The current max leverage allowed by the GMX interface is 30x, liquidation happens when (collateral - losses - borrow fee) is less than 1%.
The max leverage allowed by the GMX interface should be increased to 50x, this would give more options to traders and attract more users.
Considering the data we have statistically positions with higher leverage are less profitable. So it should not significantly increase risks to GLP.
Average profit grouped by leverage:
Personally I very against 50x. Being 30x now, we already have higher leverage than DYDX and even FTX. High leverage is cool, but there are many reasons why most CEXs eliminated 50x+. People are irresonsible and it could be a little unethical considering the permissionless nature of GMX.
This will hurt the branding and also affect
the reputation of GMX Blueberry Club. Do we really need to use irresonsible high leverage just to get more users?
There are other ways to attract more user like adding more assets. For AVAX, we can add LINK and JOE token (UNI equivalent) etc…
Not thinking this is a great idea. GMX benefits more from being viewed as a legit and reputable decentralized trading platform, not an online casino.
Are there any specific examples you might highlight about value or use cases this might unlock? In my mind, I can think of anyone challenged for capital efficiency of 30x leverage that would be satisfied by 50x - at 10x a 10% drop liquidates you, at 30x a 3.3% drop liquidates you, at 50x a 2% drop liqs you. Is anyone clamoring for that additional 1.3% of wiggle room? It would make sense for trades between two really stable paired assets (Forex?), but it doesn’t seem like the platform supports any such assets currently.
Recently a number of large CEXs (Binance, FTX) lowered their max leverage to 20X. I think the current 30X is plenty.
Even though I think this would be great, the problem that cannot be easily surmounted without working with custom chainlink oracles is that our oracles aren’t fast enough to work with high leverage positions. It technically isn’t possible to raise leverage much more without causing user experience to suffer where people do or don’t get liquidated/stopped out when they are supposed to.
Increasing the leverage to 50% will only result in more liquidation fees. In the short run may look positive, but in the long run it will drive away traders.
IMO, we should look at being much more cost effective and fast (transaction wise) with little or no slippage.
That’s what a regular trader would be interested in.
Additionally we should look at having more assets in the trading pool (this should be introduced once the number of trades is 3x-4x that of current number)
Traders know the risks of leverage, and definitely when they go higher than 30x.
I don’t agree with this opinion, and we should increase leverage options to attract other traders. Fees were also up for discussions as fast as I know, why not attract both of these groups of traders?
@xdev_10 could we have an update on how easy this is for dev and if so, maybe put up the voting already?
I don’t see any problem with increasing the leverage to 50x. The risk of liquidation is clearly indicated. As long as the protection of funds from GLP is ensured traders are responsible for risk management
the code changes needed to increase leverage to 50x is already done, will try to create the proposal for voting this week.
I don’t particularly like making ethical decisions for users. However, I can see where that would be important for more regulated, centralized solutions like FTX or dydx. I think we should give our users maximum options and let them make their own decisions about how to deploy leverage within their trading strategies.
The most important issue to me is security. Second would be additional risks to GLP. Then dev time to implement. As this is an extension of existing functionality (increasing leverage from 30x to 50x), higher levered traders tend to do worse mitigating risk to GLP somewhat (although no guarantees), and the code is already written, I support this proposal.
I think it’s in everyones responsability to manage their risks. We could also just activate the x50 lvg and see how it goes for a test period of say 1month, and deactivate it afterwards if it does more harm than good.
I’m good with the decision.