# How to make it with GMX By [DeFi Man](https://paragraph.com/@defi-man) · 2022-03-27 --- A very common and legit question by those recently red pilled in the GMX ecosystem is what is the best way to position themselves to capture the maximum upside. This is why I believe it is a good time to dig into that issue. This article aims to: 1. Outline my personal investing framework in the GMX world 2. Lay out the different methods to grow your stack 3. Crunch some numbers to gain insight about current & future cashflows Nothing less, nothing more. This is not financial advise and these are just my thoughts as a community member of the project 1\. GMX investing framework --------------------------- I do not want to overextend myself in explanations, so long story short my thesis is that GMX is cashflow investment, like rental property but with a potentially bigger ROI and where stakers of the protocol are the landlords. You can think about it like $GMX, esGMX & MP provide 1 unit of fee accrual power each and every week 30% of all the revenue generated by the protocol is distributed proportionally to the fee accrual power of each staker Fee accrual power = GMX staked + esGMX staked + MP staked Besides, it has a massive addressable market and it is already a decent sized protocol in FDV terms, so while a x100 is possible, it won’t happen overnight. Patience and conviction are needed to reap the rewards in full. Thus my investment framework for GMX is the following: > Maximize the future cashflows I will be entitled to in the future if the protocol succeeds and becomes one of the leading spot & perp exchanges What are the implications of this statement? * Accumulate as much GMX, esGMX & MPs as possible * Stay liquid where possible, but giving priority to increasing fee accrual power * Organic traction is needed to profit bigly from this strategy, the next x10 must be achieved through traction, hype alone is not enough at this stage * Medium-long term investment mindset is required to execute this strategy 2\. Methods to grow your stack ------------------------------ I will focus on the basic strategies & direct yields, but in addition you could: * Design complex strategies that build on top of the basic ones to boost the returns (p.e lend $GMX in Vesta, borrow VST and buy call options in Dopex) * Compound yields to obtain higher returns in fee accrual power (p.e. staking esGMX to collect more MPs) My suggestion would be to stay always on the safe side & do a proper due diligence into the risk that each option presents beforehand. ### a) Buy $GMX and stake in GMX (Medium-Risk) [https://gmx.io/buy\_gmx](https://gmx.io/buy_gmx) It is the highest yielding strategy if your objective is to increase your fee accrual power as much as possible. If your investment thesis in GMX is similar to mine, I believe most of your stack should be parked here, specially if you want to avoid the hustle of managing your portfolio very actively Current yields are: * 10-15% APR in ETH/AVAX * 20% APR in esGMX * 100% APR in Multiplier Points (MPs) All in all, **around 130% APR in fee accrual power** each year reinvesting the ETH/AVAX in buying GMX ### b) Mint $GLP in GMX (Low-Risk) [ GMX | Decentralized Perpetual Exchange -------------------------------------- Trade spot or perpetual BTC, ETH, AVAX and other top cryptocurrencies with up to 100x leverage directly from your wallet on Arbitrum and Avalanche. https://gmx.io ![](https://storage.googleapis.com/papyrus_images/12f41c88a8e49c73d8e43c0bc258551c7bdfce56c782b6653711502fbff8b065.png) ](https://gmx.io/buy_glp) Being a liquidity provider of the protocol is a good option for those that prefer a lower risk in exchange of not having as much exposure to the fee accrual power Current yields are: * 25% APR in ETH/AVAX * 20% APR in esGMX In short, **around a 45% APR in fee accrual power.** ### c) Buy a GBC NFT to obtain esGMX (Medium-Risk) [ A Fond Farewell from tofuNFT:Thank You for the Journey ------------------------------------------------------ Since 2019, tofuNFT has proudly served as the first multichain NFT marketplace, connecting creators and collectors across more than 30 EVM-compatible blockchains. Together, we've witnessed incredible innovation-from the rise of GameFi to the NFT boom of 2021. As we close the doors of tofuNFT.com, we want to express our deepest gratitude to our vibrant community of users, artists, and developers. https://tofu-bye.vercel.app ](https://tofunft.com/collection/blueberryclub/items?category=fixed-price) GMX distributes each month proportionally 20.000 esGMX to $GMX stakers that hold at least 1 GBC in the same wallet. Currently the ratio is that around **1,2 esGMX are distributed monthly per 1000 GMX staked**, so the APR will be very variable depending on the size of the $GMX stack ### d) Option trading in Dopex (High-Risk) [ Stryke / Maximum reward Minimal risk ------------------------------------ Trade BTC, ETH, ARB and other crypto options on the leading decentralized derivative exchange. https://www.stryke.xyz ![](https://storage.googleapis.com/papyrus_images/10e7569cef8fd5e34153c6bc53413f2b51264838ec6e8065227ceee84c1c40db.webp) ](https://www.dopex.io/) Another option to grow your stack would be to enter into the realm of options as it offers several interesting alternatives: * Write call options to collect premiums in the form of $GMX * Leverage your long bet on $GMX buying call options and exercising them if they are “in the money” * Hedge your exposure buying puts (and having more dry powder to buy dips in case $GMX goes down) There are tons of good resources to go down the options rabbithole and this article from Dopex could be a good starting point. Strongly advise to become familiar with everything before risking your hard-earned money **Call writers have collected 55% APR in GMX on average** (variable depending on which price your option was underwritten) [https://blog.dopex.io/articles/dopex-essentials/dopex-essentials-calls-and-puts](https://blog.dopex.io/articles/dopex-essentials/dopex-essentials-calls-and-puts) ### e) Yield farming on TraderJoe (Medium-Risk) [ LFJ | Crypto Trading Platform Built for Winners ----------------------------------------------- LFJ is where winners trade crypto onchain. One-stop DEX, Aggregator, & Screener. Discover & buy every token at the best prices across Monad, Solana, Avalanche & more. https://lfj.gg ![](https://storage.googleapis.com/papyrus_images/4d657871e3e935eaa568198bcabe12c1d3f1a0f49ce063c75cdfcb21e9a1c947.png) ](https://traderjoexyz.com/farm) Some people might prefer to have a direct exposure to a couple of assets instead of a basket of them ($GLP) and be fully exposed to the market (without stables), and in that case, there is an incentivised farm GMX/AVAX in TraderJoe that could be a good option **Current yield is 47% APR** so really good considering is all liquid and could serve to buy $GMX. Main risk is the usual suspect, the Impermanent Loss that could eat into a good chunk of your profits or even making it unprofitable. Check this thread to get familiar with the concept if you are not already [![User Avatar](https://storage.googleapis.com/papyrus_images/ec70fef4706e3f412d09117f835f99e12e9575156077d3d5237e5349e0cb03ab.jpg)](https://twitter.com/rektdiomedes) [rektdiomedes](https://twitter.com/rektdiomedes) [@rektdiomedes](https://twitter.com/rektdiomedes) [![Twitter Logo](https://paragraph.com/editor/twitter/logo.png)](https://twitter.com/rektdiomedes/status/1475353597223194625) Thread: Should You Worry About Impermanent Loss? Fun pop quiz, which of the following would have been profitable (vs just holding) if taken 6 mo ago and held til today? a) ETH-AAVE at 30% apr b) ETH-FTM at 50% c) ETH-USDC at 20% d) AVAX-USDC at 100% e) AVAX-USDC at 250% 1/x [![Like Icon](https://paragraph.com/editor/twitter/heart.png) 233](https://twitter.com/rektdiomedes/status/1475353597223194625)[ 12:31 AM • Dec 27, 2021 ](https://twitter.com/rektdiomedes/status/1475353597223194625) ### f) YieldYak farm (Medium-Risk) [ Yield Yak | GMX GMX ------------------- Yield Yak provides tools for DeFi users. Discover a huge selection of DeFi strategies which maximise returns and make your life easier. https://yieldyak.com ](https://yieldyak.com/farms/detail/0xC64D9F6e0E060a68967e7b5F330d6208168BD47D) YieldYak designed a couple of pools for $GMX/$GLP that incorporated a very interesting model. I will focus on the $GMX one as the mechanisms are very similar and could be inferred Basically, YieldYak has built a vault where users can deposit their $GMX and YieldYak will stake it for them in gmx.io. As we have previously remarked, the $GMX staking generates both ETH/AVAX rewards & esGMX but the esGMX is not tradable, so when users withdraw from YieldYak vault they are not getting their esGMX that will remain staked, so in given time, very possibly the YieldYak vault will generate more liquid rewards than the GMX one, but at the cost of not receiving esGMX, so its up to everyone to decide what do they prefer Current **APR around 10% in AVAX** ### g) Deposit $GMX into Vesta Finance (Medium-Risk) [ Fun88 - Link vào Fun88 mới nhất - Đăng nhập nhà cái Fun88 ⚡️ ------------------------------------------------------------ Fun88 là nhà cái nổi tiếng trong lĩnh vực cá cược thể thao và casino trực tuyến. Truy cập link vào Fun88 mới nhất để cũng khám phá thế giới cá cược sôi động. https://vestafinance.xyz ![](https://storage.googleapis.com/papyrus_images/9ecb791436ae6af7f4f2a3140d3390d58725420af40af826d3d8386531a87cfe.webp) ](https://vestafinance.xyz/products/gmx) Vesta Finance has recently open a vault that allows users to borrow $VST (Vesta stablecoin) against their collateral in $GMX, this could be a good option for users that need liquidity in a certain moment but don’t want to sell $GMX and be outpriced of their GMX make it stack. Minimum collateral ratio is 150%, so I recommend being careful to avoid the risk of being liquidated in the event of a crash in the GMX price 3\. Current & future cashflows ------------------------------ The objective of this article is not to speculate on the organic growth of the protocol nor the price action of $GMX, but to provide some insight on how the numbers would look like at given trading volumes The equation that rules how much ETH/AVAX is going to be received per unit of FAP is the following: Fees 1 unit of FAP = (30% x GMX revenue) / Total FAP Where: * FAP is the Fee Accrual Power (GMX + esGMX + MP) * 1 unit of FAP is either one GMX, esGMX or MP Therefore we need to estimate the Total FAP and the GMX revenue based on the trading volume For the sake of simplicity we will assume that the max amount of GMX + esGMX tokens in circulation through 2022 will be 10M tokens, don’t want to delve into the details too much, but if you are curious about how I got this number, check this thread [![User Avatar](https://storage.googleapis.com/papyrus_images/3a1ed663443f3a3e584df14937d432d463c22c8713cf1cae5cf2535f6aa44784.jpg)](https://twitter.com/DeFiMann) [DeFiMan](https://twitter.com/DeFiMann) [@DeFiMann](https://twitter.com/DeFiMann) [![Twitter Logo](https://paragraph.com/editor/twitter/logo.png)](https://twitter.com/DeFiMann/status/1482737554151587841) 3b) $GMX scarcity (1/7): GMX is very scarce, like real scarce. I will explain why Here you can see GMX tokenomics, adding every bucket we arrive to the known number of 13,25M GMX at FDV Devil is on the details though, so lets examine each bucket carefully ![](https://storage.googleapis.com/papyrus_images/105478d8ff7c053361771c147eba172c8e2d49fb96ad4c89e8e7fe43df0bbfc4.jpg) [![Like Icon](https://paragraph.com/editor/twitter/heart.png) 9](https://twitter.com/DeFiMann/status/1482737554151587841)[ 9:32 AM • Jan 16, 2022 ](https://twitter.com/DeFiMann/status/1482737554151587841) Also, we will assume that the max amount of Multiplier Points (MPs) will be 5M tokens, quite realistic assumption taking into account that every time someone unstakes either GMX or esGMX that MPs are burned. This number could increase in the future if the team decides to increase the max amount of MPs per account, which AFAIK, right now is set to be equal to the GMX + esGMX staked in the wallet Total FAP = GMX + esGMX + MPs = 15M units Moreover, we know based on historical data the relationship between trading volume in the platform and GMX revenue in average. It fluctuates depending on the swap/perp ratio on the period etc but will keep it simple GMX revenue ($) = 0,00147 x Trading Volume ($) So we can plot how much $ we would be getting yearly per GMX/esGMX/MP in each of the proposed daily trading volume scenarios. Current volume average sits around 200-300M$ daily to serve as reference I have used Binance volume numbers as best case scenario, quite unrealistic at the moment but serves to prove the point that cashflows could get really juicy if enough traction is achieved. Easier said than done, but it is important to keep the objective on sight ![Honestly, gud coin](https://storage.googleapis.com/papyrus_images/e8f982630d96f75ad5a47d99bf120d352550b6b0f65b368b8b716aa8811ed730.jpg) Honestly, gud coin **At DyDx volume, which is around the $2B daily mark, a GMX staker with 1000 GMX staked for a whole year would obtain $32k**. Not bad at all right? To sum up the article: * GMX is one of the very few cashflow investments in crypto * The play is to accumulate as much Fee Accrual Power (FAP) as possible * There are many ways to grow our stack, and many more will come soon * Be patient, and keep the eye on the price Thanks for reading, hope you enjoyed it! ![Cheers!](https://storage.googleapis.com/papyrus_images/f232f342b937aad2ed3a7021cdeae0fef6161854f45c84e27b216d7988eb9c15.jpg) Cheers! --- *Originally published on [DeFi Man](https://paragraph.com/@defi-man/how-to-make-it-with-gmx)*