Introducing gTrade v7: gETH, gUSDC and Multi-Collateral Deposits

The 2-week timelock is complete, and gTrade’s v7 multi-collateral deposits and gToken upgrade is officially live!

The multi-collateral upgrade means that traders can choose from a range of cryptos as collateral for their positions. The 2 new gToken vaults allow depositors to earn yield through protocol fees while remaining liquid and exposed to ETH, USDC!

Vault and Collateral System

Since launch, DAI has been gTrade’s primary non-native token used throughout its Arbitrum and Polygon platforms.

Traders use DAI stablecoins as collateral to place leveraged trades across gTrade’s 134 crypto, forex, and commodities markets. DAI can also be deposited into gTrade’s vault. These deposits are used as protocol liquidity, and depositors — who serve as counterparties to all trades on the platform — receive a percentage of protocol revenue generated through trade fees and liquidations.

Users who deposit into the vault receive a liquid ‘gDAI’ version of their coins, which can be used throughout the DeFi sector to generate additional yield via protocols such as TraderJoe, RAMSES Exchange and Pendle.

This model has proven its success and efficiency for over 18 months, with gTrade processing more than 1.38 million trades, $56.4 billion in total trade volume and $38 million in fees, making it one of DeFi’s most profitable and high-performing perp DEXs.

With an ever-growing user base and community, as well as an increasing number of markets available, gTrade is starting 2024 strong and maintaining momentum with the highly sought-after integration of additional assets into its vault and collateral system.

New gTokens

gTrade has responded to community feedback and the request for additional vault ‘gTokens’ and is excited to introduce its new liquid, yield-bearing tokens — gUSDC and gETH.

USDC is one of the most used stablecoins across the Arbitrum and Polygon blockchains, making it a natural alternative to DAI. Users are now able to opt for their preferred stablecoin to be used as a yield-generating gToken. The gETH token works much the same way as gDAI and gUSDC and is available for use across the DeFi sector. Where gETH differs is its ability to offer holders long-term exposure to ETH, and at the same time, capitalize on gTrade’s protocol revenue.

gToken Revenue

While all gTokens earn yield through protocol-generated fees, revenue distribution is not cross-compatible.

For example, gETH holders earn a share of the revenue from trades collateralized using ETH but not the revenue generated through DAI or USDC-based positions.

gToken Integrations

gTrade is working with partner protocols across the DeFi space to integrate both gETH and gUSDC into their platforms. The goal is to build out-of-the-gate liquidity while allowing users to boost their gToken yield through LPing, lending and borrowing.

Multi-Collateral Trading

Another feature that has been highly requested is the ability to use different assets as collateral for leveraged positions — multi-collateral.

The v7 multi-collateral upgrade means that traders are not locked into holding DAI while maintaining their open positions. Instead, they have the option to use USDC, ETH or DAI.

Understanding ETH as Collateral

Unlike centralized exchanges (CEXs) where the position size is fixed in the token amount of the underlying pair, gTrade features a unique model for ETH collateralization. Consider two traders, each with 1 ETH as collateral — with a price of $2,000:

Trader 1 on a CEX: Opens a 10x leveraged long position on TIA.

• Position size: 2,000 TIA (notional size = $20,000 at inception).
• If ETH drops to $1,900, their position size in TIA remains unchanged (2,000 TIA).
• However, on CEXs, the current leverage is a function of both ETH and TIA prices, and the liquidation price is a function of ETH (and the funding).
• If ETH drops to $1,900, the trader’s liquidation price increases, making it more difficult to manage.

Trader 2 on gTrade: Also opens a 10x leveraged long position on TIA.

• Position size: 10 ETH (notional position size = $20,000) or 2,000 TIA.
• If ETH price drops to $1,900 (TIA price constant), the notional position becomes $19,000 = 1,900 TIA.
• Conversely, if the price of ETH rises to $2,100 (TIA price constant), the notional position becomes $21,000 = 2,100 TIA.
• If ETH drops to $1,900, the trader’s liquidation price remains unchanged, making it easier to manage.

On a CEX like Trader 1’s case, a 10x leveraged long position on TIA is established with a fixed amount of TIA tokens. If the value of ETH declines, the number of TIA tokens in the position remains the same. However, the changing value of ETH influences the trader’s liquidation price and leverage, complicating risk management.

On gTrade, as in Trader 2’s situation, the position size is denominated in ETH. A 10x leveraged position on TIA translates to a variable amount of TIA based on ETH’s value. If ETH’s price drops, the notional value and the TIA amount decrease, but the ETH amount stays the same. Similarly, if ETH’s price rises, the notional value and the TIA amount increase.

Basically, the gTrader may experience a variation in the TIA amount but not in ETH amount, with the liquidation price remaining constant. gTrade simplifies the management of liquidation risks, a significant advantage over traditional CEX mechanisms.

Maintaining exposure to ETH can be beneficial to your leveraged positions, however, crypto markets are prone to daily price fluctuations of +/- 10% or more. It’s recommended to familiarize yourself with leveraged trading using stablecoins as collateral before ETH.

GNS Revenue Generation

Don’t worry, GNS holders, you’re not missing out on the action!

With the v7 upgrade, GNS holders can now stake their tokens to receive DAI, wETH and USDC incentives. Since the updated GNS tokenomics plan went live in Q3 2023, stakers have consistently received more than 60% of protocol revenue.

GNS Staker Revenue:

• December 2023: $805,948 (61%)
• November 2023: $710,495 (62%)
• October 2023: $752,345 (62%)

Keep in mind that these are predominantly bear market stats. If trading volume increases as the bull market ensues and new pairs are added to gTrade’s growing list of 134 markets, gTrade will likely see an uptick in protocol revenue, along with yield for GNS stakers… win-win!

Wrapping Up

Multi-collateral deposits and additional gToken vaults have been some of gTrade’s most requested and highly-anticipated features.

Over the past 18 months, gDAI has proven its DeFi success and has been integrated into +10 protocols. Now, with gETH and gUSDC token vaults, users have more avenues for LPing and earning yield across the Arbitrum and Polygon ecosystems.

The v7 upgrade allows traders to collateralize their positions with their preferred stablecoin or remain exposed to the market movements of ETH.

GNS token holders don’t miss out either and will maintain a steady stream of +60% protocol revenue paid out in DAI, ETH and USDC!

Additional updates regarding protocol integrations and liquidity for gETH and gUSDC will be announced via the Gains Network Twitter and Discord channels.

Enjoy the updates and happy trading!