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VENOM is the platform's liquidity provider token.
VENOM consists of an index of assets used for swaps and leverage trading. It can be minted using any index asset and burnt to redeem any index asset. The price for minting and redemption is calculated based on (total worth of assets in index including profits and losses of open positions) / (VENOM supply).
Holders of the VENOM token earn Escrowed SERP rewards and 70% of platform fees distributed in ETH. Note that the fees distributed are based on the number after deducting referral rewards and the network costs of keepers, keeper costs are usually around 1% of the total fees.
Staked VENOM token address: ______________________
Note that VENOM is specific to the network you mint it on, it is not directly transferrable between networks and the price / rewards to the tokens will differ between networks.
As VENOM holders provide liquidity for leverage trading, they will make a profit when leverage traders make a loss and vice versa. Past PnL data, VENOM price chart and other stats can be viewed on Stats page.
- A list of VENOM tokens can be found on the Dashboard.
- Fees will be lower for tokens that the pool has less of, check the "Save on Fees" section to get the lowest fees
- You should buy the token with the lowest fees from Ethereum and then bridge that token directly as these tokens are likely more expensive to purchase on Arbitrum
- Key in the amount of VENOM you'd like to purchase on Buy VENOM section of the Buy page.
Fees for buying VENOM will vary based on which assets the index has less or more of, the Buy VENOM page will show which assets have the lowest fee.
After buying your tokens will automatically be staked and you will start earning Escrowed GMX and ETH, you can check your rewards at the Earn page.
Key in the amount of VENOM you'd like to redeem in the Sell VENOM section of the buy page.
The fees to mint VENOM, burn VENOM or to perform swaps will vary based on whether the action improves the balance of assets or reduces it. For example, if the index has a large percentage of ETH and a small percentage of USDC, actions which further increase the amount of ETH the index has will have a high fee while actions which reduces the amount of ETH the index has will have a low fee.
The token weights can be seen on the Dashboard.
Token weights are adjusted to help hedge VENOM holders based on the open positions of traders. For example, if a lot of traders are long ETH, then ETH would have a higher token weight, if a lot of traders are short, then a higher token weight will be given to stablecoins.
If token prices are increasing, then the price of VENOM will increase as well, even if a lot of traders have a long position on the platform. The portion reserved for long positions can be treated as stable in terms of its USD value since if prices increase the profits from that portion will be used to pay traders, and if prices decrease, the losses of traders will keep the USD value of the reserve portion the same.
If a lot of traders are short and larger weights are given to stablecoins, then VENOM holders would have a synthetic exposure to the tokens being shorted, e.g. if ETH is being shorted then the price of VENOM will decrease if the price of ETH decreases, if the price of ETH increases then the price of VENOM will increase from the losses of the short positions.
Apart from this, if the weight ratio of any token in the liquidity is the off the safe limits, the protocol will reach our partner lending protocol CANIS and borrow the token to get the liquidity pool to a happy ratio. Why not a simple swap? With a direct swap, the liquidity pool’s imbalance might not be taken care of, since it will be a 1:1 swap. Whereas with a lending protocol, the governance team can get the required amount of the token with minimal collateral.
Caution should be exercised when interacting with any smart contract or blockchain application. While risks are attempted to be mitigated through testing, audits and bug bounties, there is always a risk of vulnerabilities in smart contract code.
For details of contract operation please read the Contracts section.
A non-exhaustive list of some risks:
- Smart contract risks
- Counterparty risks: The VENOM pool is the counterparty to traders, if traders make a profit that comes from the value of the VENOM pool
- Token risks: Bridged tokens may depend on the security of the bridge, pegged tokens have risks of depegging