🚀 GMX Volume Surge: A Deep Dive into the Recent 240% Fee APR Spike
Did You Catch the GMX Volume Spike?
From August 11th to August 13th, some users on Diamond Factory may have noticed that our GMX/WETH 1% arbitrum pair skyrocketed from its usual range of 40%~ fee APR to over 240%. We want this opportunity to remind our users what, why, and how this happened.
GMX Surges in Volume
On August 10th, GMX was edging close to $40 amidst a month of declining prices. This triggered a critical sell point for GMX whales, where four addresses dumped a combined total of 62,274 GMX — worth $3 million — on DEXs. Such a sell-off did not significantly impact the price of GMX, as it momentarily dipped below $40 and later recovered to $42. The volume of the GMX/WETH pair on Uniswap reached nearly a combined $6m from 8/10 to 8/11, compared to the usual average of $0.5m daily volume for August. Likewise, fees generated on Uniswap for the 2 days shot up to $60,000, whereas it usually sat at $2,000 — $5,000 per day.
Huge 240% Fee APR?
Our Unibot platform displays the average fee APR of a pair over the past three days. Hence, the sudden surge in the volume of GMX over the 10th and 11th caused a massive increase in displayed APR from Aug 11–13th on Unibot. Users with existing, in-range factory positions open before the sell-off could have greatly profited, but the real-time APR might have been very low for someone who opened a position later on August 12th. In conclusion, it is important to realize that altcoins, such as GMX, with lesser volume in general, do not have an even distribution of trading activity; it comes down to luck if liquidity providers manage to catch a moment of big volume surges.
So What Can You Do?
While it certainly feels great to have an open, in-range LP position at the right time coinciding with large market moves, it hardly qualifies as a reliable long-term strategy for earning yield from LP. Having allocation in relatively more stable pairs with higher liquidity and more even distribution, such as our wide selection of WETH/USDC pairs, allows for more consistent long-term yields.
Fret not, however, as even if you want to try your luck landing a jackpot volume surge on altcoin pairs, our platform allows users to optimize an altcoin LP position with a wide range. Having a wide-range LP position could improve the chances that the profits from a volume surge will be captured when and if it happens.
Finally, our new foray into the BNB chain on Pancakeswap opens yet another source of more reliable LP yield. Our BNB pairs on Pancakeswap, such as CAKE/USDT or CAKE/BNB, offer a substantial portion of its yield as farming rewards. As of this writing, our CAKE/USDT 0.25% pair has a fee APR of 49%, of which nearly 40% consists of farming reward APR.
Even though the fee APR is directly related to spot trading volume, the farming rewards are given relatively more evenly, providing a generally stable yield over a long period of time. This means overall APR over time is more evenly distributed, allowing for more consistent yields for our LPers.
You can provide liquidity on the AMM while earning farming rewards today at Diamond Unibot — Pancakeswap. To kick-start your journey with this exciting pair, we’re offering a special incentive. Trade with a minimum of a 500 $CAKE position, and you’ll not only earn the coveted GALXE OAT but also secure your spot for an upcoming airdrop (only available for factory positions) Check it out here:
Who We Are
Diamond Protocol’s Unibot is a leveraged liquidity provision platform that operates on top of DEXs. It allows liquidity providers on platforms like Uniswap to hedge their LP positions by borrowing and shorting volatile assets.
Unibot’s philosophy has always been to give the DeFi and crypto community a product that allows systemic earnings in a volatile market. From the beginning of our product design, we grappled with the question of how to earn profit in a market that is so unpredictable — our result was Unibot. This product aims to significantly increase our user’s odds of winning. We aim to create a scenario where a Unibot trader can accrue fees earned and wait for an ideal exit price even if they guess the market wrong.
Our approach has since been appreciated by seasoned traders within the crypto and DeFi ecosystem, and we welcome everyone to join our discord, where we regularly host trading competitions and events with rewards. Come on by and meet the team and other veteran traders eager to discuss and share strategies!
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