For the past several months, we’ve been working with the GMX team behind the scenes to launch a GLP cauldron.

We are happy to announce that the first cauldron is ready for you all to use!

The Strategy

Let’s dive into our Degenbox GLP Strategy on Arbitrum, how it works and how our users can benefit from it! If you’ve never used Abracadabra before, please make sure to understand how our Lending Markets and Leveraged Positions work. More information can be found here.

Step 1: The Cauldron

As a user, you can join the GLP Market by depositing sGLP collateral in it, and borrowing MIM. The cauldron does not charge an interest or borrow fee. Instead, protocol earnings will be taken from your ETH / esGMX rewards.

Step 2: Degenbox

The GLP cauldron is built on top of Degenbox. This allows borrowers to use GLP tokens as collateral while still collecting a portion of their GLP rewards. For this strategy, we are depositing the ETH rewards produced by the GLP tokens, swapping them for MIM, and then using them to automatically repay your loan.

Step 3: Repaying Users Loans

Every time rewards are harvested, the ETH tokens are swapped for MIM and this MIM is used to repay your position, reducing the amount of MIM borrowed.

This cauldron is set up with a dynamic fee, targeting a protocol APR of 15% on MIM borrowed. As an example, if we have $2m in GLP collateral and 1m in Borrowed MIM, and GLP APR is 40%, in this case Abracadabra will apply a 18.7% fee take on the earnings paid by GLP. Another way of seeing this fee model, is a 15% interest is charged on each MIM borrowed, but its paid with yield produced by the GLP. esGMX rewards are not distributed, but staked to increase farming APR.

The obtained MIM tokens are used to repay Abracadabra user’s position in the cauldron, proportionally to their borrowed amount! Once your borrowed amount goes to 0, you will stop earning rewards. It is therefore recommended to always have some MIM borrowed.

Borrowers of this cauldron will be able to see their MIM borrowed amount reduced every day due to our automated harvesting.

Withdrawing GLP tokens tokens

Users can withdraw their GLP tokens at any given point in time, without any time locks or restrictions!

Leverage is coming!

This cauldron will be launched without a native leverage engine. As soon as the GLP cooldown will be removed, leverage will be enabled directly on our UI! Stay tuned for this!

Our GLP Tokens degenbox strategy is now live!

If you have any questions or have thoughts on what Arbitrum cauldron we should open next, join our Discord community here!