This issue remains in the newly proposed pair model. To counteract the long-skew and make GLP more delta-neutral, GMX could introduce a negative borrow fee (similar to a funding rate) for the underutilized side. This is common practice for perp exchanges when the perp price deviates from the spot price. GMX doesn’t have perp prices, so the funding rate mechanics need to be adapted.

To account for different risk profiles of LPs, it makes sense to create a variety of GLPs with different token holdings and weights. This ultimately leads to more liquidity and raises the IO ceiling. As this could result in liquidity fragmentation, the GMX team proposed to restructure GLP based on pairs

As of January 4, leverage tradoooors made a loss of -$6.2m. LPs earned $8m in fees, resulting in 14.2m net profit.

There’s a 1.5% price change limit in place for positions that have been open for under 24 hours to avoid bots from taking advantage of the lag in oracle pricing. This limits trading volume from arbitragoooors.

GMX takes a fee of 0.1% for opening and closing positions plus a dynamic borrow fee based on utilization rates. Swap fees are also dynamic, related to whether a swap improves the weights of assets in the pool towards the target or away. The same applies to GLP minting and redemption fees. LPs can burn their GLP to receive any of the assets in the pool. In case an LP redeems GLP for an over-weighted asset, fees are reduced.

GMX is a mix of a perp and spot exchange for traders + an index fund for LPs (GLP).Perp: Traders can long/short utilizing assets from the liquidity pool (GLP) with up to 30x leverage. Perp trading is responsible for ~85% of protocol revenue at the moment.Spot: Traders can swap tokens with zero price impact. GMX uses Chainlink oracles together with FTX and Binance market data to price assets in the pool, instead of an AMM formula. As a result, users won’t incur slippage.GLP: LPs hold a basket of assets (ETH, BTC, USDC, …). Therefore, they are exposed to the price of the underlying assets, adjusted by the positions of traders (as LPs automatically take the other side of each trade). LPs basically rent out the upside of assets to traders. For this, LPs earn 70% of protocol revenue from fees as well as GMX rewards. Holding GLP can be seen as a long-term strategy compared to the short-term view of traders.

Supply-side: All the potential demand needs to meet supply on the other side. On GMX, liquidity providers (LPs) provide capital for traders to long/short assets with up to 30x leverage. LPs receive 70% of protocol revenue, 30% go to GMX stakers. GMX currently generates ~$112k in daily fees, or ~$41m annualized. $29m go to LPs, which equates to 28% APR paid in ETH, based on protocol fees alone. For the basket of assets (called GLP) that LPs hold and the risks involved, this is a competitive offering and acts as a first indication that the protocol could be sustainable. This would allow liquidity to scale with demand without relying on token rewards too heavily. However, LPs take on risks that could especially materialize in a bear market. Therefore, further improvements are required to ensure better performance for LPs during difficult market conditions, which the team is aware of.

Demand-side: GMX offers traders decentralized derivatives, a highly-demanded product. BTC and ETH perpetual futures contracts have a monthly trading volume of ~$2T. In comparison, spot volume is roughly 7x smaller, with ~$300B per month. dYdX, the leading perp DEX currently facilitates ~$3B in perp trading volume daily (~5% of total volume). GMX stands at ~$70m on Arbitrum, where the protocol only recently launched in September. A narrative shift towards L2 solutions more generally could act as a catalyst for GMX. Arbitrum has the highest TVL of all L2s. GMX is ultimately chain-agnostic, expanding to Avalanche on January 6, further increasing the target market. With the recent crackdowns on centralized exchanges to add KYC and reduce the amount of leverage offered to traders, demand will continue to shift over to decentralized applications. GMX is run by an anon team, which puts it at an advantage over its direct competitor dYdX in this regard. As a result, GMX is in a pole position to capture a share of the (growing) demand for decentralized derivatives.

As we know, derivatives trading volumes should be orders of magnitude higher than spot volumes. Whichever few DEXs comprise the natural monopoly will earn beaucoup fees. That is the future bull case for the category itself, and from what I have seen so far, GMX is the best out there. However, I don’t believe it is elegant enough … yet … to truly capture the fee wallet of DeFi leveraged traders en masse and catapult volumes over spot DEXs such as Uni and Sushi.

In the derivative DEX space, dYdX dominates the field. That said, I have a very puritanical objection to the dYdX model, which is that dYdX is not truly a DEX. It is a centralised orderbook hosted on a dYdX machine, and only settled trades are posted on chain for finality. But more importantly, when it comes to its P/E ratio, it is markedly higher than the protocol I’m most impressed by, GMX.

Compared with the CEX behemoths, the derivative DEX average daily trading volume numbers are quite low. But that only gives more upside to the faithful. Just to match the market share that spot DEXs possess vs. their CEX counterparts at 10% would be a 5x improvement in trading volumes. I’ll take that.

Since there have been some questions on the long-term sustainability of the project we feel it is appropriate to address them here. The team currently has ~1.8 million held in USDC, this is sufficient to last 18 months till March 2024.

The next thing to notice is that the write throughput of my prototype database approaches the same long-term rate with or without read threads. However, the support for multi-threaded reading allows my database to sustain over 120,000 operations per second while performing over 30,000 random inserts per second while the state is larger than RAM.

The Green line represents an apples-to-apples comparison of my new database's single-threaded insert against LMDBX and std::map. As you can see it is over 2x faster than LMDBX and std::map while everything is in RAM. We will zoom in on the disk-based performance in a later chart. This means it is likely more than 2x faster than chainbase as used in eosio and hive.

As a point of comparison, I chose one of the highest-rated databases I could find (LMDBX) because it supported reading past states while advancing. Past experience with RocksDB and months of testing and optimization let me know that it would not serve us well. Some Ethereum implementations use LMDBX because of its performance over Rocks. I also chose to compare against the default key/value store native to all C++ code, std::map. std::map isn't a proper "database" and only has to concern itself with maintaining a sorted tree of key/value pairs. It has no other overhead. Its performance starts out high, being in-memory, and eventually forces the operating system to start using virtual memory to swap to disk. At this point, we are simulating the upper limit of chainbase, which was used by Hive and is used by EOS. Chainbase has extra overhead and has historically always been slower than pure std::map.

Typical voting processes have a pre-defined ballot which limits the choice of the people. Using fractal voting there is no need for a pre-defined ballot and all members of a fractal democracy have equal opportunity to be heard. This occurs by randomly grouping members into groups of 5 or 6. Each group must reach a consensus among its own members on who best represents their interests. The chosen representatives of each group are then randomly grouped and the process is repeated ƒractally (in a fractal manner). The end result is the integration of opinions of the entire population without any filtering by the media or political parties. A fractal voting system is what enables fractal democracies to truly empower the people while preventing the covert capture of power by the media, the political parties, or even the military.

Some may argue that such models of coordination are replicable without crypto— stock agreements and bonus rewards for aligned actors are already present in most centralized organizations. However, crypto-economic protocols unlock five key benefits:Rapid Scale — Permissionless and borderless protocols can grow everywhere in the world in parallel across many legal jurisdictions.Credible Neutrality — Credibly-neutral networks give their stakeholders guarantees that the rules can’t arbitrarily be changed from underneath them.Collective Ownership — A system that is owned by its users creates loyalty, aligns incentives, and drives growth.Frictionless Payments — Blockchains allow for peer-to-peer micropayments that the legacy payments system cannot support.Integration with DeFi rails — DeFi rails are useful for bootstrapping liquidity via automated market makers. Overtime, we also expect proof-of-physical-work networks to leverage other composable DeFi-native tools, including NFT marketplaces, social tokens, derivatives, and more.

The vast majority of crypto-innovation to date has been focused on coordinating digital communities and economies; however, tokens also create opportunities for innovation in capital formation and human coordination that extend beyond the digital world and into the physical. We refer to this thesis as “proof of physical work.” Protocols that fit this thesis incentivize people to do verifiable work that builds real-world infrastructure. Relative to traditional forms of capital formation for building physical infrastructure, these permissionless and credibly-neutral protocols:Can build infrastructure faster—in many cases 10-100x fasterAre more attuned to hyper-local market needsCan be far more cost effective

Apple’s trailing price-to-earnings, or P/E, ratio steadily climbed this year alongside its stock price. Apple began the year with a trailing P/E ratio just over 13, according to FactSet, below its five-year average of 16.2, before finishing 2019 at 24.7, its highest point since 2010.