How to Provide Liquidity to a GM Pool

Providing liquidity to a GM pool means earning a share of trading fees, and taking the structural counterparty position to leveraged traders in that specific market, the same role Hyperliquid’s HLP vault plays platform-wide.

This guide is part of TradeOnDEX’s GMX how-to series within Perpetual Futures, and builds on understanding GM pools from the trader’s side.

Disclosure: TradeOnDEX may earn a commission from links to GMX on this page, at no extra cost to you. Full details at the end of this article.

What you actually own as a GM pool liquidity provider

When you deposit into a GM pool, you’re contributing the specific tokens (an index token and a stablecoin) that back one particular market. In return, you earn a share of that market’s fees, 63% of trading, liquidation, borrow, and swap fees on Arbitrum and Avalanche (50% on Botanix, GMX’s Bitcoin-network deployment).

This means for you, concretely: your returns depend on that specific market’s trading activity and fee generation, not a platform-wide average, a busier, more actively-traded market can generate more fees for its LPs than a quiet one.

Fee sources, specifically

• Trading fees: charged when traders open or close leveraged positions.
• Borrow fees: charged continuously while a trader’s leveraged position stays open.
• Swap fees: charged when traders swap between tokens through the pool.

How to provide liquidity, step by step

1. Go to the Pools page on GMX.
2. Select the specific market’s GM pool you want to provide liquidity to (see the pool comparison guide for how to think about which one).
3. Deposit using any supported token, GMX handles the necessary swap into the pool’s required composition.
4. Your deposit is minted as GM tokens representing your share of that specific pool.

Risk: what “risk-isolated” pools mean, and what they don’t remove

Each GM pool is risk-isolated by market, this limits contagion, but not your own exposure to that specific market. Profits and losses from traders in one market’s pool don’t spill into other pools, which is a meaningful design improvement over GMX V1’s single shared GLP pool. But within your chosen pool, you’re still fully exposed to that market’s trader activity.

You are the structural counterparty to that market’s traders, the same “house” role Hyperliquid’s HLP plays. If traders in that specific market are net profitable against the pool, LPs bear that cost; if traders are net unprofitable (liquidated, paying fees), LPs benefit. This is a mechanical relationship, not a sign of manipulation.

Marketing claims of “no impermanent loss” deserve a more careful read than the headline suggests. GMX’s design differs from a classic AMM, so it doesn’t experience impermanent loss in that specific technical sense. But LPs still bear real value fluctuation risk from holding a basket of the index token and stablecoin, plus the risk of the pool’s value declining if traders are consistently profitable against it, a different mechanism than classic impermanent loss, but not the same as “no risk.”

Highly profitable traders can meaningfully deplete a specific pool’s liquidity. Because each pool is exposed only to its own market’s trader activity, a market with a run of unusually successful traders (or a single very large winning trade) can draw down that specific pool more than a platform-wide vault would experience from the same event.

Smart contract and oracle risk apply here too, at the protocol level. The same categories of risk covered in the leveraged position guide, including the July 2025 V1 exploit, apply to the contracts underlying GM pools generally, research GMX’s current audit status before committing significant capital.

GM pools vs. GLV vaults: two ways to provide liquidity

GMX also offers GLV vaults, which dynamically allocate liquidity across multiple GM pools rather than concentrating it in one market.

See it for yourself

Consider whether a single-market GM pool or a diversified GLV vault better matches your risk tolerance before depositing meaningful capital, the pool comparison guide walks through that decision in more detail. You can review current pools at gmx.io.

Frequently asked questions

Do GM pool liquidity providers suffer impermanent loss?

Not in the classic AMM sense, since GMX’s design differs from a traditional AMM, but LPs still bear real value-fluctuation and trader-counterparty risk, which is a different mechanism, not the absence of risk.

Are GM pools shared across all GMX markets?

No, each GM pool is risk-isolated to its specific market; profits and losses in one pool don’t affect others.

What’s the difference between a GM pool and a GLV vault?

A GM pool backs one specific market; a GLV vault dynamically spreads liquidity across multiple GM pools for diversification.

What percentage of fees do LPs earn?

63% of trading, liquidation, borrow, and swap fees on Arbitrum and Avalanche; 50% on Botanix. Verify current rates before depositing, as fee splits can be adjusted by governance.

Affiliate disclosure

TradeOnDEX may earn a commission if you sign up or trade through a link on this page, at no extra cost to you. GMX’s own affiliate/referral terms are still being confirmed for this site, so links here are direct and untracked for now. This article is educational and is not financial advice; providing liquidity carries real risk of loss. See our disclaimer for the full risk warning.