets.

Implementation Plan:

Design and Development:

Collaborate with developers and designers to implement changes to support GLV functionality.

Testing and QA:

Conduct thorough testing of the GLV features.

Address any issues or bugs before deployment.

Deployment:

The initial rollout of the GLV feature will use a phased approach to monitor performance and user feedback, including tight supply caps on GLV and the underlying target GMs. The first GLV proposed is WETH/USDC on Arbitrum, as this token pair includes the broadest set of markets available on GMX.

Monitoring and Support:

Continuously monitor the performance of GLV.

Provide user support and make necessary adjustments based on feedback.

Conclusion

The introduction of GLV is set to significantly advance the GMX protocol’s liquidity management options for LPs. Integrating GLVs into the existing earn interface will provide a unified approach to liquidity provision, enhanced capital efficiency and the improved liquidity profile will improve the trading experience for users.

This proposal aims to streamline the LP experience, optimise liquidity deployment, and boost overall platform performance. It outlines the necessary steps for implementation and seeks approval from the DAO to move forward with the integration of GLV into the GMX protocol.

9 Likes
2

Thank you, @Saurabh, for this proposal.

As a GMX delegate, I see this as a pivotal move toward simplifying the investment process for users who prefer a streamlined vault experience without navigating individual GM pools, so a big yes from me.

The concept of dynamically reallocating liquidity to specific pools is exceptionally well-conceived. It directs GLV vaults toward the most advantageous opportunities while ensuring that each pool maintains adequate liquidity for traders’ needs—without relying on a single global vault for all pairs.

This is liquidity efficiency at its finest.

5 Likes
3

very excited over liquidity moving to the most needed place
:slight_smile: thank you saurabh!

4

GLV is necessary for GMX to deploy more markets, especially long-tail markets, and can incorporate the advantages of GLP from GMX V1 into GMX V2, providing a simpler and more consistent experience for LPs. I strongly support the deployment of GLV.

2 Likes
5

One of the best aspects of GMX v1 was the simplicity of GLP, but of course it was limited in the assets that could be offered. The innovation of v2 allowed for the inclusion of longer tail assets but this of course came at the cost the simplicity that GLP offered.

With the deployment of GLV, GMX will be able to satisfy all range of investors allowing those who are more cautious to LP for the pools they are comfortable in (the first iteration of v2 deployment) but now will also be able to cater to those that are interested in higher capital efficiency but are perhaps less considered with the trader PnL of some of these longer tail assets.

GLV will allow for improved boot strapping of new synthetic markets and could see new pairs be added more frequently.

Very much in favour.

1 Like
6

d2.finance is excited about this and confirms it will build on top of GLV.

We’ll also nudge Dolomite/Corey to offer leverage as soon as possible! :grin:

ARB++ and some other vaults already provide liquidity for GM ETH, GM BTC, and GM SOL ( we are users of SHIFT :grinning:) , but the cost and complexity of adding other assets haven’t been worth it. We have specific models for these assets based on external data, like Camelot v3.

Having a single wrapper where we can model a basket, as successfully done with the GLP-based strategy, is a significant improvement. It allows us to allocate static capital without needing constant rebalancing (which is operational costly as we run many vaults).

We may able to bundle with the upcoming GMX++ ( built on top GM GMX and looped in new integration in dolomite + alpha startegies on top)

2 Likes
7

glad D2.finance is onboard!

thank you for being fast and great quality work =)

1 Like
8

The GLV vault implementation is quite innovative, especially in reducing the difficulties for new users interested in providing liquidity on GMX v2 and choosing the right market for themselves. This simplifies the liquidity provision process by depositing into GLV, allowing users to enjoy the yield across different markets without complex management, utilizing the advantages of the first-generation LP - GLP.

Moreover, it enhances the liquidity efficiency of different markets on GMX, especially for the new listing synthetics that need initial liquidity.

Vaultka supports this proposal and looking for the potential upgrade of our basket GM product - GLM. Possibly, enable leverage on GLV to further bootstrap new capital.

2 Likes
9

GLV has now been successfully launched, with a BTC edition following the initial ETH edition. Both are attracting lots of liquidity:

GMX introduces GMX Liquidity Vaults (GLV), now live on Arbitrum

x.com

x.com

3 Likes
10

We are in full support of the GMX Liquidity Vaults (GLV) proposal. By introducing automated vaults, this proposal stands to improve overall capital efficiency, ensuring that liquidity is deployed where it is most needed, thus maximizing the impact for both liquidity providers and traders.

The GLVs’ ability to bootstrap liquidity for new and upcoming pairs is particularly valuable, as it will help these pairs gain traction more quickly. In addition, automated rebalancing across different liquidity pools will provide deeper liquidity and reduce slippage for traders, resulting in a more efficient trading environment.

The move away from traditional liquidity mining incentives towards a more sustainable and decentralized model is a positive step, and we believe it will strengthen the GMX ecosystem over the long term. However, we strongly advocate for thorough audits and transparent risk assessments to ensure the security and safety of user funds.

Overall, we believe the GLV proposal will significantly enhance the liquidity framework and support GMX’s continued growth.