[Arbitrum] Add GM: BTC/USD [WBTC-WBTC] markets on Venus Core Pool

[Saurabh]

Summary

In October 2024, we proposed adding GM: BTC/USD [WBTC-WBTC] as a collateral asset to the money market Venus Protocol on its Arbitrum network deployment. Following community feedback, a vote was initiated on Snapshot, which successfully passed with a 100% quorum. The asset was subsequently added to Venus Protocol on Arbitrum.

Now, GMX Contributors would like to propose the addition of the GM: BTC/USD [WBTC-WBTC] liquidity asset to Venus Protocol on the Arbitrum Network. This addition would allow this GM liquidity token for the GM: BTC/USD [WBTC-WBTC] pool to be used as collateral on Venus as well, enabling LPs to borrow against it, and thereby expanding Venus’ offerings, TVL, and central role on Arbitrum.

Benefits of Adding GM: BTC/USD [WBTC-WBTC] to Venus Protocol

• Increased demand for borrowable assets on Venus Protocol due to GM: BTC/USD [WBTC-WBTC] popularity and low-volatility nature.
• GM: BTC/USD [WBTC-WBTC] low beta properties make it an ideal asset to borrow against.
• Integration with Chainlink Data Streams in GMX V2 reduces the risks of front-running and price manipulation.
• $294.58 million of GM: BTC/USD [WBTC-WBTC] has already been minted on Arbitrum. This demonstrates the asset’s popularity.
• The APR of this GM: BTC/USD [WBTC-WBTC] pool stands at 9.17% (as of the time of writing); a very respectable yield
• More than 975 Liquidity Providers are holding the GM: BTC/USD [WBTC-WBTC] token: a healthy, decentralised distribution
• GMX V2 and its GM tokens are highly composable, and were designed with that functionality in mind.

The GM: BTC/USD [WBTC-WBTC] token is already being integrated into various DeFi protocols and used as collateral in multiple money markets: Dolomite, Abracadabra, Vaultka, and Deltaprime come to mind. This is evidence of significant community demand for the asset.

Performance of the GM: BTC/USD [WBTC-WBTC] token

When comparing GM: BTC/USD [WBTC-WBTC] to a traditional Uniswap V2-style 50/50 rebalancing pool composed of equivalent long and short tokens, the GM: BTC/USD [WBTC-WBTC] pool outperforms by 3.71% over the last 6 months.

This highlights the advantages of GMX’s GM: BTC/USD [WBTC-WBTC] pool for liquidity providers, and its potential value as a collateral asset in money markets like Venus.

Motivation

GMX is a leading,battle-tested decentralised finance application, allowing users to buy spot crypto and trade perpetuals on 70+ top crypto assets. The introduction of several new features in GMX V2, including the integration with Chainlink Data Streams, has significantly reduced the risks of front-running and price manipulation and further bolstered protocol security. .

GM: BTC/USD [WBTC-WBTC] is a single sided Liquidity Token on the GMX V2 platform and earns fees from leveraged trading, borrowing fees, and swaps. More than $35 million in liquidity has been committed to GM: BTC/USD [WBTC-WBTC] by DeFi users, underlining the asset’s significant popularity.

Integrating single-sided GM: BTC/USD [WBTC-WBTC] as a collateral asset in Venus on Arbitrum has the potential to create new demand for borrowable assets on Venus. GM: BTC/USD [WBTC-WBTC] has a proven track record of being a low-volatility asset whose value does not fluctuate heavily compared to the broader market. The low beta properties of gm WBTC make it an ideal asset to borrow against.

Background: GMX V2

GMX V2 was launched following discussions on the GMX forums in mid-2022. The limitations of GLP (the GMX V1 Liquidity Pool Token), designed for specific assets and sizes, restricted its potential scalability.

V2 builds on the successes and challenges of the GMX V1 model, aiming to enhance the experience for both traders and liquidity providers. V1 demonstrated a community demand for ownership of liquidity, creating a solid foundation for an on-chain perpetual market without relying on professional market makers. GMX simultaneously pioneered the use of Oracles for effective price discovery, providing liquidity providers with more equitable returns, and minimizing value extraction.

GMX’s performance over the years highlights traders’ need for control over assets, transparent pricing, guaranteed protocol solvency (100% backed and verifiable on-chain), and isolated risk.

Arbitrum supports the best of Ethereum DeFi, with multiple protocols integrating with GMX to meet the demand for yield-generating assets and capital-efficient trading.

GMX V2 builds upon these rock-solid foundations. It utilizes new sub-second data Oracles developed together with Chainlink, enabling real-time price updates and faster on-chain execution, thereby improving performance and reducing frontrunning risks. Liquidity pools in V2 are isolated to each market, enhancing flexibility for providers and allowing the emergence of new markets as trader interest grows. In addition to lower trading fees, GMX V2 features robust market parameters that promote balanced open interest, including variable fees and opportunities to earn funding fees. This results in more liquid markets, making GMX a preferred venue for trading, hedging, and earning.

Specification

Ticker: GM: BTC/USD [WBTC-WBTC]
Contract Address: 0x7C11F78Ce78768518D743E81Fdfa2F860C6b9A77
Chainlink Oracle: 0x19eCDd6DDc12597ec4A522fB1E25b1A580B605B7

Reference
Project: https://gmx.io/#/
GitHub: gmx-io · GitHub
Docs: GMX | GMX Docs
Audit: gmx-synthetics/audits at main · gmx-io/gmx-synthetics · GitHub
Twitter: https://twitter.com/GMX_IO
Telegram: @GMX_IO
Discord: GMX

Next Steps

We invite the community to consider this application for listing the gmWBTC market, and welcome suggestions in this direction and any related feedback.

Disclaimer

This proposal is provided for informational purposes only and does not constitute any form of legal commitment or agreement between GMX, Venus Protocol, or any other parties. The listing and parameters for such allocation are subject to the approval and discretion of Venus Protocol. GMX or any other parties make no warranties or representations regarding the accuracy, completeness, or suitability of the information presented, and will not be liable for any losses, damages, or adverse consequences that may arise in relation to this proposal. All parties are advised to conduct their own due diligence and seek independent legal advice before making any decisions or commitments based on this proposal.

GMX DAO is supported by Labs as voted on in Snapshot: (Snapshot 7)

[Tomm]

Great to see gmWBTC being considered for listing! GMX assets are widely used and trusted on Arbitrum, and adding more of them could significantly boost Venus’s TVL and user engagement on the chain. This is a solid step toward deeper integration with the Arbitrum ecosystem.

[mopgawka]

GMX has already established itself as a great platform. I like the idea of adding another asset from GMX as collateral on Venus.

[Jonnifer]

I would like to use this!

[emanueledornelas]

GMX is growing a lot, we shold go for it

[chaoslabs]

Overview

Chaos Labs supports listing gmBTC-BTC on Venus’s Arbitrum Core pool as part of a strategy to enhance its offering with a greater diversity of assets.

Technical Review

The GMX V2 BTC-BTC single-token pool implements a specialized architecture where liquidity providers deposit wrapped BTC (WBTC) to back both long and short positions in BTC perpetual markets. The core logic resides in DepositUtils.sol, which handles atomic deposit creation through its createDeposit function. When users deposit WBTC, the contract verifies token transfers via depositVault.recordTransferIn, calculates proportional pool shares using initialLongTokenAmount and initialShortTokenAmount parameters (both set to WBTC in this configuration), and mints liquidity tokens through mappings in Vault.sol’s poolAmounts storage. The system enforces 1:1 BTC exposure maintenance through its Market.Props validation, ensuring no cross-asset exposure.

We have previously recommended listing tokens from dual-asset pools (e.g., BTC-USD); gmBTC-BTC differs in three relevant ways:

1. Collateral Handling: The Deposit.Addresses struct hardcodes identical initialLongToken and initialShortToken values as WBTC, eliminating stablecoin dependencies present in dual pools
2. Swap Path Validation: MarketUtils.validateSwapPath enforces empty swap paths since no asset conversion occurs
3. Risk Isolation: The cancelDeposit function returns only WBTC regardless of market conditions, whereas dual pools face redemption risk across two asset types

Critically, GMX V2’s isolated pool design ensures that risks are contained within each market, meaning that adverse events or imbalances in, for example, ETH-USD or BTC-USD pools, do not propagate to the BTC-BTC pool. This isolation is a meaningful safeguard for both liquidity providers and protocols using gmBTC-BTC as collateral.

Liquidity and Market Cap

The pool value of gmBTC-BTC has remained relatively steady, increasing from $31M at the beginning of April to $42M currently.

Its open interest has been somewhat more volatile, though it is generally well balanced, with the largest imbalance coming on April 12, when OI was more than 85% short.

Potential Use Cases

Unlike the previously listed gmTokens on Venus, gmBTC-BTC does not have the reduced delta that comes from the other gmTokens being paired with a stablecoin. As displayed below, its annualized volatility closely tracks that of BTC, though it has on occasion diverged slightly.

gmBTC-BTC can thus be thought of as relatively similar to BTC in terms of price, albeit with additional price movements caused by the net PnL of traders (if traders are highly profitable the pool can take losses), and accrued fees. The chart above shows a prolonged instance of lower volatility for gmBTC-BTC relative to BTC because of these additional factors.

gmBTC-USD, already listed on Venus, is largely being used to borrow WBTC and WETH, allowing users to manipulate their delta exposure to BTC or express a short position in another asset.

Borrow against gmBTC-USD

However, because gmBTC-BTC does not have the reduced delta exposure of gmBTC-USD, it is possible that it will be used more like a substitute for WBTC, with which users primarily borrow stablecoins.

Borrow against WBTC

This anticipated different use case, as well as its higher volatility relative to Asset-USD gmTokens, requires a slightly more conservative collateral parameterization, allowing Chaos Labs to observe user behavior and refine the parameters over time.

Liquidation Bonus, Collateral Factor, and Liquidation Threshold

Like other assets listed on Venus, liquidations and withdrawals of gmBTC-BTC can be performed atomically, with an additional 50 bps fee applied to withdrawals. As with any pool-based collateral, there is a scenario where liquidations may not be fully executable if the collateral received by the liquidator exceeds the available liquidity for withdrawal or redemption, as governed by the pool’s Reserve Factor.

For collateral parameterization, we use WBTC as a benchmark given gmBTC-BTC’s 1:1 BTC exposure, robust on-chain liquidity, and similar volatility profile. However, we recommend setting the LT at 70% and the CF at 65%, slightly below WBTC’s current values (80% LT, 75% CF).

This modestly more conservative approach reflects the unique additional risks of the GMX pool structure relative to WBTC. Specifically, it accounts for the potential for pool drawdown due to highly profitable trader PnL and the additional smart contract risk.

Supply and Borrow Caps

Previously, our supply cap methodology for gmTokens was developed specifically for dual-asset GMX pools, where liquidity providers supply both a volatile asset and a stablecoin. In these pools, the cap was set using the difference between the Reserve Factor and the Open Interest Reserve Factor (OIRF), reflecting the need to manage risks like imbalanced open interest and a scenario in which both sides of the pool could be heavily utilized at once. This conservative approach ensured that supply on Venus would not exceed that which could be liquidated even in times of severe stress on GMX.

With the introduction of single-token pools such as gmBTC-BTC, the risk landscape changes significantly. These pools are backed entirely by a single asset, eliminating stablecoin risk and impermanent loss, and ensuring all redemptions are in the same asset.

For this reason, we can now recommend the use of the protocol-enforced Max PnL Factor to set the supply cap. The Max PnL Factor for gmBTC-BTC is 90%, meaning that, at most, 90% of the pool’s value can be paid out to traders as profit in an extreme event, always leaving at least 10% of the pool intact; traders’ profit cannot exceed this 90% threshold. By setting the supply cap so that, even after a highly unlikely maximum PnL event, the remaining pool value is sufficient to cover all redemptions, we align the cap directly with protocol risk limits. Using the median pool size of $38.3M over the last 90 days, this results in a supply cap of $3.83M (2.4M tokens) for gmBTC-BTC. This approach is both more permissive and better tailored to the actual mechanics and risk exposures of single-token pools

Specification

Parameter	Value
Asset	gmBTC-BTC
Network	Arbitrum
Pool	Core
Enable Borrowing	No
LTV	65.00%
LT	70.00%
Liquidation Incentive	10.00%
Supply Cap	2,400,000
Borrow Cap	-
Kink	-
Base	-
Multiplier	-
JumpMultiplier	-
Reserve Factor	-

Disclaimer

Chaos Labs has not been compensated by any third party for publishing this recommendation.