Launch a New LYF Product on GLP-like Real Yield Perp LP Pools

Hi team. I have a proposal to make here. I suggest Alpaca Finance consider launching a new LYF product on GLP-like real yield perp LP pools. Such LYF product can be launched on any GMX/forks with a real yield feature.
Basically, the new LYF product would allow people to borrow assets on the LP. In the case of GLP (GMX), they would be ETH, BTC, USDC, USDT, DAI (and some smaller assets like UNI and LINK), and allow users to borrow these assets to mint more GLP to earn leveraged yield and increase their exposure to the underlying assets. For example, with GLP currently yielding 25%-50% (depending on trading volume), a 2x – 3x LYF can easily yield 50%-100% APY. And all yields are in ETH and can be reinvested in minting more GLP.
Another selling point for such a product is that it allows people to gain more exposure to the underlying blue-chip crypto assets in a bull market. For example, the GLP consists of roughly 50% in stablecoins. While minting GLP can earn lucrative yields, minter also lose 50% exposure to non-stablecoins, in this case, primarily BTC and ETH. Offering a LYF product will allow users to maintain 100% exposure (or higher) while earning higher fees!
With GMX’s current GLP TVL of $485M, such LYF product should significantly increase our addressable market and enter the rapidly-growing Arbitrum ecosystem.

With the same idea, given our upcoming perp exchange is another GMX fork, we can lunch a similar product on BSC. This should help improving lending pools’ interest rates and attract LPs (whether to separate from our current lending pools can be discussed.)
And with GMX forks sprouting, this can really become a new category of Alpaca products.

This is a high-level proposal for the community to brainstorm the possibility and viability, details can be discussed (fees/revenue splits, max leverage, method of liquidation, etc.). For example, we can even work with Layer0 to enable cross-chain lending and farming (e.g., one-click and gain GLP LYF for BSC users). Not sure how much dev works is
required but I do think as the largest and most successful LYF product in the market, this is a natural move and should benefit the Alpaca ecosystem and users.

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Great idea, one of the core products is leverage, these perp-pools would be an excellent fit for this (relatively low risk, high return). For our own perp exchange, this could be the thing that sets us apart: allowing slightly higher leverage 2x-5x and lower performance fees.

Additionally, we could accept our (and other) GLP equivalent in AF2 as collateral, to allow borrowing of other crypto/mint AUSD. Not really sure if it’s mentioned or planned, but ideally every product would be integrated into the AF2 lending market (allowing us to take loans in usdc, usdt).

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Thank you for the idea. Supporting LYF into a pool like GLP is something we can consider in the future.

Cross chain LYF, however, would be a lot of effort and many security issues need to be considered. It’s probably not something we can do in the short - medium term while we focus on delivering our own Perp and AF2.0 products. One thing I also want to point out is that as far as I recall, the yields for GLP has mostly been in low teens and just recently went up to the 50% range (I could be wrong b/c I haven’t monitored it closely.)

That being said, if the yield for our Perp’s LP is sustainably high enough to support LYF, we can visit this topic.

Thanks for the consideration. I do agree cross-chain LYF would be a less secure move at the moment and the idea should be saved for long term development.

For the GLP yield (excluding emission), historical average is at high 20s (GLP Key Metrics [Arbitrum]). So if our ALP vault can achieve a similar APY, LYF should make a lot of sense given ALP would be much less volatile (less liquidation risk).

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