I. Trader Extractable Value (TEV)
In essence, GMX’s manipulation of Ava’s price on Avalanche last year is a typical example of TEV. When the cost of manipulating the spot price is lower than the friction cost on the futures side, there’s an opportunity for profit.
Yes, because BTC and ETH’s depth and consensus make it significantly harder to control spot prices. That’s why GMX V1 only had two trading pairs for BTC and ETH on ARB.
No, because if GLP’s TVL were in the tens of billions and traders could profit at the expense of LPs, there would be prominent players willing to manipulate BTC and ETH prices, similar to what happened with the AVAX trading pair. As long as GLP’s depth is sufficient, GMX’s fixed trading friction cost will lead to spot price manipulation cost being lower than futures friction cost. As GLP TVL grows, the possibilities and success rates of TEV increase, explaining why GLP’s TVL is capped at around 350 million USD.

II. A Protocol for Anyone to Establish a DEX — Surf’s Solution and Innovation
How can we incentivize greater TVL in derivatives and create an innovative trading protocol? Surf’s solution is straightforward. To maximize LP incentives, Surf introduces a unique mechanism in its LP structure, creating a B2B2C trading protocol.
Typically, LPs earn 70–80% of trading fees, with the remaining 20–30% going to the protocol. Surf, however, innovates by allocating 80% of trading fees to LPs, 10% to the protocol, 5% to the creator of each pool, and 5% to the contributor with the highest TVL in each pool.

Under this incentive system, LPs are more motivated to create trading pairs for non-blue-chip long-tail assets. Furthermore, because the entity with the highest TVL in a pool receives 5% of the trading fees, there is an additional layer of real competition in terms of TVL, encouraging large and loyal TVL providers to continue offering LP, resulting in a better trading experience and deeper liquidity for traders.
Moreover, how can we address the friction cost in futures? It can be done by transforming the friction cost on the futures side into a dynamic cost by introducing pools with different fee rates, similar to Uniswap V3’s homogeneous trading pairs.
For the overall system, more stable periods may lead to significantly reduced fees (as more LPs choose low-fee pools), potentially reaching theoretically feasible minimum levels. During periods of extreme market activity, costs may increase to prevent scenarios like GMX’s AVAX trading pair price manipulation that continuously depletes GLP.

III. Permissionless — The True Essence of Cryptocurrency
Those familiar with the early history of cryptocurrencies know that Bitcoin’s main selling point in its early days was “Permissionless,” not “Decentralization.” Satoshi Nakamoto used the term “Permissionless” in the whitepaper and forum discussions rather than “Decentralization.”