Avalanche Rush comes to Yield Yak with up to $100K in rewards as part of collaboration with GMX
Yield Yak and GMX, two of Avalanche’s premier DeFi protocols, are announcing a series of collaborations to help grow both ecosystems and more closely align the two communities heading into the future.
- Up to $100k in AVAX Avalanche Rush rewards are coming to Yield Yak. Rewards will be distributed to Yield Yak’s GLP strategy depositors over the course of four months.
- YY will be launching a novel upgrade to Yak Swap which adds GLP as a tradeable asset. Trades will be routed in and out of GLP via the most under- or over-balanced assets if slippage is less than fees, helping maintain assets’ target weights. The adapter can be seamlessly integrated into other protocols, including GMX.io.
- YY and GMX communities have completed a YAK <> esGMX treasury swap aimed at aligning financial interests, with esGMX going towards further boosting Yield Yak’s GLP vault.
Avalanche Rush comes to Yield Yak
Avalanche Rush is a liquidity mining incentive program by the Avalanche Foundation launched back in August 2021 to grow the Avalanche Ecosystem, with $4 Million in AVAX allocated to support GMX. Via this allocation, Rush is arriving at Yield Yak with up to $100k in AVAX rewards for its GLP vault.
Rewards will be proportionally distributed to depositors over the course of four months. At the start of each month, the amount of rewards for the upcoming month will be determined by the average TVL of the vault in the prior 7 days. Rewards increase upon hitting key TVL milestones, designed to encourage growth of GLP across the Avalanche Ecosystem, which in turn benefits Avalanche GMX traders.
Yield Yak’s Approach to GLP
Yield Yak’s GLP strategy was the first of its kind, with a strategy to continuously stake esGMX in perpetuity in order to maximize GLP rewards for all depositors.
Specifically, here’s how it works:
- AVAX rewards are compounded back into GLP
- Earned esGMX are staked forever to increase total vault rewards
Yield Yak’s GLP vault depositors all benefit from Yield Yak’s accrued esGMX, which will increase their GLP rewards without having to vest esGMX (which requires staking a significant amount of GMX). GMX will also benefit by increasing the percentage of its supply that will never be vested and released on the market. This makes the strategy mutually beneficial for GMX and Yield Yak users.
Audited, battle-tested, boosted, with low fees
Yield Yak’s GLP vault has been running smoothly for over 10 months and has recently undergone an audit by independent auditors CoinFabrik. The audit was performed to better support third-party integration of the GLP Vault with DeFi partners on Avalanche, with the vault already integrated by Moremoney and Arable Finance with more integrations underway.
The vault also has the lowest fee structure of any product built on top of GLP, with a 9.5% fee taken only on yield and zero entry/exit fees. The displayed returns are net of fees.
The GLP vault has already accrued approximately 1,000 esGMX (worth ~$50K) over the past 10 months, benefiting all current depositors, with a proposed YAK <> esGMX Treasury Swap set to add even more esGMX to boost vault yields.
Introducing the best way to buy and sell GLP
Yak Swap was the first DEX aggregator to integrate GMX pools as a trade route. Since then it has routed over $300 million in trades to GMX, while charging zero fees.
We are doubling-down on our support for the GMX ecosystem, and have built a novel upgrade to Yak Swap, which benefits the GMX ecosystem by optimizing trade routing to GLP. This upgrade makes GLP a tradeable asset with trades routed in and out of GLP via the most under- or over-balance assets if slippage is less than fees, helping maintain assets’ target weights. Not only does this help rebalance the GLP pool towards its target index weights, it provides liquidity providers with better overall price execution.
The GLP functionality will be available on Yak Swap and can be integrated into any protocol wishing to use this functionality (including GMX.io). This will be especially useful for protocols building delta-neutral vaults, as they tend to deposit and withdraw only in stables.
Coming to Yak Swap very soon, this GLP adapter is simply the best way to mint and redeem GLP.
How does the GLP Adapter work?
GMX charges dynamic fees on GLP minting, based on the coverage ratio of the assets in the GLP pool. Under-covered tokens have lower fees than over-covered assets and vice versa.
This creates an opportunity for Yak Swap to route trades to the lowest-fee route, provided the slippage to enter that asset does not outweigh the fee.
Jim would like to purchase GLP with $1,000 in WBTC.e. WBTC.e is over-covered in GLP, and has a mint-fee of 0.75%. This means that for $1,000 in WBTC.e, they’d receive $992.50 in GLP value.
In this example, the lowest fee asset to enter GLP is BTC.b with 0.08% in fees, meaning someone entering GLP with $1,000 in BTC.b would receive $999.20 in GLP, a difference of $6.70.
Using Yak Swap to enter GLP, Jim doesn’t need to worry about fees or making this calculation himself. Yak Swap will automatically swap his $1,000 worth of WBTC.e for BTC.b, and purchase GLP with BTC.b, netting him $992.50 in GLP and saving Jim $6.70.
Importantly, Yak Swap takes into account slippage to always ensure converting into another asset is profitable. If your asset is already the cheapest way to mint/redeem GLP, then it will simply proceed with the transaction.
Aligning the protocols via Treasury Swap
The treasury swap is designed to better align the financial interests of the two protocols, as well as boost the performance of Yield Yak’s GLP vault. The swap helps position the vault as a key building block inside the GMX ecosystem. This combined with YY’s GLP router create a near-frictionless integration for GLP within Avalanche’s DeFi ecosystem.
The proposal, which sits with both communities to confirm, results in:
- Yield Yak receives [$60K] equivalent of esGMX which would be used to boost its GLP vault
- GMX receives a [$60K] equivalent value of YAK tokens staked on Yield Yak.
- Both sides agree to replicate the above swap for $40K in each asset should Yield Yak release a GLP vault on another chain. The $40K in esGMX would go towards Yield Yak’s GLP vault on the destination chain.
Both Yield Yak and GMX will hold and stake these positions for a minimum of two years.
GLP is GMX’s liquidity provider token, which accrues 70% of the fees the protocol generates on that blockchain. GLP’s value is based on multiple factors, including the value of the tokens that make up the liquidity pool for the platform. The GLP pool typically contains ~50% in USDC, with the remaining portions made up of BTC.b, WETH, and AVAX. As GLP holders provide liquidity for leverage trading, they will make a profit when leverage traders make a loss and vice versa. Past PnL data, GLP price chart and other stats can be viewed on https://stats.gmx.io.
About Yield Yak
Yield Yak builds tools for DeFi users on Avalanche. Yield Yak Farms auto-compounds rewards for you. Yak Swap finds the best price execution for dex trades. yyAVAX is Avalanche’s highest yielding liquid staking derivative.
Web | Medium | Twitter | Docs | Telegram | Discord
GMX is a decentralized spot and perpetual exchange that supports low swap fees and zero price impact trades. Trading is supported by a unique multi-asset pool that earns liquidity providers fees from market making, swap fees and leverage trading.