The GMD Protocol is a platform for maximizing yields and aggregating data built on top of already existing software and using GMD’s reserve token on Arbitrum (Uniswap V3). GMD’s initial offerings are a set of GMX and GLP-based single-stake vaults (for BTC, ETH, and USDC).
For those puzzled by the GMX/GLP tokenomics, here’s a brief introduction to help you understand the GMD protocol better. Namely, the GMX is a decentralized exchange that meets those needs. GMX is currently operational on Arbitrum (Ethereum layer 2) and Avalanche. The protocol evolved from an earlier effort called Gambit, which was developed on the Binance Smart Chain (BSC).
Furthermore, GLP is the liquidity provider token on the GMX platform. The GLP is made up of an index of assets used for swaps and trading with leverage. This token can be issued using any asset in the index and redeemed for any asset in the index. Moreover, minting and redemption costs are determined by the total balance of GLP tokens.
How GMD Protocol Works
GMD uses either delta-neutral or pseudo-delta-neutral strategies to aggregate returns from an index pooling or an LP to its constituent holdings, hence removing the risks of temporary loss or exposure to unsuitable assets.
More specifically, the single-stake vaults of GMD Protocol employ a pseudo-delta-neutral technique, which means that the assets held in each vault ($USDC, $ETH, or $BTC) will be distributed and weighted according to the composition of GLP. Put simply, these assets will be utilized to create new $GLP and generate income from the sale of $GLP.
The vault’s exposure to these assets is protected from GLP’s volatility when the market shifts because they are of identical composition. The protocol will rebalance the composition every week to keep the hedging parameters constant regardless of market fluctuations.
For instance, a vault holding $1,000,000 in assets, for example, would have $500,000 in USDC, $330,000 in ETH, and $170,000 in BTC if GLP is made up of roughly 50% stables, 33% ETH, and 17% BTC. In this case, the pseudo-delta neutrality requirement would be met.
What Is GMD Token Used For?
The GMD is the utility and governance token of the GMX protocol that serves as both a means of payment and a vote in the network’s administration.
Where to Buy GMD Tokens?
For those interested in purchasing GMD Protocol at present, the best place to do so is on the crypto exchange Uniswap (V3) (Arbitrum).
How Long Has GMD Protocol Been Around?
GMD Protocol token is still in its beta-testing version at the time of this writing. To launch $GMD officially onto the market, $USDC will be used in the minting process.
Moreover, to provide holders of $GMD with yields, all of the USDC utilized in the minting process will be turned into yield-generating assets. $GMD investors will also be eligible for profit sharing throughout the platform’s various vaults and apps.
What’s Controversial About GMD Protocol?
There are three possible adverse influences on the protocol’s strategies:
- The impermanent loss as a result of the fluctuating prices and the shifting asset weights caused by minting and redeeming GLP;
- The gain or loss incurred by a trader from the GLP pool;
- Volatility is caused by a large number of small-cap assets (such as Link and Uni) on the market.
Out of these three aspects, the second one is most helpful to GLP because, statistically speaking, traders will lose over the long term. In this regard, GLP has consistently delivered superior returns compared to other indexes/LPs.
On the other hand, the volatility of the cryptocurrency market and the fact that LP providers have to deal with the risk of impermanent loss make factors 1 and 3 the most problematic. As a result, GMD Protocol established $GMD as a reserve capable of soaking up perceived risks.
How Many GMD Protocol Tokens Are There?
There’s a total supply of 50,001 GMD tokens, while the maximum number of GMD tokens in circulation is currently unknown.
Can GMD Protocol Be Mined?
The GMX coins are not generated through the process of mining but rather through staking, i.e., they are minted.
Market Cap and Price History of GMD Protocol
There is insufficient data on the market cap and the price history of the GMD protocol.
Biggest Competitors of GMD Protocol
UNI token, the native token of the Uniswap DeFi Network, is, of course, GMD’s main rival. The UNI governance token was introduced into circulation on September 16th, 2020.
The Uniswap Protocol was developed with the intention of being a publicly owned and self-sufficient ecosystem. As a result, UNI token holders have the ability to vote on the management of the platform, thereby engaging in this kind of ownership structure. As a result, participants in this crypto project can support the network’s evolution.
What Are the Future Plans for GMD Protocol?
GMD intends to employ derivative platforms in the future by utilizing smart vaults (long, short, social, news trading, etc.) and arbitrage pegged assets. This is in addition to yield-earning vaults, which are another goal of GMDs for the future.
Moreover, the GMD protocol roadmap projects to actively track the performance of the single-stake vaults, the weight of their assets, market forces to increase the deposit maximum limit over time, as well as to increase the $GMD supply/reserve, and so on.
Pros and Cons of GMD Protocol
Pros
- 70 % of all platform fees are stored in the platform’s vaults and reserves.
- According to GLP’s performance records, the $GMD reserve has a far higher probability of making a profit during volatile market times.
Cons
- There’s a risk of an impermanent loss;
- Currently, there aren’t many trading platforms supporting this token.