Dear Paribus Governance Forum,
We are pleased to propose listing GMX token as collateral on Paribus. this initiative aims to further expand Paribus’ offerings by integrating a key asset within the Arbitrum ecosystem. GMX continues to hold the number two spot in TVL on Arbitrum making it more then a worthy market to support on Paribus for users who want to leverage their GMX holdings.
Background on GMX
GMX is a decentralized derivatives exchange that launched on Arbitrum in September 2021. It is designed for spot and perpetual contract trading, offering users the ability to trade with low fees and zero price impact, while also allowing leverage on trades. The GMX protocol generates rewards from market making, swap fees, leverage trading (spreads, funding fees, and liquidations), and asset rebalancing, which are distributed back to liquidity providers.
What Is the GMX Token?
The GMX token is the utility and governance token of the platform. Stakers of GMX receive 30% of the fees collected across the platform, making it a valuable asset for users who participate in the protocol.
GMX Token Information
Market Cap ~$240 million
Circulating Supply 9.6 million
Max Supply 9.6 million
Token Holders: 300,000+
Uniswap Liquidity Pool: ~$18 million
Camelot Liquidity Pool: ~$600,000
Rationale for Listing GMX as Collateral
1. Expanding Market Presence:
GMX is one of the most significant tokens on the Arbitrum network, with a strong user base and robust liquidity. Listing GMX as collateral on Paribus allows us to tap into the ecosystem’s growing user base and enhance our market presence by supporting a widely recognized and utilized token.
2. High Liquidity and Utility
Given GMX’s substantial liquidity on decentralized exchanges like Uniswap and Camelot, and its utility within the GMX protocol, the token is well-suited for use as collateral. This high liquidity reduces the risk associated with using GMX as collateral, making it a reliable asset for both borrowers and lenders.
3. Pioneer Advantage
Currently, no lending protocol on Arbitrum supports GMX as collateral. By being the first to list GMX, Paribus can position itself as a pioneering platform within the Arbitrum ecosystem, attracting users who are looking for new opportunities to leverage their GMX holdings.
Implementation
Loan-to-Value (LTV) Ratio
Given the GMX token’s significant liquidity and strong market presence, we propose a high LTV ratio between 50% and 60%. This ratio reflects the token’s reliability and utility, providing users with a substantial borrowing capacity while maintaining the security of the platform.
LP Token Support
As Paribus continues to evolve, we also propose listing GMX’s liquidity provider (LP) tokens as collateral once LP collateral support goes live on Paribus. This addition would further enhance the platform’s offering by allowing users to leverage their LP positions, increasing capital efficiency.
Community Involvement
As with all significant decisions, we seek the input of the Paribus community in shaping this proposal. We encourage active participation through discussions and feedback to ensure that the final implementation aligns with the community’s expectations and preferences.
Conclusion
Listing GMX as collateral on Paribus represents a strategic move to integrate a leading asset within the Arbitrum ecosystem. By offering a competitive LTV ratio and being the first to support GMX as collateral, Paribus can enhance its appeal to a broader user base and solidify its position as an innovative lending platform on Arbitrum.
We invite the Paribus community to review this proposal and share their insights before it moves to on-chain voting through governance.
Sincerely,
Paribus Team
