The GMX platform features a Digital Liquidity Pool called the GLP pool, with GLP tokens serving as LP (Liquidity Provider) tokens. These tokens function similarly to an index reflecting the liquidity conditions of leveraged trading on the platform. GLP tokens are minted when liquidity is added to the pool and burned when liquidity is removed. GLP tokens serve as rewards for users who contribute liquidity to the platform. Additionally, holders of GLP tokens earn rewards from trading fees.
Because the value of GLP reflects the value of the liquidity pool for leveraged trading, it means that if users incur losses from trading, GLP holders receive compensation. Conversely, if users make profits from trading, GLP holders incur losses.
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