The much anticipated GLP vault is finally going to go live. On September 13 at 5 PM Pacific Time, we are going to open the GLP vault with 3m VST mint cap. The vault’s starting parameters are 120% minimum collateralization ratio and 10% liquidation bonus, enabling users to achieve as much as 6x leverage, potentially reaching 120% APR on GLP.
What is GLP?
GLP consists of an index of assets used for swaps and leverage trading. It can be minted using any index asset and burnt to redeem any index asset. It consistently achieves 20%+ APR from fees generated from GMX. You may buy it here: https://app.gmx.io/#/buy_glp.
What are the fees for this product?
As all GLP will be staked onto GMX to earn its native yield, there will be no mint fee. Vesta will charge a 20% performance fee if GLP’s native APR is ≤ 25%, and if the native APR is > 25%, Vesta will increase the fee charged, resulting in a max possible APR for users at 20%. The proceeds will go to the Vesta treasury to extend our runway to build more exciting products.
How does liquidation work?
Liquidation on Vesta is done via the stability pool. You may stake your newly minted VST to acquire GLP by staking the VST into the GLP stability pool here. There’s a liquidation penalty of 10% that would go to the liquidator if you get liquidated. Learn more about liquidation on Vesta here.
Potential Strategies of GLP on Vesta
The GLP Exposure Keeper
You may keep your exposure to GLP, taking advantage of its yield earning nature, while spending its value via taking out a VST loan against it.
The GLP Yield Maxi
GLP is already one of the juiciest places to earn yield across all of DeFi at 20%+ APR. At Vesta, you may achieve even more of that — you may stake GLP into Vesta and mint VST, which you may then stake into the VST-FRAX pool to earn a healthy 10%, or up to 30% as seen here.
Assuming GLP has a yield of 24% and you take out a VST loan at 150%, which you deposit into the VST-FRAX pool, you’ll earn:
- 20% in ETH from GLP deposit
- 10% on VST-FRAX deposit, but since you took out a loan at 150%, it would be 6.66% on the amount of principal.
In total, instead of 24%, you’ll earn close to 27% using Vesta, without magnifying any directional risk.
The GLP Degen (AT YOUR OWN RISK)
If you are bullish on the volatile tokens of GLP (WBTC, ETH, LINK, UNI), you may lever up on GLP via Vesta. You would deposit your GLP onto Vesta, take out a VST loan at a collateralization ratio that you deem as safe. With the newly borrowed VST, you then acquire new GLP position again, and then take a VST loan again… Until you’ve reached your ideal exposure. Here’s a leverage calculator that you may use to simulate max leverage.
At lowest collateralization ratio at 120%, you may achieve 6x leverage using VST. At 20% APR, that’s potentially 20% * 6 = 120% APR.
Using this strategy of GLP looping, will raise your liquidation risk. Please only use this if you have a firm understanding of lending and how Vesta works. Learn more about liquidation on Vesta here.
Vesta is also working on a 1-click leverage shortcut, where you’ll be able to do the above with just one-click. Stay tuned for that!
Alas, GLP enjoyors. Out of the three aforementioned, there must be one that suits your wants and needs. So keep a look out for our vault on September 13, around 5 PM Pacific Time — the mint cap could fill up quite quickly.
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