Understanding $GMXs network effect and how it's a catalyst for Arbitrum adoption
Including $LEVI, $KTN, $GMD, $LODE and more.
The network effect is an economic principle where value is derived when other users utilize compatible products.
In $GMXs case, this is their LP $GLP
Network affects are cyclical in nature and have a clear snowball effect, which I'll demonstrate for GLP
Ubers network effect ↓
GMX currently has > 40% dominance in Arbitrums TVL
A majority of that is in GLP, of which > 50% is in stables.
If I'm a project wanting to offer sustainable yield to my users, I instantly think of holding GLP in my treasury.
Because it's proven itself as a 'stable' and safe investment.
This creates compounding liquidity, with each new protocol leveraging GLP only furthering it's dominance on Arbitrum.
Knowing that Arbitrum is the most used L2, we see the network effect begin to take place.
So who are some of the projects acting as catalysts, and what are they doing?
@Leverage Inu (💙,🧡)
A MemFi project on Arbitrum, $LEVI is a trading and profit sharing innitative, distributing yield to holders.
It's main holding right now?
You guessed it:
→ 26k $GLP
Fees for the treasury are generated through trading volume, which started zero.
They also are diversifying out from just GLP through $BFR trades & more.
See @ΛEtherPyrαte's thread on $LEVI and how they bridge the gap between real yield and memes.
Seen some big sells recently but $KTN is another project looking to benefit from GLP returns.
Utilizing a negative bonding curve, once yield amps up arbitrage through minting $KTN and selling it will reduce difference between early and later buyers.
New $GLP purchase for $20,000 on @GMX 🫐, find the tx here:
We currently have deployed:
$60,000 on $GLP (APR 48.65%)
$10,000 of $CRV converted to $sdCRV and stake in @Stake DAO liquid lockers, current APR 78.64%.
Maybe the most well known on this list, especially after it's recent pump to $100.
$GMD offers a pseudo-delta-neutral yield strategy.
What does it mean?
Capture yield whilst ignoring PA of the non-stable token.
Utilizes long/short positions to do so.
You faded $GMX.
Missed $BFR 15x, $PALM 2x, $MVX 3x.
Arbitrum has one more gem.
Will you miss this one too?
Short Thread on $GMD [1/8]
Stake your $GMD and earn 70% of fees generated in $ETH.
The fact you earn in a token that isn't GLP or GMD makes a big difference. (It's not emissions)
Great write up on PND strategies:
So when you have projects like @PlutusDAO operating almost as an Arbitrum index, with almost every major protocol on Arbitrum looping back to $GMX, what do you get?
A massive network effect that pushes $GMX upward in a perpetual fashion.
The ultimate question is...
Why not just buy and hold $GLP yourself?
Two main reasons for me:
a) exposure to other yield strategies like $KTN, $LEVI and $PLS have setup.
b) exposed to smaller mcap projects on Arbitrum
You in yielder ?
Don't let me misguide you, there are MANY other projects utilizing GLP, or will do in the future, like:
$VESTA, $MGN, @Rage Trade and more.
I wouldn't be able to fit them all in one thread.
That's a wrap
Like this content? Drop me a follow at @Louis Cooper (💙,🧡) for more.
RT for the algorithm