gLooping GM Assets
How to Loop GM Assets
How It Works
Automated Looping is the repeated supplying and borrowing of tokens in a smart contract-assisted single transaction.
Due to the present nature of GMX architecture, we are unable to offer automated gLooping of GM assets at this time. (We are hopeful that this will change in the near future.) However, where there's a will, there's a way.
Manual Looping
Users can manually loop their GM assets (gmBTC, gmETH, and gmSOL) by taking the following steps:
Navigate to the Loop! subtab on the Markets page.
Select the asset you would like to supply, and the amount you'd like to initially deposit and borrow. You will see position and health factor feedback in the information card below.
When satisfied with your parameters, click the Supply button and sign the transactions (one for token spending approval, and one for the execution itself) that auto-populate in your wallet. This will deposit your GM asset into the GM Lending, which increases your collateral value, which enables you to borrow USDC.
Next, head to GMX and buy more of the same GM token with the borrowed USDC. Go back to GM Lending to deposit the additional GM tokens into the pool, which increases your collateral value again, which allows for another USDC borrow, although at a smaller amount this time.
Repeat steps 2-4 until you are satisfied or you hit the maximum leverage amount (5x, assuming a 0.8 lending factor).
Note: The Markets interface allows for granular position management/adjustment and provides crucial position information for loopers. The Looping function may not execute if the action would cause your health factor to drop below 1.
Liquidation Risk
Your looping position (or any positions involving active borrows) can be liquidated if your health factor falls below 1. This can occur if you have looped enough times to bring the borrow amount within a small percentage of the maximum borrowable amount, determined by your collaterals' lending factor(s). Depending on the demand for the protocol's assets, if the borrow interest rate is higher than the GM token supply yield for a sustained period of time, your debt can increase faster relative to the supply yield, which could take your position over the liquidation threshold. This is why it is recommended to manage your position(s) with a healthy buffer, so that elevated interest rates or typical market crashes will not lead to liquidations.
If you are unaware of some of the additional risks like smart contract exploits, some can be found here.
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