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? Virtual AMM (vAMM) Mechanics

Gains Network's vAMM (virtual Automated Market Maker) is the engine that powers gTrade's decentralized perpetuals exchange. Unlike real AMMs where liquidity providers deposit actual capital, a vAMM uses on-chain storage to simulate a trading curve without any LP risk. The vAMM quotes prices from Chainlink oracles, charges a structured pair fee, and routes PnL settlement through the GDAO vault. This architecture eliminates impermanent loss entirely and enables leverage up to 1000 on certain markets.

vAMM vs Real AMM vs Order Book - Animated Comparison

Watch how the three market mechanisms handle trade execution, price discovery, and PnL settlement differently. Each model has a different capital structure and risk profile.

Select a model to see how it handles trade execution, pricing, and settlement.

vAMM Trade Flow - Step by Step

Follow a trade from deposit to settlement. Each step shows what happens on-chain and how the GDAO vault interacts with the vAMM at each stage.

Pair Fee Simulator

The pair fee is gTrade's spread equivalent - it scales with trade size and open interest imbalance. Trades that improve balance get a rebate; trades that worsen it pay more.

Pair Fee Rate
0.20%
Fee Amount
$20.00
OI Imbalance
67% Long / 33% Short
Rebate / Surcharge
Surcharge +0.05%

vAMM vs AMM vs Order Book - Feature Matrix

Feature vAMM (gTrade) Real AMM (Uniswap) Order Book (CEX)
Price Discovery Oracle (Chainlink) AMM curve (xy=k) Bid-ask spread
Slippage Near-zero for small trades Curve-dependent (large) Book depth-dependent
LP Risk None (no real LPs) Impermanent loss N/A
Max Leverage Up to 1000 N/A (spot only) Up to 125
Counterparty GDAO vault Other LPs / traders Other traders
Capital Efficiency High (margin only) Low (full deposit) Moderate
Oracle Dependency High (Chainlink) None Low (self-discovered)
Fee Model Pair fee (dynamic %) Pool fee (fixed 0.3%) Maker/taker (static)
Market Classes Crypto + Forex + Commodities Spot only Crypto primarily
Settlement Speed Next block Instant Sub-second (centralized)

How the vAMM Price Is Calculated

The vAMM doesn't calculate prices from reserves like a real AMM. Instead, it retrieves the Chainlink oracle mid price and applies the pair fee to determine the execution price.

// Execution price formula
Entry Price = Chainlink Mid Price (1 +/- Pair Fee Rate)
// where Pair Fee Rate = f(trade_size, OI_imbalance)
Liquidation Price = Entry Price (1 ? Margin Buffer)
// where Margin Buffer = f(leverage, fees, funding)
Close PnL = (Close Price ? Entry Price) Position Size ? Total Fees
Chainlink Oracle

Provides the mid price feed. gTrade supports 50+ trading pairs using Chainlink's price reference contracts.

Pair Fee

Dynamic fee from 0.01% to 1%+ depending on trade size and open interest imbalance. Acts as the spread.

GDAO Vault

Settles PnL. Pays winners from accumulated fees + net trader losses. Distributes 50% to GNS stakers.

? Why No Real LPs? The Design Rationale

Benefits of No-LP Design
  • Zero impermanent loss for any participant
  • No LP capital lockup required before trading
  • Vault can socialize losses across all stakers
  • Maximum leverage capped by vault, not pool size
  • Simplified protocol design - no LP token management
  • Traders don't pay for LP risk premium
Risks of No-LP Design
  • High oracle dependency - no market-price discovery
  • Keeper network must be reliable for liquidations
  • Vault insolvency risk in extreme volatility events
  • Cannot absorb large directional moves without socialized loss
  • No natural spread widening during market stress
  • GDAO stakers bear all counterparty risk