Mycelium’s response to GMX ‘exploit’

A note to our traders and LPs

GMX LP Losses

Mycelium’s Preventative Measures

  1. Having a bid-ask spread which was inversely correlated to CEX liquidity depth;
  2. Having tight maxgloballongsize and maxgloballongsize parameters which prevent toxic order flow, and/or significantly reducing the profit of traders who are manipulating CEX prices.

Steps going forward

  • Increase the spread on some long-tail assets to reflect existing market conditions on CEX orderbooks;
  • Reduce the maximum notional value size for certain long-tail assets (FXS, CRV, and BAL) for the time being;
  • Update the bid-ask spread on these market more frequently so that it conservatively reflects CEX liquidity on said asset;
  • Decrease the chainlink price-binding threshold to 1.5%;
  • Maintain a conservative maxgloballongsize and maxgloballongsize for long-tail assets.
  • Introduce the bid-ask spread dynamic, and a function of CEX orderbook depth and/or;
  • Make the oracle pricing more robust via pricing it from more CEX venues (and potentially some algorithmic average of sample of CEX prices);
  • Make the max position size a function of CEX liquidity.
Unlisted

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Mycelium

Building infrastructure since 2019. Chainlink Nodes, Arbitrum Validator, Ethereum & Arbitrum smart contracts. 🍄