GLP Vault on Arbitrum
GLP Vault is firstly deployed on Aribitrum, by integrating with GMX's GLP token and the GMX perpewual swap exchange.
- The Vovo GLP vault accepts the deposit in GLP tokens or tokens like ETH, BTC, USDC, etc. For non-GLP token deposits, the vault purchases GLP tokens for the user before making the deposit.
- Every week, the vault collects the yield of staked GLP tokens, and uses the yield to open high leverage positions on GMX. Depending on your market view of the vault you select, the direction and the underlying of the leverage position is different. For example, if you select ETH Up Vault, the yield of your GLP tokens will be used to open 10x leveraged long ETH positions.
- After one week, the vault automatically closes the leverage position and reinvests the profit to buy and stake more GLP. The profit depends on whether the price of underlying token moves in the same direct of your market view. For example, if you select ETH Up Vault and ETH price goes up by 10% for the past week, you will get around 2x of GLP base yield, that’s 40% APY if GLP base yield is at 20%. If ETH price goes down that week by 10%, the leveraged positions will be liquidated and profit is 0, but your staked GLP token principal is untouched with 0 loss.
- In addition, since the GLP token also receives esGMX token reward, the vault also automatically stakes the esGMX to earn more trading fee yield. The vault will be able to accumulate a large amount of esGMX in the long term, boosting the yield even higher.