[WIP #19] - Earn Yield on Part of our ETH and BTC using GLP

[WIP #19] - Earn Yield on Part of our ETH and BTC

Link to previous discussions:

[DAO Discussion] Tokens Wonderland Should Consider Investing In
[RFC] Earn Yield on our 25m in ETH and BTC

More granular details can be found in the RFC although there are significant changes to the structure of the proposal and options to be voted on


Wonderland should earn a yield on part of its BTC and ETH position. It can do this by diverting BTC and ETH to mint GLP, a token paying 15-20% yield on the GMX platform.

Based on feedback, the ideal position size for GLP would be $12.5m in value, to keep our risk diversified.

As GLP is about 55:45 BTC/ETH:Stablecoins, minting GLP by using only BTC and ETH would reduce exposure to BTC and ETH (e.g., exchanging $1 in BTC for $0.50 BTC and $0.50 in Stablecoins reduces exposure to BTC by half). Minting GLP using a mix of stablecoins and crypto would allow Wonderland to maintain the same exposure to BTC and ETH as it currently has.

This WIP will allow voters to choose which road we should go down. The options will be:

YES (A) - Invest in GLP and keep exposure to BTC and ETH unchanged
YES (B) - Invest in GLP and lower exposure to BTC and ETH
NO - Do not invest in GLP


  1. The core objective is to utilize our treasury assets more productively and earn a yield to increase treasury size or enable a higher revenue-share.
  2. This proposal may also help Yieldchad execute on his potential future strategies, and improves liquidity for our BTC and ETH which are instantly liquid on GMX.

Provide a High Level Overview:

GMX is a trading platform on Arbitrum and Avalanche, and GLP is a liquidity token on this platform. GLP can be seen as akin to a basket of BTC, ETH and USD and GLP can be minted or sold freely for its constituent assets. GLP holders are paid various fees for providing liquidity to GMX traders.

If YES (A) or YES (B) win the vote, Wonderland will mint GLP and earn a yield while maintaining exposure to BTC and ETH – whether that exposure is identical to the current exposure, or lower, depends on which of the two YES options wins out.

For lower-level details on GLP, read the RFC

Main Risks of $GLP:

The first risk is smart contract risk.

The smart contracts on GMX have been audited and currently contain a TVL greater than $USD 200m across Avalanche and Arbitrum. They have not been exploited in the past despite the > 350 million dollar incentive that exists to do so (if you can exploit GLP and steal the underlying assets, you would gain close to 350m in BTC ETH USDC and other assets). Further, given the popularity of GMX as a platform, several commentators have examined GMX’s smart contracts and have generally not found exploits. One such piece of mature commentary and the corresponding response by GMX’s main dev can be found here.

The second risk is that $GLP act as “the house” where holders win when traders lose, and vice versa.

Leveraged traders have consistently been unprofitable on the GMX platform. However, there is a foreseeable risk that in a grey swan event, traders win en-masse and $GLP holders experience depreciation of $GLP. This risk is slightly mitigated in a bull-market where traders win on longs as the BTC, ETH and AVAX component of $GLP would also appreciate and slightly offset trader-winnings. This risk is exacerbated in bear-markets where traders win on shorts as $GLP loses value both from traders winning and from the depreciation of BTC, AVAX and ETH.

Over the past year of trading on GMX, traders have been consistently unprofitable. This pattern is not unique to GMX, it is relatively well-known that as an aggregate, traders tend to be unprofitable and this can be observed on other platforms such as Gains Network as well. In order to hedge against this risk, Yieldchad will likely issue further strategies and it is also possible to decrease exposure to GLP when short open-interest on GMX is unusually high. It is also within the remit of the treasury council or other parts of the treasury team to further reduce exposure to BTC and ETH at any point, thereby providing some means to potentially address this risk. Note, these are not the only two risks to GLP, but they are two that were selected as among the most prominent and clear risks.

Business and/or technical requirements of the implementation of the proposal:

Details of the Snapshot Vote:

  1. The outcome of this vote will not be decided based on which option attains a simple majority.
  2. Instead, note whether the sum of votes for the YES options exceeds the sum of votes for the NO option. If so, Wonderland will mint GLP.
  3. From there, consider which YES option was more popular and abide by that option.
  4. To illustrate, if the vote is split 32-28-40 between YES (A), YES (B) and NO, it is YES (A) that wins the vote by the process above.

The options will be:

  • YES (A) - Invest in GLP and keep exposure to BTC and ETH unchanged
  • YES (B) - Invest in GLP and lower exposure to BTC and ETH
  • NO - Do not invest in GLP

Snapshot link: https://wl-l.ink/Snapshot/WIP-19

Details of Executing the Proposal

  1. The ideal position size for GLP indicated by Yieldchad and echoed by other community members is 12.5m USD
  2. If YES (A) wins the vote, the treasury will deploy a mix of BTC, ETH and stablecoins to minting GLP such that the overall % of treasury exposed to BTC and ETH remains the same.
    • In this case, assume that GLP is composed of 55% BTC/ETH and 45% stablecoins. YES (A) being executed would require $6.875m in BTC/ETH and $5.625m in stablecoins to be deployed to GMX to mint GLP.
  3. If YES (B) wins the vote, the treasury will deploy $12.5m in value of BTC/ETH to GMX to mint GLP.
  4. GLP should be minted across both GMX-Avalanche and GMX-Arbitrum in even amounts per Yieldchad’s comment on the RFC on the diversification of risk.
  5. It is likely that the cheapest and safest method of bridging funds to Arbitrum and Avalanche will either involve Multichain, Synapse or a transfer using a CEX or OTC partner as an intermediary. On-chain methods of bridging are preferable given that there is currently no treasury manager.

Just trying to fully understand the choices and I have a couple of questions:

  1. Is the benefit of option Yes (A) that we maintain the same level of exposure to BTC and ETH, so that we if the prices begin recovering we would stand to benefit from that increase more so than in option Yes (B)?

I hope that question made sense.

  1. If we choose option Yes (B) and reduce exposure to BTC and ETH are we keeping the yield earned in GMX or swapping it for a stable as it is earned?
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GLP pool has ~$250m in it. How much of the treasury are we talking to throw in there?

At a certain size I assume it would negatively impact the yield on $GLP quite heavily (unless I’m missing something).

I.e. if throwing $100m of treasury funds in would collapse the yield to single digits the risk/reward ratio could change

@0x0rko Did you read the proposal? “Based on feedback, the ideal position size for GLP would be $12.5m in value, to keep our risk diversified.” This amount would not result in a significant reduction in yields, given the current size of the pool especially if we split between Arbitrum and Avax networks.


Apologies, was multitasking and didn’t catch the proposed amount :see_no_evil:

All good then!


I vote A, but before considering to vote I would ask dates of execution are explicitly stated and agreed upon so that an objective time frame can be reliably established.


I think it should be an expectation that any treasury WIP is executed within 24 hours.


My opinion is not to invest in $GLP. There is a peg between GLP/ETH that a Black Swan can break. Keeping the entry only in $GMX is safer for the Treasury. Tks.

Yep that is the result of YES (A)

The question about what we are keeping our yield in is a good one – we can keep them in ETH/AVAX, sell them to stables or compound them back into GLP. I think for now it is most justifiable to just compound them back into GLP and I will include an edit that discusses what to do with the rewards.

If anyone has feedback on this please do share it

I will add this to the proposal. I’ll call it 48 hours just to give some leeway, since it wouldn’t be possible to easily re-establish new timeline expectations once they are breached

Hmmmm… Not a fan of WIP edits… They should be final and not modified unless necessary.

Already a lot of people that saw the WIP and may not look back as they should not be changed. I’d personally remove the edit.

I guess in this case it doesn’t change the core idea of the proposal but it does add extra restrictions on the treasury “management” that I would consider just “extra considerations”.

What to do with the rewards should be left to the council or whoever is monitoring the strategy to allow the flexibility that might be required. Maybe have it as a recommendation, but not a sure thing. Otherwise it should include a safeguard, but the time for feedback is “over” and it would require more conversations.

Same for the second point. Nice to set expectations, but what happens if its not followed ? Unless you are adding consequences, this serves no real purpose. And its too late to have a discussions about the consequences to add to this vote.

True enough – I will just delete it but the comments on this proposal can be taken into consideration yep

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Hope that YES votes will simply mean that something will happen to optimize the holdings in ETH and BTC.

Note: if BTC and ETH continue to fall, it is likely that there will be an expansion of exposure to ETH/BTC vs holding it without this LP token. I’d like to suggest that there isn’t super frequent rebalancing even if a little more is to be accumulated.

:loudspeaker: Voting is now live for WIP #19!


Please be sure to cast your vote!

The proposal to Earn Yield on Part of our ETH and BTC Using GLP has passed with 80.95% of votes in favor!