APX Finance ALP Analysis: Where do high returns come from?

Overall, the price performance and fee income performance of APX and $ALP are driven by APX Finance products and data.

Written by: Sleeping in the Rain

I once talked about APX Finance. From October 15, 2023 to now, $APX has nearly tripled. Today we change the angle and talk about the ALP of ApolloX (now renamed APX Finance).

Today, $ALP’s staking income has reached 55%. The return rate of its competing product $GLP is 13%, and the return rate of the $VRTX pledge (not an LP Token, but a protocol governance token) that was launched some time ago is 47%.

The income from this type of LP Token pledge or native governance token pledge often comes from the fee income of the derivatives agreement and the inflation reward of the token. This is the case with ALP. The direct reason why it can surpass GLP and Vertex token staking APY is that its income is composed of Fee income (real income) and token inflation. But it is worth mentioning that the real benefits brought to ALP Staker by the protocol are much higher than the inflation rewards.

The composition of ALP is also more stable than GMX v1 GLP, with stablecoins accounting for more than 80%, and is less affected by Crypto market fluctuations.

Meanwhile, the price of ALP has been rising steadily. Its upward momentum came from Trader’s losses. According to Dune data, Trader has currently lost 1.48M USD, which will also be classified as ALP’s income.

Trader’s losses may come from the following two aspects:

• Market conditions have turned bullish, market risk appetite has increased, and users and transaction frequency have increased. *APX Finance has launched Degen mode, which is suitable for traders with higher risk appetite. The high leverage of the Degen model is more like gambling than trading. We can see from the chart the proportion of 500ETHUSD and 500BTCUSD in its overall Trend.

Secondly, APX Finance recently launched Dumb mode. Dumb mode allows users to predict the price changes of various assets within a limited time (60s, 5m, 10m). If the expiration price is greater than the entry price, they can obtain 70%, 85% and 88% returns. But if the expiration price is less than the entry price, the user will lose 100% of the principal.

The introduction of Degen and Dumb models essentially provides users with a fresher product with higher risks and higher returns, which in disguise promotes the growth of transaction frequency and transaction volume.

Therefore, driven by these two new products and the basic market (such as expanding to Arbitrum, opBNB, and Base chain), protocol revenue increased, ALP price increased + fee income increased. The price of ALP increases, more people buy ALP, the depth is better, and the user trading experience is better.

The protocol will use the income to repurchase $APX. Part of the repurchased $APX will be allocated to $APX Staker, and the other part will be directly destroyed. In this way, the price of $APX will also increase.

Overall, the price performance and fee income performance of $APX and $ALP are driven by APX Finance products and data. You can pay more attention to the Dune data dashboard of Perp DEX and APX.