Before diving into the V2 GM Vaults, allow us to take a moment & reflect on the GLP Vaults released earlier this year. While meticulous in our scaling approach, the Umami DAO has been able to achieve a record $5M TVL across all GLP Vaults while not jeopardizing on yield. Most notably the BTC & LINK Vaults

With the DeFi landscape ever expanding & iterating comes the rise of UmamiDAO’s new product: the GMX V2 GM Vaults. GMX V2 GM Vaults are emerging as a pivotal component in the Arbitrum DeFi landscape. These vaults offer a distinctive opportunity for investors seeking single-sided exposure to premier assets such as $USDC and $ETH, with plans to expand support to a full spectrum of assets in the future.  We expect that by offering this alternative simplified and more predictable approach to GM liquidity provision, we will be able attract depositors from the full spectrum of DeFi users, from retail investors to managed funds, who may otherwise be overwhelmed by the broad range of options and dynamic exposure that GMX v2 presents. We also foresee a future where Umami’s GM vault tokens can be used as collateral within money markets for borrowing and leveraged products, and can become one of the staple DeFi assets on Arbitrum and beyond.
Risk-Adjusted Index
The initial ETH and USDC Vaults will have exposure to 4 markets:
ETH-USDC
XRP-USDC
DOGE-USDC
LTC-USDC
This approach allows the vaults to maximize revenue by gathering liquidation fees, swap fees, and PnL from all four pairs, ensuring a balanced risk-adjusted return across these ETH and USDC backed markets while increasing GMX GM TVL. When a user deposits ETH, they become the counterparty to traders involved in trading those pairs. However, our underlying infrastructure, composed of Internal Netting and a sophisticated & proprietary External Trader Router, ensures that users receive the delta of ETH in the ETH GM Vault while maintaining delta neutrality for USDC. Token allocations dynamically rebalance based on asset volatility and returns within the index, optimizing returns and offering diversification to reduce risk.   

In essence, Internal Netting in GM Vaults not only ensures desired single-sided exposure for depositors but also offers a more intelligent and cost-effective hedging strategy while increasing TVL into the GMX V2 Platform. This results in depositors enjoying higher yields than they would typically achieve through manual hedging. Our approach is tailored to optimize operations, minimize expenses, and position our GM Vaults a step ahead of our competitors.

The withdrawal & deposits fees will also be calculated on execution - meaning these calculations are dynamic  based on the weight of the withdrawal asset in the index and the weight of the GM tokens in the index. In other words, the end user can potentially expect a rebate on these fees due to the nascent architecture of GMX GM.