Executive Summary
GMX would hereby like to provide the final report on how the 5.4 million ARB grant from the Arbitrum DAO for the GMX STIP-Bridge campaign has been utilised.
To recapitulate, the campaign’s main goals were to:
- Incentivise LPs based on a specific APR target to optimise the efficient allocation of incentives, minimise waste, and maximise the ROI for the protocol and the DAO, while continuing to bring more assets and TVL into the ecosystem.
- Stimulate on-chain engagement with DeFi on Arbitrum by increasing the adoption of and activity on GMX V2.
- Expand GMX’s range of perpetual and spot pools that are highly liquid, reward-earning, composable and capital-efficient.
- Utilise part of the STIP-Bridge grant for a GMX-administered Grants Program for Arbitrum ecosystem partners building on GMX V2.
- Convert centralised exchange users to DEX users, and foster a vibrant on-chain trading environment.
The three incentive categories and their results will each be addressed in turn in the following segments.
Liquidity Incentives
The GMX STIP-Bridge campaign aimed to build on the success of the original STIP grant, in which successful liquidity incentives played a key role. The goal was to continue to grow the Arbitrum ecosystem, bringing in new long-term users via the thriving DeFi vertical so they can subsequently experience all that Arbitrum has to offer.
| Epoch | Distribution Amount |
|---|---|
| Epoch 1 | 149,947.32 |
| Epoch 2 | 165,947.30 |
| Epoch 3 | 165,946.48 |
| Epoch 4 | 168,942.82 |
| Epoch 5 | 168,941.26 |
| Epoch 6 | 174,943.75 |
| Epoch 7 | 180,942.73 |
| Epoch 8 | 192,942.43 |
| Epoch 9 | 192,943.03 |
| Epoch 10 | 192,940.78 |
| Epoch 11 | 234,451.09 |
| Epoch 12 | 259,960.34 |
| Total | 2,248,849.33 |
Main Results:
- GMX V2 Liquidity remained strong throughout the STIP-Bridge campaign, despite a months-long ranging market, relatively low volume and a slight general downtrend resulting in negative sentiment. In USD terms, TVL started at $310M on June 26 (at the launch of STIP-B), peaked at $412M on July 29, and ended at around $325M on September 16.
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Given the Summer lull, the GMX V2 liquidity has largely remained sticky, achieving our goals of allowing traders to have consistent and reliable liquidity for trading and liquidity providers to earn stable rewards.
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Multiple new GM markets have launched with the help of Arbitrum incentives, including ORDI, STX, WIF, PEPE, SHIB, wstETH, tBTC, and USDe. These tokens have had a cumulative volume of $177.36M and a total liquidity of $6.13M.
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GMX Launched two new GLV Vaults. These new vaults allow GM liquidity to shift dynamically to where traders need it the most, giving liquidity providers unprecedented capital efficiency on GMX V2. Shortly after launch, both vaults have achieved over $10 million in liquidity.
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Additionally, GMX’s Partnered Protocols showed an increase in growth in GMX V2 TVL, peaking at $144.72M by late July and currently sitting at $119.13M TVL.
- New V2 markets for Pepe and WIF brought in $4.90M in liquidity ($1.67M in WIF and $3.23M in PEPE)
Challenges:
Due to the overall market conditions during summer and the ARB token’s falling price, liquidity providers’ incentives were valued lower in USD terms than during the previous STIP campaign. With the drop in price and overall trading volumes decreasing, GM V2 LPs were earning fewer rewards. This market dynamic made growing the amount of TVL, and subsequently sustaining it, more challenging.
Trading Incentives
By providing trading fee rebates, GMX aimed to reduce the trading fees on the DEX to a level comparable to that of prominent centralised exchanges. The initial STIP campaign has shown that offering traders rebates could provide a material boost in on-chain usage of GMX perpetuals and, by extension, the Abritrum chain. STIP-Bridge employs the previously successful model on a smaller scale.
| Epoch | Distribution Amount |
|---|---|
| Epoch 1 | 149,906.05 |
| Epoch 2 | 149,784.78 |
| Epoch 3 | 299,692.51 |
| Epoch 4 | 174,975.21 |
| Epoch 5 | 174,923.29 |
| Epoch 6 | 199,782.81 |
| Epoch 7 | 199,908.18 |
| Epoch 8 | 199,943.93 |
| Epoch 9 | 199,934.14 |
| Epoch 10 | 349,895.07 |
| Epoch 11 | 349,842.29 |
| Epoch 12 | 349,958.21 |
| Total | 2,798,546.47 |
Main Results:
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Over the course of the STIP-B period, there were 10,456 qualified traders who were awarded an average of 101.67 ARB rebate.
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Rebates continued to drive trader volumes, with some deviations due to the overall market dynamics and the lower total percentage of rebates offered. There’s a notable increase in trade volume directly following the launch of STIP-B in the last week of June. However, trading volume diminishes after the sizeable market-wide liquidation event at the start of August.
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Traders traded a total of $13.03B over the entire STIP-Bridge period, marking a $233M increase compared to the previous 3 months, equivalent to 1.82% growth.
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New GM pools propelled by the STIP-Bridge grant gathered significant user attention. Traders had seven new GM markets on which they could open positions.
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In the past 90 days, GMX has emerged as the top fee-generating protocol among all perpetual DEXes, amassing $17 million in fees.
Challenges:
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The STIP-Bridge grant initially stated users would be rebated up to 75% of their open/close trading fees. Unfortunately, the combination of lower overall allocation from the STIP-Bridge and a steeply lower price of the ARB token meant we could only rebate 51.82% for the totality of the STIP-Bridge Grant.
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GMX V2’s total open interest and volumes initially grew steadily, but midway through the STIP-Bridge program, they began to fall. Overall market conditions contributed to this decline, and the inability to fully rebate traders’ open and close fees may also have.
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By early August, Open Interest had halved, while liquidations surged to their highest levels of the year across the board. This period also saw heightened competition in the Perpetual DEX space, making it increasingly difficult to attract and retain users, further adding to the challenges faced by GMX during this phase.
Grants Incentives
A portion of the STIP-Bridge grant was allocated to support projects building on the GMX V2 platform, driving innovation and development within the broader Arbitrum ecosystem. Out of the total STIP-B allocation of 5.4 million ARB tokens, GMX designated up to 600K ARB as grant incentives. These grants were awarded to developers and protocols building on GMX V2, contributing to Arbitrum’s continued expansion.
Implementation
We had previously implemented a committee-based model for our initial grants program, which fell under STIP, and saw great responses from the grantees and the DAO. The GMX Grants Committee was also elected to the LTIPP council by the Arbitrum DAO, so it was decided to implement the same committee model for our new grants program.
This proved a practical choice, allowing for a streamlined and efficient process of evaluating and awarding grants. The approach ensured that projects aligned with GMX’s vision and Arbitrum’s ecosystem growth were given priority. The grants committee, comprising experienced members from varied backgrounds, carefully reviewed each application to maximise the impact of the allocated funds.
The committee comprised five members: Saurabh, Tano, KR, Jonezee, and Shogun. Saurabh also performed the role of the grant administrator. Jrogon and Fredegar, ecosystem and business development contributors, assisted the grants committee with contacting potential recipients and finding high-quality grant applications.
After establishing the process, we worked on creating the grants template and setting up a GMX Grants Program landing page to enable grantees to navigate the grants process easily.
We allocated a maximum of 600K ARB of incentives to the grantees for the wave two grants, with a cap of 75K ARB per grant. Importantly, those who had previously received an STIP-bridge allocation, LTIPP grant, or grant in wave 1 of the GMX Grants Program were not eligible for the GMX wave 2 grants.
We implemented rigorous monitoring mechanisms to track the grant recipients’ progress and ensure the funds were used effectively. We also established precise reporting requirements for the grant recipients, requiring them to submit regular updates on their progress and use of funds. Through these mechanisms, we ensured that the grant funds were used in a manner that maximised their impact on the growth of the GMX V2 ecosystem.
The KYC for the grants program was managed end-to-end by BLG, who performed the process for the applicants. GMX paid them 4,000 ARB as a service fee.
Outcomes and Impact
We launched our grants program on June 3 and received 29 applications within a month. Given the number of proposals, the STIP-Bridge timeline, and the limited grant budget, the committee decided it was best to close the program on June 24. Nine of the 29 applications were approved. GMX’s business development contributors stepped in to assist the builders who did not receive grant committee support, ensuring the applicants could nonetheless continue building on GMX and Arbitrum.
Our main challenge in the current grants program was attracting high-quality applications, as many participants had already received LTIPP grants or were previous grantees from the first GMX grants program. Additionally, the STIP-Bridge program ran simultaneously, further narrowing the applicant pool. Despite these limitations, we successfully funded several high-quality projects that could meaningfully contribute to the GMX and Arbitrum ecosystems.
After a thorough review process, we awarded grants to nine promising projects and funded two small campaigns, allocating roughly 505,000 ARB, with a total disbursement close to 280,000 ARB. These projects showed the strongest potential for driving growth and innovation within the ecosystem. The ‘Highlights’ section, below, illustrates that many successfully did so. In addition, the grant program has helped cultivate accountability and a sense of community involvement and ownership among the grantees. All the accepted grantees were required to submit bi-weekly reports on the GMX governance forum, promoting this process.
| Project Name | Amount Asked (Funds allocated) | Amount disbursed for completing the milestones |
|---|---|---|
| KnightSafe | 75K ARB | 75K ARB |
| Compass Labs | 40K ARB | 40K ARB |
| Gloop | 50K ARB | 20K ARB |
| GoldLink | 75K ARB | 25K ARB |
| GMX Arbitrage Bot | 50K ARB | 30K ARB |
| Spectra | 50K ARB | 0 |
| UniDex | 50K ARB | 25K ARB |
| Enzyme | 50K ARB | 20K ARB |
| Open Ocean | 50K ARB | 30K ARB |
| Radiant Galaxy campaign | 3K ARB | 3K ARB |
| Compass Labs X Encode Hackathon | 8K ARB | 8K ARB |
| KYC | 4K ARB | 4K ARB |
| Total | 505,000 ARB | 280,000 ARB |
Grants Project Highlights
- KnightSafe
KnightSafe is a non-custodial smart contract management platform. As an open-source and decentralised digital asset self-custody service, KnightSafe is specifically designed to address the need for seamless interaction with DeFi protocols under customisable role-based access controls, as well as custody issues faced in traditional digital asset management. KnightSafe received a total grant of 75,000 ARB from GMX to drive growth in liquidity and trading volume, and to recover part of its audit costs for enhancing the security level of the KnightSafe protocol. The goal was to boost the trading volume by $50m and increase the capital inflow into GM pools by $3m. Surpassing our original targets, KnightSafe users contributed $184 million+ in trading volume and $32 million+ in capital inflow.
- Goldlink
GoldLink Protocol is an on-chain leveraged prime broker, providing lenders with transparent returns while allowing borrowers to execute complex leveraged investments on third-party exchanges such as GMX. Goldlink obtained a 75K ARB grant, the primary objective of which was to incentivise new lenders and drive retention within their GMX Funding Rate Farming Lending pool. They achieved milestone one by generating more than $1 million in the lending pool and a total of $500K in borrow volume deployed in their GMX Strategy.
- Compass Labs
Dojo - a Python-based DeFi platform developed by Compass Labs - is the world’s first platform that allows users to access DeFi with simple Python commands, handling complex blockchain interactions in the background. The GMX integration in Dojo enables users to source data, backtest, simulate and optimise trading strategies and smart contracts on local testnets, and monitor real-time performance and protocol analytics. Initially, their application was narrowly rejected due to some ambiguity around the stated aims. However after GMX’s BD contributors worked with the Compass team, they were able to refine the milestones and get their application accepted.
Compass was able to achieve all its milestones and secured a grant of 40,000 ARB. The GMX integration into Dojo will also take centerstage during the upcoming Encode London Hackathon, jointly organised by Compass Labs and the Cambridge and Oxford Blockchain Societies. The Grants Committee approved an additional budget of 8,000 ARB to facilitate hundreds of involved hackers engaging in developing AI trading agents for use on GMX on Arbitrum.
- Arbitrage Bot
The GMX Arbitrage Bot is an open-source searcher bot that can detect and profitably execute upon differences in funding rates across CEX/DEX perps platforms in a delta-neutral manner. The Arbitrage Bot was awarded a grant of 50,000 ARB, as funding rate arbitrage solutions were considered a high-priority item for GMX. The developer was successfully able to complete two milestones of the grant proposal and make the bot live and publically available. Moreover, he also organised a successful workshop session on how to install and use the bot for the GMX community.
- UniDex
UniDex is the everything aggregator in DeFi, allowing users to find efficient routes for their swaps, perp trades, and even other aggregators. Their bottom line is to save as much money and time for users when trading across any network. UniDex was awarded a grant of 50K ARB and they were successfully able to complete the first milestone. Unfortunately, some of their trading data wasn’t recorded because of a configuration error with their GMX referral code. But the protocol was nonetheless able to generate a Trading Volume of 11 million USD.
- Spectra
Spectra is an EVM-centric protocol for interest rate derivatives with an easy-to-use flagship app. The Spectra protocol is permissionless, meaning its services are entirely open for public use. Anyone can create new markets at will, swap yield derivatives, or become a liquidity provider. Spectra was able to secure a grant of 50,000 ARB, and garnered TVL of 500K USD, but didn’t manage to achieve its milestones.
- Gloop
Gloop Finance is an upcoming GMX-centric yield optimization and leveraged looping protocol. The primary objective of their grant was to bolster the amount of liquidity available for loopers contributing to the GMX V2 pools. By offering higher yields the protocol makes lending more attractive and, in turn, stimulates loopers to utilise the protocol, boosting liquidity on GMX. Gloop were awarded a grant of 50K ARB, and they successfully completed milestone one.
- Enzyme
Enzyme (formerly known as Melon) is a leading on-chain asset management protocol, accelerating growth for builders and asset managers. It enables vault managers to build strategies and vaults on-chain, incorporating perpetual exchanges like GMX, and easily showcase their NAV/track record in real-time and historically. Enzyme received a grant of 50,000 ARB, and they were successfully able to achieve milestone 1 and get the vaults live and audited. The integration of GMX forms a foundational puzzle piece in Enzyme’s strategy to expand its asset management services on the Arbitrum blockchain.
- OpenOcean
OpenOcean is a leading DEX Aggregator and cross-chain swap aggregator, offering a suite of tools across 30+ networks and 1000+ decentralised liquidity sources to provide traders with the best returns. OpenOcean was awarded a grant of 50K ARB to integrate GMX’s swap functionality into its DEX aggregator, providing its 1.3 M+ users access to GMX’s 400M liquidity on Arbitrum. The team successfully achieved two milestones, getting GMX’s swap trading functionality integrated into three affiliated protocols in the process.
Reflections on the Grants Program
In this second wave of GMX grants, the focus was on onboarding projects that could expand the GMX ecosystem’s utility and increase protocol adoption. Despite constraints, such as not being able to fund LTIPP, STIP-Bridge, and Grants Program wave 1 grantees, the program attracted a good number of high-quality applications. This speaks to the growing recognition of GMX within the broader DeFi ecosystem.
One of the key success factors of this cohort was the improved, milestone-based evaluation process, with stricter criteria focused on measurable ecosystem impact. With the successful conclusion of this second wave, the GMX grants program is well-positioned for future continuation.
Achievements of GMX’s STIP-Bridge Program
- GMX saw a stabilisation in liquidity, with a moderate increase in pre-incentive GMX V2 TVL. This increase in TVL reflected the success of the program in attracting and retaining users within the GMX ecosystem.
- Following the launch of incentives, there was a measured uptick in daily trading activity and user count.
- For this STIP-Bridge wave of the GMX Grants Program, there was a smaller applicant pool of projects to work with. This was because those who had previously won a grant with the Arbitrum DAO or GMX Grants Program were excluded from participation. In total, 9 of 29 applications were approved by the GMX Grants Committee.
- Testimonials from grant recipients and partners within the ecosystem, highlighting the influence of grants on their projects or the ecosystem at large, offer firsthand insight into the grants’ impact.
- Throughout the course of the STIP-Bridge campaign, GMX has implemented even more measures to bring actions on-chain on Arbitrum. GMX DAO participants can now create proposals directly on-chain via Tally to be approved by the tokenholders, for example.
- We saw an increase in token markets on GMX, with a total of seven new markets for traders getting listed on GMX V2.
- Lastly, GMX further enhanced its UX through continuous feature enhancements, such as introducing a complete suite of DeFi trading alerts and notifications, and two auto-optimising GLV vaults that boosted liquidity and capital efficiency.
Conclusion:
The STIP-Bridge program had clear goals: to strengthen GMX’s foundational liquidity layer for DeFi on the Arbitrum blockchain, attract new on-chain users, bring new assets to the GMX V2 platform, increase trading volumes, and support others in building on the V2 platform through a Grants Program.
In light of these goals, the STIP-Bridge campaign can be deemed a success overall. GMX was able to keep deep liquidity readily available, while offering low-cost trading and an enhanced onchain user experience. Traders, including new users, came to Arbitrum through the GMX V2 platform, generating volumes and gas usage for the network. This dynamic was particularly evident in the first months of the program. However, the effects lessened during the lower-volume summer period. Additionally, the GMX Grants Program expanded the ambitions and reach of nine projects building on GMX, meaningfully contributing to the long-term growth of the Arbitrum network.
We extend our gratitude to the Arbitrum DAO and the STIP-Bridge Grants Program for their support. And we look forward to continuing our journey to develop a robust, efficient, and user-friendly decentralised exchange, which serves as a powerful liquidity base layer for all of Arbitrum DeFi.
