The GMX Bear Case

in blockchain •  2 years ago 

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Two events that can lead to gmx collapse.

EVENT 1: Attack from a competitor

Competitors can organize a pump/dump/news release and take a trade on gmx draining the $glp liq. Now it's difficult as you can trade only $btc and $eth (which can't be manipulated easily), but after the synthetic assets launch this can become a serious problem.

EVENT 2: $GLP Bank Run

Some entity opens a very large trade and market follows. Let's assume that after 1 day this entity gains 10% of glp liquidity and twitter sentiment starts getting worse and worse (like during the $LUNA drama), people start exiting glp and the death spiral begins:
As people exit glp, the gains made by the entity will result in a larger % of the total glp liquidity, this will incentivize even more people to exit glp and the cicle goes on until glp is completely drained.

⚫ Source: https://twitter.com/apywizard/status/1565777258756935686

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