Staking Rewards on GMX.IO: Full Walk-Through
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gmx.io is a decentralized perpetual exchange that provides some interesting yield faming opportunities. For example, the gmx.io native token GMX can be staked for APR rewarded in the form of AVAX (or ETH) while receiving additional GMX in the form of staked GMX tokens. Let’s walk through a concrete example to understand the yield mechanics:
Assume we have 100 GMX tokens which we stake into gmx.io to receive 100 stGMX. We will receive two separate channels of yield from stGMX: 1) esGMX tokens at a rate of 16.88% APR and 2) AVAX tokens at a base rate of 5.18% APR (reported by gmx.io at the time of this writing).
Assume we want to compound our returns on a weekly basis. After the first week our rewards will equal: 1) 100*0.1688/52=0.324 esGMX tokens, plus 2) 100*0.0518/52=0.099 GMX tokens that have been converted to AVAX tokens. If the price of AVAX is $80 and the price of GMX is $29 then 0.099 GMX tokens will equate to 0.099*29/80=0.035 AVAX tokens.
Additionally, we will receive Multiplier Points (MP) every second at a fixed rate of 100% APR relative to how much stGMX we have. So after one week we will have accrued: 100*2/52 = 3.846 MP.
In summary, after the first week of staking we will have been rewarded with: 0.324 esGMX+0.035 AVAX+3.846 MP.
Let’s examine what happens if we “compound” our rewards after the first week. The compounding smart contract does several things: 1) it transfers AVAX rewards to our wallet, 2) it stakes the rewarded esGMX, and 3) it stakes the MP. Hence after compounding we should have an additional 0.035 AVAX in our wallet, 0.324 esGMX staked (let’s call this stesGMX) and 3.846 staked MP (let’s call this stMP).
Boost percentage (BP): the boost percentage equals the amount of stMP relative to the stGMX plus stesGMX we hold. This is a simple computation: BP = 3.846/(100+0.324)=3.83%. This BP will be added to the AVAX rewards during the second week and onward. This will effectively raise our AVAX reward percentage to: 5.18*1.0383=5.37%.
In summary, at the start of the second week we will have: 100 stGMX+0.324 stesGMX+0.035 AVAX (assuming no fees)+0.0 MP (since the MP timer will reset)+3.846 stMP. Our AVAX reward rate will be 5.37%. Let’s compute our rewards at the end of the second week. Assuming the escrowed GMX APR to remain the same as last week our rewards will equal: 1) 100*0.1688/52=0.324 esGMX tokens, plus 2) 100*0.0537/52=0.103 GMX tokens that have been converted to AVAX tokens. If the price of AVAX is still $80 and the price of GMX is still $29 then 0.103 GMX tokens will equate to 0.103*29/80=0.037 AVAX tokens. We made 0.002 more AVAX this week, yay! Additionally we will accrue 3.846 MP.
We will also receive rewards for our stesGMX from the previous week. Recall we had 0.324 stesGMX after the first week. This is treated as if it was stGMX so we will earn: 1) 0.324*0.1688/52=0.001 esGMX plus 2) 0.324*0.0537/52*29/80=0.0001 AVAX. So in total we will have been rewarded with: 0.324+0.001=0.325 esGMX tokens plus 0.037+0.0001=0.0371 AVAX tokens.
If we compound after the second week, we will have 3.846+3.846=7.692 stMP which raises our BP: 7.692/(100+0.324+0.325)=7.64%. This in turn raises our AVAX APR to: 5.18*1.0764=5.57%.
In summary after two weeks:
- Our AVAX APR rose from 5.18% to 5.37% to 5.57% and we earned 0.035+0.0371=0.072 AVAX.
- We earned 0.324+0.325=0.649 stesGMX tokens.
In dollar amount: our original equity was 100 GMX = $2,900. We earned (on an average weekly basis): 0.072*80/2=$2.88 from AVAX and 0.649*29/2=$9.41 from staking esGMX. So our projected APY is 52*(2.88+9.41)/2900=22%. Not surprisingly, 22% is in-line with the advertised APR value on the gmx.io earn page. Of course by compounding every week the APY should be higher than 22% by the end of the year. Assuming that the prices of AVAX and GMX don’t drop!
The diagram below shows the relationships between the various yields on gmx.io:
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