Why does LP Staking in APX Finance have such high returns? Where do these high returns come from? This article explains in detail the source of income for ALP. This article is sourced from a publication by Yu Zhongkuang, and was organized, compiled, and written by Shen Chao.
(Previous summaries:
Beware of Solana Phishing Scams: Common Attack Types and Prevention Guide
)
(Supplementary background:
In-depth Analysis: Sustainable Contract DEX Trends, Competitive Landscape, and Investment Value
)
I previously mentioned APX Finance before, and since October 15th, the price of $APX has almost doubled. Today, let’s talk about ApolloX (now renamed APX Finance) and its ALP from a different perspective.
Currently, the Staking returns for $ALP have reached 55%. In comparison, its competitor $GLP has a yield of 13%, and the yield for $VRTX, a token recently launched for staking (not an LP Token but a governance token), was 47%.
The income from LP Token staking or native governance token staking often comes from the fees generated by derivative protocols and token inflation rewards. This is the case for ALP. Its ability to surpass the APY of GLP and Vertex token staking is directly due to its income being composed of fee revenue (real income) and token inflation. However, it is worth noting that the real income for ALP stakers from the protocol far exceeds the inflation rewards.
Compared to GMX v1 GLP, ALP is more stable in its composition, with stablecoins accounting for over 80% and being less affected by fluctuations in the crypto market.
At the same time, the price of ALP has been steadily rising. Its upward momentum comes from the losses incurred by traders. According to data from Dune, traders have currently incurred losses of $1.48 million, which will also contribute to ALP’s income.
The losses incurred by traders may come from two aspects: a bull market and an increase in market risk preference, as well as the growth of users and trading frequency.
APX Finance has introduced the Degen mode, which is more suitable for traders with higher risk preference. The high leverage of the Degen mode is more like gambling than trading. We can see from the chart the proportion of 500ETHUSD and 500BTCUSD in its overall trend.
Furthermore, APX Finance recently introduced the Dumb mode. The Dumb mode allows users to predict the price changes of various assets within a limited time frame (60s, 5m, 10m). If the expiration price is higher than the entry price, users can earn returns of 70%, 85%, and 88%. However, if the expiration price is lower than the entry price, users will lose 100% of their capital.
The introduction of the Degen and Dumb modes essentially provides users with fresher and higher-risk, higher-return products, indirectly promoting the growth of trading frequency and volume.
Therefore, driven by these two new products, as well as the expansion to Arbitrum, opBNB, and Base chains, the protocol’s revenue increases, ALP’s price grows, and fee revenue increases. The growth in ALP’s price attracts more people to purchase ALP, resulting in better liquidity and a better user trading experience.
The protocol will use its revenue to repurchase $APX, and a portion of the repurchased $APX will be distributed to $APX stakers, while the rest will be burned. This will also drive up the price of $APX.
Overall, the price performance of $APX and $ALP, as well as the performance of fee income, are driven by APX Finance’s products and data. It is worth paying attention to the Perp DEX and APX’s Dune data dashboard.
Related Reports
Analysis of the Eight Key Trends for 2024: DePIN, RWA, SociaFi…
Can Stader Labs, a Multi-Chain Staking Facility, Enjoy Ethereum Ecosystem Dividends?
In-depth Understanding of Solana: Accounts, Tokens, Asset Transactions, and Differences from Ethereum.