GM, this is your Daily Bolt briefing
GMX is consistently one of the highest grossing protocols in all of crypto judging from it’s fees collected. The project is back in the spotlight as of late with its new V2 upgrade…
We’ve made sure to keep GMX V2 in our coverage, as we’ve released two Analyst Insights on the matter; one detailing the upgrade, and another comparing GMX V2 & Synthetix V3. In this edition, we’re giving you notes featuring core-contributor Fredegar Christensen on what to expect from GMX going forward.
Also; be sure to tune into EP.5 of Metrics Matter at 11AM EST today, featuring Nick Drakon & Souvlaki. Learn how to use the latest DeFi data to your advantage.
Stay alert in the markets ⬇
1/ The Edge Podcast – GMX V2 Deep Dive with Fredegar Christensen
Preview: Fredegar Christensen from GMX talks about the challenges of GMX v1, what GMX v2 optimizes, and more! Click here to listen to the full episode (62 mins).
Read our Note (9 mins) and save 53 mins.
DeFi Dad believes what sets GMX apart and explains its growth, even during a bear market, is that people naturally want to trade and speculate.
He compares most of the activity in traditional finance to gambling. GMX allowed users to trade like they would on platforms such as Binance or Coinbase, but with the added benefits of layer-2 solutions like Arbitrum, offering cheap fees and quick transactions.
Fred identifies a few shortcomings with GMX v1:
Zero price impact allowed large traders to maintain their capital in GMX v1 for extended periods, which could consume trading capacity. This could lead to imbalances in open balances and potentially degrade the initially envisioned user experience.
An ideal scenario for a DEX would be having a balanced open interest. A balanced open interest ensures maximum utilization of liquidity, whereas unutilized capital represents an opportunity cost for LPs and the platform.
$GLP, while valuable as a DeFi building block, posed challenges. Its composite nature made it difficult for other projects to develop higher-level financial strategies on top of it.
Technological constraints in GMX v1 hindered the platform's capacity to accommodate more trading volume. As trading volume increased, these limitations became more apparent.
GMX v1's user experience falls short of centralized exchanges, such as the inability to set take profits and stop loss triggers during position opening and the lack of granular price update charts.
Fred says that while GMX v1 faced challenges, these were positive indicators of growth and increasing demand. They underscore the importance of adapting to accommodate this growing demand.
DeFi Dad emphasizes the improvements of GMX v2 over GMX v1, noting features like new markets, multiple collateral types, faster execution times, and reduced fees.
Fred describes $GLP as a composite index, similar to stock indexes. He acknowledges its complexity but highlights its hedging capability. GM pools offer more flexibility, allowing the inclusion of riskier assets to trade on the GMX platform without affecting GLP. This approach promotes better pricing and efficiency. For markets lacking native liquidity, the typical pair is ETH and USDC. The new system lets liquidity providers easily tailor their risk.
DeFi Dad mentions the attractive yields of GM pools in GMX v2's beta stage, viewing it as a major step forward from the GLP model.
Fred explains the main difference in GMX v2's fee structure: fees can now be lowered. He talks about the open and closed fee, borrowing rate, and the new addition of price impact.
Nomatic notes from the Castle Capital report that GMX v2 could be 60% cheaper than v1 in some simulations. He also mentions that the funding rate means dominant traders now pay the minority, rewarding contrarian trading strategies.
2/ Bluechip Twitter Spaces – Stablecoin Safety
Preview: James hosts Garett, Deathereum, Ben, Nic, Ameen, Peter, Robin, Alex, and Nevin to discuss stablecoins safety, risks, ratings, and more. Click here to listen to the full episode (67 mins).
Read our Note (7 mins) and save 60 mins.
Alex talks about the large volume of stablecoins, with $7 trillion in net settlement, stressing the need for public trust in them. He highlights their usefulness in transferring money globally and highlights the potential in the developing world. He shares his surprise that people trust Tether despite uncertainties about its stability.
Peter highlights the importance of centralized information to make better decisions and avoid failures like Terra $LUNA. He fears that failures erode public faith and could lead to harsh regulations or centralization.
Robin, being an outsider to the crypto world, expresses interest in the role of independent rating agencies and the use of market prices in ratings. He suggests assets that trigger when a stablecoin's price goes out of a specified range as a way to bet on failure.
Robin describes how assets could be set up to represent a stablecoin's failure based on defined criteria, allowing for betting markets on the chance of failure within a specific time frame.
Ameen mentions how shorting stablecoins might reflect their quality and stability, referring to the borrowing costs of different stablecoins like $USDT and $USDC.
James asks Robin about the time horizon for a betting market on stablecoin safety and the difficulties involved, especially concerning black swan events.
Robin says that the time horizon would be customer-driven, with the need to tailor information based on what customers want to know. He highlights the importance of understanding both the supply and demand of information.
James asks Nevin to discuss the most valuable hard-to-quantify driver of a stablecoin's success.
Nevin mentions liquidity as a significant factor, referencing Tether's network effect and its popular usage in Latin America. He talks about the combination of Tether with Tron, the importance of transaction fees, and how the market seems to care more about liquidity and network effects than underlying stability. He speculates on how market dynamics might shift if a stablecoin like Bluechip becomes more significant.
Nevin explains network effects and the importance of branding in stablecoins, comparing U.S. dollar-backed stablecoins like USDC, GUSD, and TUSD.
Nevin talks about a desire to see multiple sources of stablecoin ratings that are displayed directly to users at decision-making points, such as trading platforms or fintech apps. He highlights the need for users to see and understand the risks, hoping that it would lead to better decision-making and potentially different outcomes.
If you read these 2 Notes on Revelo Intel you would have saved: 1 hour and 53 mins!