Proposal to Introduce Gold and S&P 500 Markets to GMX
Summary:
To enhance the trading experience on GMX and attract a broader range of users, I propose adding Gold and S&P 500 markets, alongside v2 liquidity pools. This strategic expansion will increase interest in using GMX, especially among traders and investors seeking exposure to these new markets or earning passive income through v2 liquidity pools.
Benefits of Introducing Gold and S&P 500 Markets:
Diversification of Trading Options:
Providing access to two of the most prominent and widely-traded assets globally.
Cater to both traditional market investors (S&P 500) and precious metals enthusiasts (Gold).
Increased Platform Usage:
Attract users from the broader financial markets who may not yet be familiar with decentralized exchanges.
Offer diversified trading options for existing GMX traders.
Enhanced Liquidity and Passive Income Opportunities:
v2 pools will enable users to provide liquidity to these markets, offering attractive passive income opportunities.
Deep liquidity will also result in better trading experiences with reduced slippage.
Implementation Plan:
Market Creation:
Develop new markets for Gold (XAU/USD) and the S&P 500 (SPX/USD).
Ensure efficient pricing by integrating with reliable data oracles.
v2 Pool Development:
Launch corresponding v2 liquidity pools for Gold and S&P 500 markets.
Create incentives for liquidity providers to encourage deep and sustained liquidity.
Marketing and Education:
Conduct targeted marketing campaigns to raise awareness about the new markets.
Educate existing and potential users on the benefits and mechanics of trading these markets on GMX.
Continuous Monitoring and Improvement:
Monitor the performance of the new markets and v2 pools.
Gather feedback from traders and liquidity providers to refine and improve the user experience.
Conclusion:
By adding Gold and S&P 500 markets to GMX and introducing v2 pools, the platform will become more attractive to a wider user base. This strategic move will bolster GMX’s position as a comprehensive trading platform, catering to both crypto enthusiasts and traditional market investors seeking a decentralized alternative.
This is an exciting proposal and represents a theme that GMX could use to distinguish its self from competitors.
Bringing RWAs onto the exchange opens the doors to a whole new set of market participants looking to trade these markets outside of their usual trading windows with fast settlement times. If we could integrate key index funds and commodity markets such as energy derivatives, the demand from outside the insular crypto economy could be significant.
This seems like the holy grail for not just our protocol, but crypto as a whole. I imagine this is not the first time someone has thought of building markets for these RWAs.
I would like to ask someone with a better technical understanding, how feasible is this proposal? Do we need to rely on another service to tokenize these assets first or can we use oracles to track any arbitrary statistic? What are the limitations?
If there is any additional information or insight a knowledgeable party could share with the community, we would all appreciate it. Please elaborate on:
• Technical limitations / solutions
• Potential for excessive legal scrutiny
• Demand expectations (seems obvious to be high, but would love to hear another point of view)
Absolutely, the potential to open up new markets through GMX is thrilling. Your emphasis on the technical aspects of integrating indexes and stocks is particularly relevant. Understanding these nuances is crucial for a successful implementation.
For instance, incorporating assets like Gold could indeed be streamlined by leveraging existing tokenized solutions such as Pax Gold (PAXG). Similarly, US fixed income could be efficiently integrated using instruments like Ondo’s USDY. These examples could serve as practical starting points for bringing RWAs onto GMX platform.
I would love to delve deeper into how we can expand this approach to include indexes and stocks. Any insights or technical expertise on this front from the community would be incredibly valuable. This discussion could help us better understand the scope and prepare for the challenges ahead.
gold would be a good first step towards commodity listing on GMX.
i believe it is doable and the contributors are working on this, need some time to make sure all the bolts and nuts are tighten and working well
I think there is a lot of value in looking at alternative (for crypto) RWA markets on GMX both as trading markets and as potentially usable as collateral. To be clear the V2 contracts are built with a view of being able to make markets for almost any asset conceivably, its simply a matter of working through and the protocol being stress tested, the recent addition of single token backed markets was a great example of this working.
Will share that the ecosystem contributors are in regular contact with nearly a dozen different protocols related to yield generating stablecoins, token issuers like paxos and tether (PAXG, XAUG) plus those looking to help bring other assets on chain.
There are a few practical issues that are worth highlighting
adjusting between 24/7 markets vs say 8/5 and how to handle the risks inherent to implied price movements during the times Oracle prices aren’t available. This could involve locking up liquidity and trader positions, mechanisms to effectively enforce auto-deleveraging if these markets are backed with non-correlated assets etc
utilzing the spot or futures markets for reference pricing of assets of this nature, example there are extended hour trading markets for the S&P500 index and gold may well have various spot and futures markets that in aggregate can provide 24/7 coverage but this doesn’t mean they are always the most liquid. How you handle for this data quality again comes into play.
for assets like S&P 500, while i’m not a lawyer it is reasonable to say that some jurisdictions might view the trading of these indexes differently than say assets like gold, silver etc.
Thank you, this is exactly the kind of analysis we need to make an informed decision. Many of these concerns are well outside of my expertise and likely many other participants as well. Please, share more as it comes to you.
Just to clarify, would the devs preference be to list other projects tokenized assets (Pax Gold), instead of using oracles to track spot prices directly?
I am looking forward to this upgrade. I personally would like to see gold on GMX because I have tried to use PAXG in the past and there are very few places to earn yield on PAXG. I think there are plenty of people like me that would like to be an LP for gold and traders looking for a decentralized place to trade gold.
I believe some of these mentioned puzzle pieces will have to fall into place before it is technically feasible. But the DAO could hold a vote to check if there is sufficient community interest in a market like this.
GMX should strive to be a first mover on Gold, Silver and WTI, preparing to add the markets as soon as possible.
Gold is getting a lot of market attention currently and may bring in notable revenue for the protocol.
WTI may not be a huge revenue driver in the short term, but the protocol should invest in building a reputation as a legitimate marketplace for derivatives critical to traditional capital markets. If crypto’s end-state is the tokenization of all assets, then GMX should begin building Lindy now as the onchain hub for RWA derivatives. Players like Ostium are specializing towards this goal and we need to be competitive by deploying these markets.
Obviously Forex markets are enormous, but I’m not particularly familiar with them. Is there a reason to believe that there would be demand for these currencies on GMX? Can we safely offer these synthetic markets with only USD backing?
