Coinflip from GMX

00:03

Hi everyone. Welcome to a new Poolside with Polkastarter session where we come together to share knowledge and experiences with the community in an informal and conversational way. Thank you all for joining us. In this episode and together with our guests, we will explore the future of finance, with GMX, leading decentralized spots and perpetual exchange. So today we have with us Coinflip, who will the partnership and strategy lead for GMX. Welcome. Don't forget that you will be able to claim an exclusive OAT the first 300 submitted valid emails and after the session sign up on Galaxe to grab your OATs. So welcome Coinflip first of all, could you please introduce yourself?

00:49

Thanks. Yeah, so thank you for that kind introduction. I go by the pseudonym Coinflip from Canada and I've been involved with GMX since the launch of the GMX DAO. Late last year with over a year ago. GMX, for those who are aren't aren't familiar, is a decentralized perpetuals platform that's deployed on Arbitrum and Avalanche, we provide access to leverage or margin trading, hedging strategies and the likes, using a combination of Oracle supported from the largest liquidity pools, or large crypto tokens and a liquidity pool containing a leading basket of crypto assets so that all trades executed are done so on chain transparently. I want to clear what one to one backing.

01:40

Okay, great. Thank you for introducing GMX to the audience. So can you please share a little bit of your background and how you got into crypto

01:50

Everybody's journey is a little bit different, I can remember way, way back to those little articles in the corner of newspapers where Bitcoin was $1, that sounds really interesting, but never looked into it further. But in late 2017, I think when crypto was really starting to enter a lot of people's views and sites I definitely spent a lot of time both dabbling in the space both from a you know maybe purchasing participating in ICOs little bit of training, although that's not ever been my forte. And, you know, I spent that time really trying to educate myself on the space and was really taken really excited by the idea of smart contracts. That way, you know, what could potentially be possible, you know, even more so than saying what Bitcoin could do as to money, a concept of notion around protocols, and people building on smart contracts really caught my imagination. And I remember constantly following and looking at projects, that time, the word, you know, putting a bit of like density, we're looking at, you know, we're looking at supply chain, we're looking at a lot of different ways to really, you know, interact and utilize these systems. But DeFi wasn't something that I think I had fully understood yet and spent also spent some time away from crypto and in 2020, sort of really started focusing back and I think that's where as, as I could, as, as defined was really taking hold, I really, it really unlocked the remaining pieces of the puzzle for my mind. And that's where I sort of went, you could say, all them to be very much defined native that was both from my own home, the way I held my assets sovereignly, the way that I traded the way that I looked at engagement protocols, and looked at the space and looked at the potential. And, you know, I was very lucky to come across other contributors, were involved in earlier protocols and eventually attended to GMX many other platforms. And, yeah, that was kind of my joke. But the last one year, as I went from sort of advisor to becoming a core contributor at GMX, has just been a wonderful experience realizing that, you know, anything is possible. We just have to keep working at it. 

How did you get into GMX?

04:20

So, you know, I actually, I actually, interestingly enough, I participated in a protocol earlier, which was actually what was one of the protocols that eventually merged into merge them to help to create the GMX data, which was called extracts. And it was, you know, it was a protocol built on some very novel features around token decay, token locking tokens, taking just a lot of concepts really trying to replicate some real world applications. And I guess the core contributor who's not even the founder and core contributor, one of the one of the founding members of GMX, you know, it was I guess that was one of the first protocols that he contributed to. And, and it was just it was, to a great extent it was in the interactions with X DEP, both the way that there was feedback he'd taken from the community, the way that there was a willingness to understand what, what the users in the community wanted. And so for me, it became a very special space very early on in my, as I sort of looked at, looked at defy it also, you know, for me, it was a blessing beyond GMX, it really got me very focused on making sure that protocols that I contributed and invested in they were protocols where you had builders who were happy to interact with the community and, and were and realize that one of the special about, you know, Web3 today is that you get, you get to get feedback directly from your users. Right away and take that feedback and use that to make the best product best product possible. So yeah, for me, it was really a process from a from a token holder holder community member to to call it an advisor contributor to a core contributor who now spends the vast majority of their time on GMX. Yeah, that's great evolution.

06:13

Can you tell us a bit more about GMX’s main features like GMX earn perpetual contracts unified liquidity?

06:24

Yeah, happy to. So with GMX, the part that most people experience is the trading, is the ability to both leverage trade and to swap on GMX. So you're able to with the current and I'll say there's some evolution that's also coming to the part of the current protocol setup. Effectively, we allow leverage trading on chain up to 50x leverage on a select number of blue chip crypto assets. Ethereum BTC. Additionally, on Arbitrum and on Avalanche, there's the AVAX token, which is the apex token of Avalanche. And that all of that trading is done with effectively, you know, no MeV, we effectively put it in a system where we're able to give people immediate no price impact trading, based on the current market price, aggregated from the leading centralized exchanges. And most notably, there's no execution risk, or I should say more important, so maybe not executed, there's no settlement risk. All of this is backed by GLP, which, is actually what you would call the GMX earned product. We have a liquidity pool that holds, you know, all the assets that I just mentioned, in very various weights, those assets being in the pool effectively allow us to lend out those assets to anybody who would like to open a leveraged position, and then also hold their deposits as collateral against those positions. So both the position, the leverage, everything is transparently available in the smart contract, all settlement can happen there in the contract, the only thing that's been brought in is the external pricing, which we take from leading centralized exchanges. And GMX, or or GLP, as we refer to it, you know, has provided, you know, extremely compelling returns over the last one year, but, you know, from a risk adjusted basis, it's provided delta positive crypto exposure, roughly half 50% of the assets are those leading cryptos that I just mentioned. But there's also a lot of fear in the fee earning comes from people opening positions, closing positions from people who borrow fees, and, and, and also a positive or negative impact on the p&l, which can vary, you know, day by day, week by week, which is the trade on p&l, if traders are, are are, you could say quote, unquote, losing, there's more gains that sit within the GLP, if traders are coming out ahead, those fees are being reduced by the fee earnings be offset by some amount of payout, you could say for traders who are coming out ahead. But over the last year, it's consistently delivered yields. I would say, you know, it's been volatile, but you know, a 25 to 35% annualized yield has been roughly what’s performed over the last one year.

09:27

Yeah, that's great. So you're telling us GMX has an ecosystem with two tokens. So GMX and GLP. What can you tell us about each token utility?

09:39

So GLP utility is a liquidity pool. It represents a share of the actual underlying assets in the pool. It has an earn 70% of the protocol fees for its specific pool are that shade from all trading activity that on the pool, effectively, you could say it is, it is a it is you taking a pool position and providing liquidity GMs, on the other hand is effectively our protocol governance token, it has both 30% of the revenue off of fees, go to GMX takers. So it's a good mix taker, not the mix holders. So there's a staking requirement to participate in a portion of the fees. Beyond that you additionally have governance rights over the pools that are being deployed the ability to suggest other improvements and modifications to the protocol. So governance is continuing to evolve. And it's been great. We have quite a robust community, both between telegram discord and our Governance Forum, gov.gmx.io. Where people are able to contribute to the protocol as well.

10:45

Okay, thank you. Thank you for clarifying. So are there any upcoming new features or new chain integrations and partnerships that you are excited about that you want to share with us?

10:57

So you know, we spend a lot of time on a lot of unexciting stuff, which is a lot of work on upgrading the protocol, in terms of just hardening ourselves from, you know, potential people looking at, you know, economic exploits, code, exploits and the like. So we spend most of our time actually focusing on that. But you know, in parallel, we have obviously been building for the future. And for us, that's a product called GMX cents. It's effectively somewhat like a, a 2.0, or a 1.5, or a two point, I don't know, whatever version of what we've been doing with GMX and GLP. it's a new set of contracts that are already out with our auditors, but he would have really liked it, you can go to our site, gmx.io and link to our GitHub, it's all the code is already available. It effectively helps us to, it helps us to create new markets, and credit markets that are a lot more dynamic. You know, to our credit, I think, with what's with GMX, we've tried to create something that was very straightforward, and has really caught the attention of the market and maybe grown even larger than we initially expected. But we want to be able to, we want to make sure that everything that makes GMX work well is also able to scale. And we're able to also make sure that we are not limited by market size. So it's introducing mechanisms that will allow small traders really participated in all the features that we've been able to ride into events and larger traders to also be able to participate. But while also making sure that there's adequate protection from liquidity providers, so we're now you know, while we are ensuring that there is deep liquidity around different tokens, we are separating them out so that it's it's more built on tiers, it has features that will encourage other other market participants to come in and for lack of a better term, balance the market or balance some of the excess open interest, which will allow bigger traders to be able to open larger positions, knowing that there are other people who will take advantage of the opportunities that the opening of big positions create for other people to want to fill those positions. And we've, we feel that all of these, all of these factors are gonna allow both potentially higher utilization and less volatility for liquidity providers, you know, by creating a more dynamic two way market, whereas our current market has sometimes tilted a little bit more one way or the other. But overall, there’s a lot of features. And, you know, we continue to be working with a lot of key partners, including chain link on, you know, just getting it all ready to go to burn. Additionally, chain expansion has been, you know, an interesting topic that our community has been reviewing, we definitely think the chain inspection is something that, you know, we, you know, I think if, if, if governance looks at it, and is interesting, I think it will happen, but which chain, I think time will tell I mean, or which chains, because, you know, there's only been a focus on making sure that we can, the product can get in front of as many people as possible, but also making sure that it's not just cannibalizing volume from the existing locations, GMX and present today, you know, arbitrage has become a bit of a hub of DeFi perpetuals. And we're really excited by that because I think our presence has helped also bring a lot of other players into that environment, where traders are and and you know, we so you know, if we expand, it'll be to expand into environments where our expansion hopefully helps to, helps to showcase a product like GMX to people who have not had that opportunity to experience yet.

14:29

Yeah, so what would you say is the vision for GMX in the long term?

14:35

It's a little hard because, you know, while while there's been a lot of, you know, we have a lot of discussion as to you know, what, what should we built, I guess within the GMX ecosystem, it largely comes down to what the contributors want to work with and what the community's kind of direction is. There's really no long term roadmap. I mean, maybe I say that because effectively, you know, that I can give you some of the principles. I mean, I think a lot one of the things that crypto as contributors we've been focused on is, how do we create efficient markets? How do we create equitable markets? So those are the sort of problems that we've been sort of thinking about. And that's been the focus. And so, you know, if I go through the evolution, you know, those changes that happen or evolutions GMX, since it's really been about that, how do you create these balanced environments? Deep liquidity is definitely one aspect of that isolating liquidity in some cases also a solution to that? How do you make sure both of them happen? How do you make sure that markets which may have relatively less interest can still be equally robust? That doesn't mean identical to say, marketing agency, or but you know, with their own parameters? And then how do you take these principles and extend them beyond crypto assets? How do you support potentially markets that already exist within the world beyond crypto, and support them on chain in an equally robust and interesting fashion? I mean, those are a lot of the problems that we think about

16:03

 you've said, and you've underlined very well that you value, community and contributors a lot. And in fact, this session, the topic of the session is about bringing new users to defy, and GMX has a very strong community. In fact, we have already more than 1800 people listening to this episode. Welcome everyone, no pressure. And I think that's, that's also a result of the strong community's got around GMX. So can you share with us some insights on how to attract new users and keep them engaged around the community? Around the brand?

16:49

Happy to o again, I think that community is developing a lot of different fashions. And so you know, I think one of the most important pieces is to be authentic. You know, GMX as a community as a DAO has sort of evolved a language of its own. And, by the way, that language is maybe, you know, a pretty sensible one, I mean, it's actually been a community that's very much been built around, ideas, about building about being focused on what we hope are the right, the right parameters, and, and what is one of the big aspects for us has been making sure that, you know, I literally, don't let it I can't tell you how much of our success is driven by, for example, our moderators and our, and our, in our contributors, be active in our telegram or discord, and just engaging because every single person actually came up sort of within the ranks of our community, was the voice of our community, and then carried on to take that responsibility. And so that's sort of, you know, built by and led by, and grown by and advocated by and used by the community aspect, I think, has been a really big aspect. You know, I think there's a lot of communities where communication doesn't feel like it's a one way street. We go, and we build something. And then people, you know, community just says, you know, when this when that and as opposed to a sort of process of engagement. And I think that engagement is a very big part of it. You know, one of the most sort of fun, but has been, you know, it's cool to reflect on them. This last one year journey of ours was something called GBC, or the GMX Blueberry Club. And it's kind of become a thing that we're seeing a lot of defi protocols launch their own NFT products. We never wanted to launch an NFT project. But community members came together with an idea somebody that they said was happy, reflected the sort of your comfort and joy, they got the volunteer Max, and they launched, they launched in an FTD product. During the time where NFP products weren't selling out, like crazy and doing all sorts of things, I mean, GBC plated time to print out cool, just web community buying and engaging and really be interested in it. But it ended up helping to promote credit and identity for you know, and for example, if you see, let's see me on the Twitter space, feel free to follow me quit from Canada, and then I'm proud of my GBC. And so are so many people and it's got it's something that's just linked our community. But it happened organically. And I think that, you know, it's, it's really hard to create that community without making a mess unless you actually engage the community and listen to them.

19:30

So we have seen a lot of migration of liquidity over the past few weeks, especially after the collapse of FTX. So what are the areas you think are critical for defi to bring new users on boards?

19:44

We put out a press release actually a couple of days ago with a handful of them reading these defi perpetuals players, highlighting what we thought were the most important things that we need to do and a lot of this was stuff that we were all doing already maybe as defined As players, we just take it for granted. But maybe it's we need to do a better job communicating to the broader crypto community. And even beyond that to regulators and the like, how do you find works, the fact that everything that we are doing is 100%, verifiable on chain, that transparency is so critical. If you think about all of this conversation about centralized exchanges, reserve balances, proof of assets with the liabilities. If you want to you can go to our contracts, you can go to our dashboard that we've done with nance and recently, they're all verifiable, they're all available, every penny is accounted for the owners to GLP are accounted for every position is transparent, available on chain and verifiable, that transparency, I think is very important. Beyond that, we need to make sure that we also deal with the user experience, no doubt, one of the big advantages, centralized exchanges have had has been the comfort that they provided, and the fact that they've removed friction from the environment. And that involves not just, that's not something that any one player can solve. But it does mean working with leading bridges, a defi, say bridges and fear on and off ramps, to make sure that it works well. For example, on GMX now, we try to highlight a whole range of bridges and gateways, that that are available, we don't pick them, we just make sure we highlight all the opportunities, because it should be an open environment, an open marketplace, where you can find the best solutions to address your needs.

21:35

Yeah, and what advice would you do to defy users to protect themselves when exploring new protocols?

21:41

Obviously, you know, research is important. And I would say that research is not easy. And I mean, I think that that's, that's, that's one of the most difficult things. It is also quite often that some of the most innovative products or sometimes some of the newest protocols, you have to be you do need to you do need to understand the potential risks that you're taking. And I think that is something that is easier said than done. And it's something that, you know, we spend a lot of time thinking about, you know, we, we make a point that, you know, while we do a lot of collaborations we don't, we don't tend to endorse other protocols. Because, for example, even we are comfortable to say that with confidence that we know what everybody's told us, and it all works out people have the right, intent and, you know,  it is a space that obviously, there is a lot of risk. So that that could be at the contract level. There's, also an entirely additional layer of risks that relate to, you know, self sovereign control over your wallets, and potential risks that do come with that, despite all the freedom that it gives you it does come with trade offs. So you know, one of the things we do spend a lot of time on is we actually have our own FAQ, where we try to highlight, you know, good safety precautions that people should be taking, to keep their assets safe, you should invariably try to see if you can find reputable voices within space can maybe not the easiest thing. You guys are actually I think one of the more considered voices, you know, within the crypto space. And, and, you know, it's a little bit hard because I'll just say this, I mean, as we're in a non team. And, you know, I think that's been generally viewed by many as a negative. What I would hope is the following that if the team is a non, I hope people do scrutinize the code as much or even more and hopefully the combination of that scrutiny and making sure that the code is solid, and the track record should be you know, a combination should be useful calculate.

23:45

Okay, thank you very, very useful recommendations, just to wrap up our session is there anything that you are looking forward into in the web 3d space in the next upcoming months

24:01

so probably went three or maybe more into just defy with a Web3, I'm, I'm really excited to just see how, you know, different protocols can work together. We with actually with mobile wallets and other sort of gateways to really try to bring together a complete user experience for for users who are entering the crypto environment, you know, with with integrations of NFPs and items that that went you know, Instagram and Facebook has been looking at it when are invariably feels like it's gonna be going further into that route. More and more people are going to slowly be exposed. And as exposed to that I'd love to I'd love to see that their experience of the Web3 is a web experience. You know, we're listed on by Nance love with CZ is doing but I don't want them to think that you go to Coinbase or you go to or you go to, or you go to buy Nance to buy your NFT used to interact with communities to go through their wallets. I'd much rather that be an experience that doesn't have as many decorators in between. And I, I'm excited to see how everybody kind of, you know, works in the collective interest, I try to create that experience. So, you know, I think that's gonna be something I really excited to see. And I think the need now has become front of mind, right? For a lot of people.

25:31

Yep. Great. So Coinflip. Thank you so much for joining us and for having this chat. Is there anything you want to say before we close our session?

25:52

No, I just wanted to thank you for the opportunity. I'm sorry that I'm not feeling well. But I really wanted the opportunity to just interact with you and your community. So I do appreciate that opportunity.

26:05

Thank you. And thank you everyone for tuning in. This was a great session, more than 2000 people listening live. And this will be the end of the Poolside with Polkastarter. Thank you everyone for joining us. If you have any topic or guests you want to hear on poolside, do let us know. And in case you missed the entire live session, make sure to subscribe to Spotify, Apple or Google podcasts channels. And if you got curious you didn't know GMX go to GMX.io. So thank you, have a good day. Bye bye

SUMMARY KEYWORDS