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GMX is a decentralized exchange platform (DEX) for trading crypto perpetual futures with up to x50 leverage on popular cryptos such as Bitcoin, Ethereum and more.
The platform was launched in September 2021 under the name Gambit Exchange.
To date, GMX has a total trading volume of over $130 billion and 283,000 users, making it the leading DEX for Arbitrum and Avalanche (AVAX) derivatives.
GMX operates on the Arbitrum blockchain and the Avalanche (AVAX) blockchain.
Instead of the order book model used by centralized exchanges (CEX), transactions are made via the automated market maker (AMM) model deployed by DEXs such as Uniswap.
It includes a native multi-asset pool, GLP, which generates revenues for liquidity providers.
GLP operates as a multi-asset liquidity pool (LP) that includes ETH, BTC (buy BTC), LINK, UNI, USDC, USDT, DAI and FRAX, at the time of writing.
Market prices depend on Chainlink’s oracles, which collect token price data from all major exchanges.
The decentralized exchange ecosystem is based on two tokens: GLP and GMX.
The first token is used to provide liquidity.
The GLP price reflects the value of all GMX assets, which are available for exchange with leverage and swaps.
In other words, the GLP is an index of all the assets in the exchange.
The GMX is the utility and governance token.
Users can add liquidity by minting GLP, and in return receive 70% of all fees generated on the corresponding blockchain.
Unlike some liquidity pools, GLP is not subject to “impermanent loss”.
In addition, the GLP pool acts as a counterparty for traders.
When GLP holders provide liquidity for leveraged trading, they profit from the losses incurred by traders.
The reverse is also true.
The GMX protocol was launched in September 2021 on Layer 2 Arbitrum, an Ethereum scalability solution.
Prior to this launch on Arbitrum, GMX was called Gambit Financial.
Gambit was a decentralized exchange based on the BNB Chain, formerly known as the Binance Smart Chain (BSC).
In January 2022, GMX was deployed on a second network: Avalanche, a smart contract blockchain compatible with the Ethereum Virtual Machine (EVM).
The protocol developers remain anonymous for the time being.
However, the two people who can sign a multi-signature wallet connected to DEX are Krunal Amin, founder of UniDex, and Benjamin Simon, co-founder of Stealth Crypto.
Similarly, one of the crypto exchange’s best-known developers goes by the pseudonym X on Twitter.
Given its mode of governance, GMX is governed by a community of 69,000 people.
GMX crypto holders contribute to the evolution of the protocol by voting on GMX governance proposals.
Buy GMX tokens.
GMX operates with a single liquidity pool, the GMX Liquidity Pool, which contains all the assets offered by its market.
The GLP is made up of around 50% various stablecoins (USDC, USDT, DAI, FRAX) and 50% large-cap crypto-assets.
To trade on GMX, users must deposit assets in the GLP.
Users who deposit assets in the GLP are known as liquidity providers. Liquidity providers receive a commission on trades made in the pool.
Trades on GMX are automated, via a mechanism called Automated Market Maker (AMM).
AMM uses an algorithm to calculate asset prices, based on the quantity of each asset available in the pool. GMX offers a number of unique features, including: – Fixed-price trading: GMX uses Chainlink’s oracles to retrieve asset prices from the major exchanges.
These prices are then used to calculate trade prices on GMX. This allows users to trade without worrying about slippage.
– No impermanent loss: Impermanent loss is a potential loss that liquidity providers may incur if the price of assets in an AMM pool changes.
GMX uses a mechanism called “rebalancing” to limit impermanent loss.
– Revenue distribution to GMX token holders: 100% of GMX protocol revenues are distributed to GMX token holders. Here’s an example of how GMX works: Suppose you want to buy 10 USDC against 1 ETH.
You deposit 10 USDC in the GLP.
The AMM calculates the ETH price according to the quantity of ETH and USDC available in the pool.
Let’s assume that the calculated price is 1 ETH = 100 USDC.
You can then buy 1 ETH in exchange for 10 USDC.
Liquidity providers who have deposited ETH in the pool will receive a commission on this transaction.
The commission is calculated according to the quantity of ETH that the liquidity providers have deposited in the pool.
Partners: – Chainlink is a decentralized data network that provides reliable information to smart contracts.
Chainlink’s oracles are used by GMX to retrieve asset prices from the largest exchanges.
This enables GMX to provide fixed-price trades and limit impermanent loss for liquidity providers.
– Arbitrum is an EVM-compatible Ethereum blockchain that offers fast, low-cost transactions.
GMX is based on Arbitrum, enabling it to benefit from the security and scalability of Ethereum, while offering low transaction costs.
– Avalanche (AVAX) is another EVM-compatible Ethereum blockchain offering high performance and horizontal scalability.
GMX is also available on this blockchain.
Investors: – Spartan Group is a venture capital firm that invests in DeFi projects.
Spartan Group invested in GMX because of its potential to become a leader in the DEX sector.
– Hashkey Capital is another venture capital firm investing in DeFi projects.
Hashkey Capital invested in GMX because of its experienced team and innovative approach to decentralized trading.
A decentralized exchange (DEX), in the context of crypto-assets, is a platform that enables users to exchange assets directly with each other without the need for a centralized intermediary such as a traditional exchange.
DEXs rely on blockchain and smart contract technology to facilitate and automate the exchange process.
They thus offer an alternative to centralized exchanges, where users have to entrust custody of their funds to a third-party entity.
DEXs operate without a central control entity.
Instead, they use smart contracts deployed on a blockchain, often on networks such as Ethereum.
These smart contracts manage order execution and liquidity.
Smart contracts are self-executing computer programs that define the rules of exchange.
In the context of DEX, these contracts automate the matching of orders and the exchange of assets between parties.
Unlike centralized exchanges, DEXs do not require users to retain custody of their funds.
Users retain full control of their assets, reducing the risk of piracy or mismanagement of funds.
DEXs often enable exchanges between different crypto-assets.
Users can create direct exchange pairs between two assets without the need for an intermediate pair, offering greater flexibility.
Liquidity on DEXs is provided by liquidity providers, who may be mainstream users.
Financial incentives, often in the form of fees, are used to encourage liquidity providers to contribute to DEX operations. How DEX works: Users deposit funds directly from their personal portfolios onto the DEX platform.
These funds remain under the control of users thanks to the decentralized nature of the blockchain.
Once the funds have been deposited, smart contracts on the blockchain manage the trading process.
These contracts determine order matching and transaction execution.
Users can place buy or sell orders directly on the DEX platform.
Orders are recorded in smart contracts, and trades are automatically executed when matching orders are found.
Another classic DEX operating format is the Automated Market Maker (AMM).
Automated Market Makers (AMMs) are decentralized protocols used in decentralized exchanges (DEX) to facilitate the provision of liquidity and the execution of automatic trades without the need for a traditional order between buyer and seller.
AMMs are at the heart of many DeFi protocols, and rely on automated algorithms to determine prices and exchange ratios.
Liquidity providers who deposit their funds on the platform are rewarded in the form of transaction fees.
This encourages user participation and helps maintain liquidity on the platform. At any time, users can withdraw their funds from the platform using their personal portfolios.
DEX does not retain custody of users’ funds.
Advantages of DEX: Since users retain control of their funds, the risk of the platform being hacked is considerably reduced compared with centralized exchanges.
DEXs correspond to the decentralized ideal of crypto-assets, eliminating the need for a centralized trusted third party.
DEXs offer greater accessibility, enabling users from all over the world to exchange assets without having to go through complex registration processes.
Users can create exchange pairs between a variety of digital assets, offering greater flexibility in transactions.
All transactions on the blockchain are transparent and verifiable, reinforcing users’ trust in the exchange process.
DEXs can sometimes face liquidity issues, particularly for less popular assets.
DEXs can be more complex for unsophisticated users than more user-friendly centralized exchanges.
The speed of execution of DEX transactions can sometimes be limited by the constraints of the underlying blockchain.
Decentralization means that users take responsibility for the security of their funds, which can be a challenge for less technically proficient individuals.
DEXs represent an important development in the crypto-asset ecosystem, offering a decentralized alternative to traditional exchanges.
Although they offer advantages such as enhanced security and decentralization, challenges remain, particularly with regard to liquidity and complexity of use.
However, with the continued development of blockchain technology, DEXs are set to play an increasingly important role in the world of digital assets.
A liquidity pool is a pool of tokens held by users in a smart contract.
These tokens are used to provide liquidity to decentralized exchanges (DEX).
Liquidity pools are essential to the operation of DEXs.
They enable users to exchange digital assets without having to go through a centralized intermediary, such as a traditional exchange platform.
Liquidity pools typically consist of two digital assets, but can also contain more.
Digital assets are usually deposited in the pool in pairs, for example ETH/USDC or BTC/USDT.
Users who provide liquidity to a pool are called “liquidity providers”.
Liquidity providers receive a commission on trades made in the pool.
The GLP token is a token indexed on a set of digital assets.
The GLP is used to provide liquidity to the GMX protocol.
Liquidity providers who deposit GLPs in the GMX liquidity pool receive a commission on trades made in the pool.
The commission is calculated according to the amount of GLP that liquidity providers have deposited in the pool.
When traders lose, GLP holders win, and when traders win, GLP holders lose.
Liquidity providers receive: – 70% of the fees generated by the protocol, which are distributed in ETH or AVAX depending on the network –Escrowed GMXor esGMX
The GMX token is the governance token for the GMX protocol.
GMX token holders can vote on changes to the protocol, such as transaction fees, rewards for liquidity providers, and so on.
GMX token holders can vote on changes to the GMX protocol.
GMX token holders can also use their tokens to pay transaction fees on the GMX protocol.
Transaction fees on GMX are low, but are still necessary to maintain the protocol.
– 30% of the fees generated by the protocol are distributed in ETH or AVAX, depending on the network – “Escrowed GMX” or esGMX, which are GMX tokens that are blocked for a limited period of time. esGMX can be staked like classic GMX or vested so that they can be unlocked and become GMX tokens after one year.
KEY FIGURES
| Total Value Locked (TVL) | $513 million |
|---|---|
| Total Staking | 363 million (74% of market cap) |
| Ration evaluation after dilution / TVL | 1.13) |
| Total Supply | 9,447,175 GMX |
| Circulating Supply | 9 050 070 GMX |
| MarketCap | $333,019m |
| Fully Diluted Market Cap | 528 million GMX |
| Inflation rate / Emission / Burn | The increase in outstanding supply will vary according to the number of tokens (esGMX) acquired and the number of tokens used for marketing and partnerships. In all cases, the mint of new tokens above the 13.25 million threshold will only be possible after a governance acceptance process, and new issues will have a 28-day lead time. |
INITIAL ALLOCATION
| 45.28% ($GMX 6,000,000) | allocated to XVIX and Gambit |
|---|---|
| 15.09% (2,000,000 SGMX) | allocated to the Floor Price Fund |
| 15.09% (2,000,000 GMX) | allocated to esGMX vesting rewards |
| 15.09% (2,000,000 SGMX) | allocated to Uniswap liquidity (coupled with ETHs) |
| 7.55% ($GMX 1,000,000) | allocated to marketing, partnerships and developers |
| 1.89% (250,000 SGMX) | distributed to contributors on a straight-line basis over 2 years |
| Revenues (annualized) | 8.64m$ |
tokenomics comment: 37% of tokens have not yet been unlocked, the annual inflation rate is sufficiently low.
Over 74% of tokens in circulation are currently in staking (for yield compounding), so there is a shortage of supply, leading to pressure to buy.
The business model is sound, since most of the rewards come from real financial flows ($ETH/$AVAX) from user exchanges. Link between token valuation and tokenomics: in view of tokenomics, investors are incentivized to hold the token and use its functionalities, so the token is likely to have a much higher bullish valuation.
Token holders: they are motivated by the governance rights over the protocol and the rewards in terms of esGMX, MPs and shared protocol fees (30%) if the token is stake.
Liquidity providers: they are encouraged to provide collateral (i.e. mint $GLP) to increase the size of the GLP pool by receiving esGMX and participating in a constant percentage (70%) of protocol fees.
Trader: GMX enables future perpetual exchanges, whose market size is much larger than that of the spot market.
What’s more, the protocol’s referral program encourages adoption by enticing new users to sign up and generating discounts for the owner of the referral code.
The GMX token is supposed to be owned, as it confers voting rights on its owners.
TECHNICAL DATA (at October 2, 2023)
| Total Value Locked (TVL) | 513 million |
|---|---|
| Cryptos available | BTC / ETH/ ARB / SOL/ LINK / UNI/ XRP / DOGE / LTC |
| Users | 341000 |
| Safety and Audits | Vl audits: https://github.com/gmx-io/gmx-contracts/tree/master/audits V2 audits: https://github.com/gmx-io/gmx-synthetics/tree/main/audits |
| Daily trading volume | 141 million (derivatives) |
| Compatible wallets | Ledger Live, MetaMask, Wallet connect, etc. |
GMX, a decentralized trading platform focused on perpetual contracts and spot exchanges, is concentrating in 2024 on several key projects to strengthen its position on the DeFi market.
Central among these initiatives is the expansion of its ecosystem, with the integration of new trading pairs and the enhancement of liquidity through strategic partnerships with other DeFi protocols.
GMX is also developing advanced features for staking and yield farming, aimed at attracting more users and strengthening the commitment of its community.
Finally, GMX plans to launch analytics and risk management tools to offer its users a more secure and efficient trading experience.
GMX is an innovative DeFi project offering a number of unique features.
It is a decentralized exchange protocol (DEX) that enables users to trade digital assets in a decentralized way.
Its unique pooling operation with the GLP token makes the project truly unique, and the protocol has the potential to become a leader in the DEX sector.
The protocol offers unique functionalities that meet the needs of traders.
The team behind the project is experienced and determined to make GMX a success.
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