GM pool
GMX V2's market-specific liquidity pool, made up of an index token and a stablecoin, which supplies the collateral and acts as the counterparty for leveraged trading in that one market.
Definition
A GM pool is liquidity dedicated to a single market. Depositors supply the index token and a stablecoin, and traders in that market borrow against the pool and trade against it. Each market has its own pool, so the risk of one does not automatically become the risk of another.
What depositors are actually taking on
Three exposures at once, and they pull in different directions.
Price exposure to the assets in the pool, since a GM position holds them.
Counterparty exposure to the traders. The pool takes the other side of the unmatched portion of positions in its market, so when traders in aggregate win, the pool pays, and when they lose, the pool collects.
And fee income: trading fees, borrow fees and price impact charges from that market flow to the pool.
Whether a GM position is profitable is the sum of those three, not the yield figure shown next to it.
Why the per-market structure matters
V1 pooled everything into one basket, which meant every liquidity provider held every market’s risk. Splitting per market lets you choose what you are exposed to, and lets the protocol price each market’s risk separately.
The trade-off is concentration. A single-market pool has no diversification, and its result depends heavily on how traders in that one market do. A GLV vault exists to spread deposits across several GM pools for that reason.
What to look at before depositing
The pool’s utilization, its open interest imbalance and which side is crowded, since that determines what the pool is effectively positioned against. And the composition, because a pool holding a volatile token is a position in that token regardless of the fees earned.
Where you will run into it
On the GMX liquidity pages, in the pool composition and APR tables, and behind every leveraged position on GMX V2, which is funded by the GM pool of the market it is opened in.