The Current Development Status of GMX Under the Arbitrum Incentive Program

Recently, GMX received the most 12 million ARB tokens from the Arbitrum Short-Term Incentive Program (STIP). This funding is primarily used to support the joint growth of GMX V2 and the Arbitrum DeFi ecosystem. This article will explore how these funds are utilized and their impact on the development of GMX.

Main Uses of ARB Token

The 12 million ARB tokens allocated to GMX under the STIP plan will be distributed over 12 weeks, with one period each week. These funds are primarily used for the following aspects:

1. Incentivize GMX V2 perpetual contracts and spot liquidity
2. Encourage liquidity to transfer from the GLP pool of GMX V1 to the GM pool of GMX V2
3. Subsidize the trading fees in GMX
4. Sponsoring projects developed on GMX V2

Through these measures, GMX aims to enhance its competitiveness, especially in terms of transaction fees, to compete with centralized exchanges.

GMX Liquidity Changes

As of November 17, the overall liquidity conditions of GMX are as follows:

• GMX V1+V2 Total Liquidity: Increased by 6.45% (from 496 million USD to 528 million USD)
• GMX V1 liquidity: decreased by 9% (from $400 million to $364 million)
• GMX V2 Liquidity: Increased by 69.5% (from $96.77 million to $164 million)

It is worth noting that the significant increase in GMX V2 liquidity mainly occurred on the first day of incentives, after which the growth rate noticeably slowed down.

Changes in Open Interest and Trading Volume

In terms of open interest, it grew from 152 million USD on November 8 to 182 million USD on November 13, but decreased to 137 million USD by November 17, even lower than the level before the incentive began.

Trading volume is significantly affected by market volatility, with the peak occurring on November 9, reaching $555 million. Recently, the trading volume of V1 is still higher than that of V2.

GM Pool Long and Short Imbalance Issue

GMX V2 attempts to balance the long and short ratio through fee adjustments, but there is still a significant disparity at present. For example:

• GMX V2 Overview: Longs $51.66 million, Shorts $28.67 million
• Some assets (such as SOL, DOGE, XRP) have reached the limit for long positions.
• XRP long positions are 4.42 times the short positions, and SOL long positions are 2 times the short positions.

Despite the series of measures taken by GMX V2, the issue of long and short imbalance has not been effectively resolved.

Summary

The Arbitrum incentive program has indeed driven a significant increase in GMX V2 liquidity, but this growth was mainly concentrated in the first two days after the program started. There has been no noticeable increase in open interest and trading volume, and certain GM pools still face the issue of imbalance between long and short positions. Although some GM pools offer an APR of up to 50%, liquidity providers may face higher risks due to the inclusion of volatile altcoins in the trading targets.