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dr. mia von steinkirch, phd 2023-02-08 15:33:46 -08:00 • committed by GitHub
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MEV_by_chains/MEV_on_Arbitrum/gmx/glp_vaults.md
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* the first component of a pool are the available assets, which are the vault assets minus reserved assets (assets set aside to cover longs).
* by covering longs, a reserved $BTC that would move with $BTC is used to cover a long position by surrendering all the upside gains to the counterparty (but also taking all collaterals of the counterparty when the price of $BTC goes down).
* conversely, a short against the pool becomes a synthetic long as its credit gains to the pool when the price goes up (but takes money from the pool when the price goes down).
* hedging $GLP means taking short positions, either on GMX or on a CEX. The short pays when the directional asset goes down, and loses when the opposite happens.
* the spread of hedged $GLP over $ETH is a good measure of $GLP's performance, and why a hedged strategy might be a better holding strategy that minimises volatility.
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