DeltaPrime wants to add value, not extract. For this reason we are incentivizing users to use borrowed funds to mint GLP. The more people that use borrowed funds, the more value can be put into GM pools by people who don’t wish to have (price) exposure on the underlying token. After all, a user who wishes to manage a GM position will mint it themselves, or borrow to mint. Liquidity in Savings pools is specifically deposited to have exposure on that asset, in a DeltaPrime pool. Thus, by using lenders’ funds we can fill GM pools with capital that would otherwise stay out of GMX or, worse, end up providing no value in an overcollateralized lending protocol.

The way we incentivize this is by making sure we only incentivize over deposited liquidity higher than the collateral value. On DeltaPrime you can deposit collateral as well as borrowed funds, so a user that deposits their $1,000 GM assets, borrows 1000 USDC and puts that in a GM pool, will receive incentives over the additional $1000. The person who deposits $1,000 GM as collateral and fills up three other pools with GM tokens (potentially hedging himself), receives incentives over $3,000 of capital, et cetera.

As there is a fixed amount of ARB streaming, this strategy allows us to hit higher TVL with the same ARB, while simultaneously rewarding GMX liquidity providers who are committed to the GMX protocol. As an example:

There is currently $3mm in the BTC-USD GM pool, equally shared across 3 liquidity providers. All three users import their position on DeltaPrime to borrow against:

Adam

Borrows an additional $1mm and uses it to create an additional TraderJoe LP position for BTC-USDC. His collateral is $1mm, the GM position is $1mm, so the total incentives are counted over $1mm - $1mm = $0. While his new position did benefit the chain as a whole (after all BTC-USDC swaps on TJ just got cheaper), it did not support the primary objective, hence there no incentives being paid out to this account.

Barry

Borrows $2mm, using one for the same TJ position and the other for providing an additional $1mm to BTC-USD. His collateral is $1mm, and his total GM position is now $2mm. He receives incentives over ($2mm - $1mm =) $1mm. With there currently being only $1mm in added GM deposits routed through DeltaPrime he earns 100% of the ARB emissions. Over $1mm that amounts to 52% bonus APR.

Cindy

Borrows $2mm and spreads $2mm (collateral + $1mm) over all available GM pools. Her collateral is $1mm and her total GM position is $2mm. She now qualifies for 50% of the incentives, giving her, and Barry, a bonus APR of 26%.

With Adam, Barry and Cindy, DeltaPrime gives a bonus APR of 26% on GM with 4 million dollars in extra GM deposits. Should they (potentially hedged) deposit a higher percentage of their available capital on GMX this number does not only increase their share in the pool, but also the multiplication of the APR on their collateral: 26% over $2mm is 52% with $1mm undercollateralized borrowing.

Depending on the risk adversity of an individual user, given a total dollar value of deposits his personal APY can be higher or lower based on the collateral ratio (collateral ratio being calculated as collateral value / borrowed value) of his Prime Account. A Prime Account with 40% health (indicating 3x borrowed), a with $5mm GM LPs earns 41,6% in incentives. Below you see the APY a user with 1x borrowed will receive when using this + collateral for GM pools.