GMX - 27 March 2022
The Dopex Community Analyst series is a series of strategies, ideas, opinion pieces and educational resource written by independent contributors from the Dopex community. Every month many knowledgeable community analysts share a short analyses of a coin of their choice and share these with Dopex. The goal of these articles is to empower the community and help Dopex increase SSOV volume & deposits. With these articles we hope to provide users with additional information that will help them in making an informed choice of strategy using our products.
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How To: Long GMX Like a Pro
By: DeFi-B
Quick Stats (as of 03/11/2022)
- Price: $24.50
- Circulating Supply/Max Supply: 7,452,999/13,250,000
- Circulating Supply Valuation: $182,377,182
- Fully Diluted Valuation: $324,625,000
What we will cover today:
- Platform Overview
- Introducing Dopex’s SSOV (Single-Staking-Option-Vault) enables liquidity providers ($GMX depositors) the ability to earn multiple layers of yield on their $GMX tokens
- $GMX Tokenomics and why you should BUY/HODL
- Extremely microcap
- $GMX’s $GLP token is currently ~50% in stables and returns ~60% APR
Platform Overview:
$GMX is a decentralized perpetual exchange that allows traders to speculate on the future price movement of cryptocurrencies while operating on the second-layer Arbitrum chain, which is great if you are trying to avoid high transaction fees from Ethereum mainnet. The $GMX platform itself enables users to collect a rather high APR on their $ETH and other crypto assets. When using the $GMX platform to speculate on future price movement traders have the ability to utilize extreme leverage (up to 30x - while increasing your liquidation price). The platform not only supports longing positions but also enables traders to short a token, with leveraged exposure, and swap between cryptocurrencies. Swap fees on $GMX are extremely low (0.26%) when compared to that of $UNI/$SUSHI (0.60%) and that is just based on the design of the protocol which I will get into later. You should consider swapping on the $GMX platform if you are making sizable trades on the Arbitrum network. 
$GMX / $GLP Tokenomics:
So where are all these assets stored and how is interest earned you might ask. The platform operates using their native $GLP token which is essentially, in boomer terms, one of the first “ETF Cryptocurrencies” in existence. $GLP is a collection of these nine crypto assets: $ETH (28.41%), $BTC (12.22%), $LINK (2.37%), $UNI (0.75%), $USDC (35.46%), $USDT (8.21%), $DAI (11.08%), $MIM (currently 0%), and $FRAX (1.47%). When you buy/mint $GLP by depositing any of these nine assets you collectively gain exposure to each and every one of 
these cryptocurrencies. Listed next to the current weight is the targeted weight of the $GLP token. As can be seen, the fund is currently over-weighting their stables which can be seen as a bearish sentiment from the majority $GMX holders. $GLP can be bought/minted with any of the nine assets in the pool and can also be sold for any of those assets. $GMX is the native governance/platform fee token and can be staked for a current APR of 35.22% - 17.65% of that being paid instantly in $WETH and the remaining 17.57% APR is not accessible instantly but instead vested over a one-year period, with the ability to be compounded. $GLP can also be staked and paid out in a similar fashion with 44.62% being paid instantly in $WETH and the remaining 17.72% vesting over a one-year period. Currently, the $GLP token’s weights have been moved so that approximately 50% of the weight is being held in stables. This could be seen as bearish sentiment and an excellent opportunity to find safety in farming during times of downward market trends.
Bullish $GMX Cases:
- Platform fees have exploded from ~$30,000 (10/01/2021) to upwards of ~$250,000 (as of writing this article - 03/10/2022). That is nearly an 8x increase in the timespan of less than half of one year.
- Platform fees exceeding $800,000+ per week allows $GMX to pay rewards upwards of 30%.
- Per CoinGecko (https://www.coingecko.com/en/coins/gmx), the fully diluted valuation of $GMX is sitting at approximately $320m with a market cap of $182m. This crypto asset has an extremely low valuation compared to its peers so worst case you’re not buying this token at a multi-billion dollar valuation which limits downside tremendously.
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Dopex SSOV Strategy Recommendation:** 
So what exactly does it mean to deposit your $GMX into the Dopex SSOV and what risks come with this? Are funds safu? Yes, your funds are entirely safu while you become an options liquidity provider. Your $GMX will now be sold on Dopex’s open option market and accrue a premium on top of the 53.74% yield. Hence the multiple layers of yield. Premiums are paid in the underlying asset ($GMX in this case) while your APY rewards will be paid out via $DPX, Dopex’s native governance token. Deposits for epoch 3 open on March 25th with strike prices set at $25, $35, $45, and $55. The risk of selling calls (depositing $GMX) is loss of potential upside in the event of a bull run. The idea is simple, say you deposit at the $35 strike and $GMX ends the march epoch at a price of $40. Your position will essentially be bought out at that strike price of $35 and the “loss” you incur is the $5 of upside you missed out on. You still sell your original position at a nearly ~50% gain, plus earn your $DPX rewards. Earned premium is a function of how many options are bought by traders and not a known number at the beginning of each epoch but rather determined during each epoch by total options sold at your specific strike price. My recommendation for march deposits would be to deposit at the $35 strike price and enjoy some juicy premiums. At the time of writing, $GMX sits at $24.50 and peaked at $62.10 on January 10th of this year. Given the current global tension and bearish sentiment surrounding markets all around the world I believe deposits in any of the strikes above $25 to be of low risk. However, if you are feeling that the current global/market situation will worsen, depositing at the lowest $25 price will see extremely higher premium APR but I would give this a rating of high risk. $GMX deposit stats for each strike are shown for the current February epoch. As seen, 100% of options were bought out at each and every strike price. Depositors of the $35 strike will take home a comfortable 59.49% APR on top of their 53.74% APR base yield while the riskier $25 depositors will take home a staggering 382.77% APR on top of their base yield. 
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Extra Layer of Protection (Vertical Call Spread):**
As mentioned, $GMX is still extremely microcap ($182m) meaning it requires less to move the price. As an extra layer of protection against missed upside in the case of a bull run it could be suggested to purchase a small number of calls above the strike of which you are depositing your calls. This way, even if your position is liquidated at your strike you are not only selling your original deposit at a ~50% gain but you also have the opportunity to profit from your purchased calls. Seeing as $GMX achieved an ATH of $62.10 on January 16th of this year each and every single strike price has been ITM (in-the-money) at some point this year already.
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Disclaimer: Author owns spot position in $GMX/$GLP. These statements are intended to disclose any conflict of interest and should not be misconstrued as a recommendation to purchase any token. This content is for informational purposes only and you should not make decisions based solely on it. This is not investment advice.**
Twitter Summary: Check out my summary I wrote on how to long $GMX like a pro using @Dopex_io SSOV (single-staking-options-vault)! This token has a massive potential upside - see more info below! - https://docs.google.com/document/d/1qCXfYyZSrqJJm-9dZT0EXJ-aTuQ0fqtDCmwqScBBuH4/edit?usp=sharing
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Views expressed in this article are the author’s own and not reflective of the position or professional views from Dopex.io.
Dopex reimburses analyst contributors with a small payout to partially compensate the time spent on research and writing. For questions feel free to jump into our discord (discord.gg/dopex) and chat with the team or analyst contributors directly.
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