Understanding GMX Returns

Is It Profitable to Stake GLP?

Published in
4 min readJul 5, 2023


An Overview on GMX

At GMX, users can choose to be either:

♠️ Gamblers: whose profitability depends on how well they time the market.

🏠 The house: by providing liquidity to the pool against which traders trade. And you know what they say about casinos: the house always wins!

When users mint GLP, they’re basically depositing into GMX’s pool aka providing liquidity to the house, so:

👎🏼 If a trader wins, they’re draining this same pool, and your GLP tokens become less valuable.

🤑 But, when traders get liquidated, their funds also go into this pool.

Long story short, if traders are profiting, LPs (holders of GLP) are losing, and vice versa. ‘How have they performed historically?’ you might ask.

For that, GMX has an official stats page where they show that LPs are winning (so far):

Overall, GLP holders are winning, but, of course, this depends on when you actually joined the pool. If you became an LP after May ’22, traders actually profited from your liquidity.

But don’t worry, this isn’t the only revenue stream GLP holders have. GLP holders’ bags also benefit from:

  • 🔁 swap fees
  • ↕️ funding rates
  • 🏦 borrowing fees
  • … etc

Okay, but all in all, can we affirm that it is actually profitable to stake GLP? Based on the official stats, this is a hard thing to say. But buckle up! @DeFiReturns came in to rescue to help us answer this question!

Understanding GMX's Returns

So, the question is simple. If:

🏭 I mint GLP using ETH

⏳ wait a few months

💰 then sell fees + rewards + GLP

Am I better off than just holding ETH?

Let’s check @DeFiReturns‘s chart to answer this: If you staked GLP since protocol inception, you’d have earned 196% more ETH than just hodling it.

🤑 Huge PROFIT!

One interesting thing to notice is: returns went up when ETH prices crashed. 👀

But let’s keep in mind that this is the return profile since the protocol launched in October ‘21.

🚨 It is highly important to pay attention to how your returns can differ from this number depending on when you entered the GLP position.

To showcase this, let’s analyze the returns of being a GLP holder in case you entered the pool in Nov ’22. As you can see in the graph, the results are not as positive as before:

LPs would have incurred a -12.3% IL. They’d have been better off just hodling ETH instead.

Does GMX show this to their users? They do! But with a smart tweak that makes the numbers more attractive. Let’s check this screenshot from their page, where they show users’ positions and past returns as a GLP staker:

The losses are reflected in the “GLP Price” at the top, while the fees earned are shown in the “APR” field. By decoupling the pool losses from the fees, they make:

  1. The APR look great — always around 20%
  2. The negative variations in the GLP price less obvious

In other words, it doesn’t matter if GLP is mooning or tanking, the APR will always show a positive and attractive number to draw in more liquidity. Here you can see how “GLP w/ fees” performed since inception in USD — sometimes positive, sometimes negative:

Moral of the story: LPing in pools can be risky, and if you’re bullish on ETH, simply hodling onto your ETH, or depositing in principal protected strategies is usually safer.