ARC: Add GMX to Arbitrum v3


chinlink oracle: 0xdb98056fecfff59d032ab628337a4887110df3db
Telegram: Telegram: Contact @GMX_IO
Discord: GMX


This proposal presents Aave with the opportunity to onboard GMX to the Arbitrum v3 Liquidity Pool.


GMX is one of the largest DeFi’s offering derivatives and is currently one of the most popular DeFi’s. GMX is also one of the most heavily traded assets and the market demand is very high.
It has never been listed on Aave in the past, so it needs to be carefully considered.


  1. About the author of ARC
    LensProfile :

  2. Provide a brief high-level overview of the project and the token
    GMX is a decentralized spot and permanent exchange supporting low swap fees and zero price impact trading GMX is the market leader in Delvatives with $544 million TVL in two deployments and is #20 on Defi Llama’s TVL Dashboard It is ranked #20 on Defi Llama’s TVL Dashboard.
    GMX, the platform’s utility and governance token, is ranked #68 above MKR on coingecko’s Market Cap Rank.

  3. Token Data
    token contract: 0xfc5A1A6EB076a2C7aD06eD22C90d7E710E35ad0a
    Holders: 250,000 addresses~
    Total Supply: 9,000,000 GMX~

  4. Maket Data
    Maket Cap

    Volume (24H): $217,622,327.00
    Circulating Supply: 8,549,848.00 GMX


Hi @0xlide -

Seems like your title contradicts the summary line:

I’d assume Arbitrum is the intended market - not Avalanche?

If so, there seems to be deep alignment between the GMX and Arbitrum community.

1 Like

Sorry my mistake, I am suggesting onboarding to Aribitrum v3.
Avalanche mounted might be a good idea. Would you be willing to share your opinion?

I would have thought people would be more interested in having GLP as an asset listed, as there are plenty opportunities for yield out there.
GMX would be useful for staker, right?

1 Like

Thanks for sharing this @0xlide.
Chaos Labs will analyze and provide recommendations for the initial parameters and will share our analyses with the community, following the Risk Parameter Recommendations for New Asset Listings framework.


hello @0xlide and thanks for this proposal.

While I’m kinda a “GMX-Maxi” the tokenomics of staking GMX makes it unattractive to supply in Aave compared to simply staking it.

The ACI is more in favor of a GLP onboarding.
GLP is a basket of assets that make sense to use as collateral.


Risk Parameter Recommendations


Should the community choose to list GMX, below are consolidated risk parameter recommendations. Please see further below for a breakdown of recommendations and considerations for transparency.

To summarize, the below consolidations were made:

  • Gauntlet’s LTV and LT recs (lower values)
  • Chaos’s cap recs (lower values)
  • Gauntlet’s Interest Rate Curve recs
Risk Parameters Values
Supply Cap 110k
Borrow Cap 60k
Borrowable Y
Isolation Mode Y
Debt Ceiling $2.5M
Collateral Enable Y
LT 55%
LTV 45%
LB 10800 (8%)
RF 20%
LPF 10%
Silo Borrowing N
eMode N

Interest Rate Curves

IR Parameters Values
Base 0%
Slope 1 9%
Slope 2 300%
Stable 13%
Uopt 45%

Additional Detail

Gauntlet Recommendation and Analysis

GMX is the utility, governance, and fee accrual token for the GMX protocol and has a unique value accrual system. GMX is a highly staked asset, with approximately 78% of circulating GMX staked. With the current APR of 7% for GMX, there might be concerns about the use of GMX within the Aave liquidity pool.

Gauntlet Specification

Cap Recommendations

We provide cap recommendations utilizing our Supply and Borrow Cap Methdology.

Supply cap - 180k

Borrow cap - 180k

GMX total circulating on-chain supply is at 9.1M with $67M 30-Day ADV. GMX’s 25% market depth on Arbitrum DEXes is approximately 180k.

Isolation Mode

Isolation Mode - Yes

@Gauntlet recommends initially listing GMX in isolation mode to restrict protocol exposure to price swings and potential resulting insolvencies. GMX’s high volatility and relative initial listing to Aave markets support a conservative strategy to list the asset within Isolation. For further details, please see here for Gauntlet’s Isolation Mode Methodology.

Debt Ceiling - $7.5mm.

Initializing the debt ceiling with 50% of the dollar value of the supply cap will help protect against tail events while providing sufficient room to explore GMX usage.

Liquidation Threshold and Loan to Value

LT - 55%.
LTV - 45%

Gauntlet’s methodology for LTV/LT parameter settings relies entirely on real data manipulated in our simulations to determine risk/reward deltas and thus cannot be used to mitigate risk for an asset upon its initial listing in the way it is used for subsequent parameter recommendations. Instead, borrow and supply caps should be the primary parameters used to mitigate risk upon initial asset listing because these can be calculated without relying upon existing data.

LTV/LT should be set by replicating these values for the most similar/correlated asset on the same (or nearest similar) protocol Gauntlet recommends a 55% LT for GMX to account for this higher volatility (215% annualized volatility) and other risk-based metrics while giving room to explore the usage of GMX collateral.

Liquidation Bonus

LB - 10800 (8%)

Gauntlet recommends initializing with an LB of 8% to give liquidators incentive to liquidate GMX collateral.

Reserve Factor

RF - 20%

Based on risk-based metrics for similar assets, we recommend having a conservative reserve factor of 20%.

Liquidation Protocol Fee

LPF - 10%

The LPF is a percentage of the LB that ultimately contributes to a protocol’s reserves. LPFs, like LBs, are intimately linked to liquidation behavior, as they serve as the primary incentive for liquidators, and thus more data is needed to conduct analysis on what optimal LPFs should be after an initial recommendation is made upon asset listing.

LPF too high (and unadjusted LB) may deter liquidators from conducting liquidations due to fears of unprofitability. Likewise, a higher LPF, with an upwards adjusted LB to ensure liquidators are incentivized, may cause too much of the collateral to be eaten up by liquidations, which also impacts liquidator behavior.

Gauntlet recommends that non-stablecoins have 10% LPF to allow for protocol revenue from LPF while minimizing effects on liquidator behavior and user experience.

Gauntlet IR Curve Recommendations

Gauntlet has published its interest rate curve methodology here. Among other factors, there are two primary goals for interest rate curves:

  1. mitigate the risk of 100% utilization in a pool
  2. build reserves via protocol revenue to cover insolvencies or other expenses in the future
IR Parameters Assumptions
Base 0%
Slope 1 9%
Slope 2 300%
Stable 13%
Uopt 45%

Final Gauntlet Risk Parameter Summary

Risk Parameters Values
Supply Cap 180k
Borrow Cap 180k
Borrowable Y
Isolation Mode Y
Debt Ceiling $7.5M
Collateral Enable Y
LT 55%
LTV 53%
LB 10800 (8%)
RF 20%
LPF 10%
Silo Borrowing N
eMode N

Chaos Recommendation and Analysis

@ChaosLabs supports listing GMX in Isolation Mode as part of an overarching strategy to increase the offering of AAVE protocol with more volatile assets. As a low market cap asset, GMX is susceptible to price manipulation, so listing it with an appropriate debt ceiling is crucial to prevent a profitable pump attack.

Liquidity and Market Cap

When analyzing market cap and trading volumes of assets for listing, we are looking at the past 180 days, especially in light of the recent market turbulence. The average market cap of GMX over the past 180 days was $441M, and the average daily trading volume was $33M (CeFi & DeFi). We find the market cap adequate and reasonable trading volumes as long as they are considered when setting appropriate supply caps, a debt ceiling, and borrow caps.

Liquidation Threshold

Analyzing GMX price volatility over the past, we observed daily annualized volatility of 98% and 30-day annualized volatility of 79%. Considering this volatility we support the suggested LT of 62%.

We support listing GMX as borrowable under reasonable caps, as we do not observe a significant risk to the protocol by allowing to borrow GMX, as long as it is bound by a well-defined cap.

Debt Ceiling

Following Chaos Labs’ Isolation Mode Methodology, we recommend an initial debt ceiling of $2.5M. Under the methodology for Isolation Mode, we consider two levels of probabilities for extreme price drops - Medium-High and High. We estimate the probability of an extreme price drop for GMX as High. Given this debt ceiling, we do not identify a profitable attack vector under the current liquidity levels.

Supply Cap, Borrow Cap, and Liquidation Bonus

Following Chaos Labs’ approach to initial supply caps, as introduced with the Metis deployment recommendations, we propose setting the Supply Cap at 2x the liquidity available under the Liquidation Penalty price impact.

Given the concentrated liquidity of GMX, we recommend an 8% Liquidation Bonus and a derived supply cap of 110K GMX, and a borrow cap of 60K GMX.

Chaos Recommendations

We support the recommendations in the post for the Reserve Factor, Liquidation Protocol Fee, and Interest Rate curves.

Following the above analysis, we recommend listing GMX with the following parameter settings:

Isolation Mode Enable Borrow Enable Collateral LTV LT Liquidation Bonus Reserve Factor LPF Supply Cap Borrow Cap Debt Ceiling
Yes Yes Yes 52% 62% 8% 20% 0.1 110K 60K $2.5M

@MarcZeller @Pauljlei
As for the liquidity of the Aave pool, I don’t think you need to be very concerned about the difference between the APR of GMX’s StakeReward and the APR of the Aave pool. AAVE and LINK are examples.