About GMX(GMX)

What is GMX?

GMX, a decentralized exchange protocol on Arbitrum and Avalanche blockchains, enables spot and perpetual cryptocurrency trading. With minimal spread and zero price impact, users enjoy transparent transactions and leverage up to 50x for BTC, ETH, AVAX, and others. Its permissionless nature fosters inclusivity, allowing participation without central authority approval, coupled with deep liquidity for efficient order execution.

The GMX token serves as a utility and governance tool, incentivizing holders to stake and earn a share of trading fees, driving ecosystem engagement. Recognized as a top-grossing protocol, GMX has evolved into GMX V2, poised for significant growth and expanded tradable assets.

Crucially, GMX distinguishes itself from GMX Mail, emphasizing its role as a decentralized exchange protocol. In summary, GMX delivers permissionless, transparent trading with leverage options, backed by the success of GMX V2 and industry recognition.

History of GMX

• Inception and Early Growth (Late 2021 - Early 2022)

GMX emerged in late 2021, launching on the Ethereum Layer 2 network Arbitrum, garnering attention for perpetual futures trading with leverage options up to 30x .

• Integration with Avalanche and Token Incentives (Early 2022)

Expanding its reach, GMX went live on Avalanche in early 2022, enabling users to trade AVAX, BTC, and ETH with leverage up to 30x. Concurrently, the platform incentivized liquidity providers through monthly esGMX token distributions.

• Chainlink Integration and Governance Proposal (Early 2022 - April 2023)

Early 2022 saw GMX integrating Chainlink oracles for reliable price feeds. A pivotal moment arrived in April 2023 with a governance proposal, securing overwhelming approval from GMX tokenholders, reinforcing community engagement.

• Diversification, Maturation, and GMX V2 Features (May 2023 - August 2023)

GMX matured by diversifying its offerings, introducing a multi-asset liquidity pool, swaps, and leverage options up to 30.5x. Simultaneously, GMX V2 was unveiled in May 2023, with a beta release in August. The update brought features like standard trading functionalities, diverse pool and collateral options, funding fees, a Price Impact feature, and opportunities for liquidity provision, marking a phase of innovation and enhanced user experience.

How Does GMX Work?

GMX V1

GMX V1 operates as a decentralized exchange facilitating multi-asset trading through a liquidity pool. Traders can take long or short positions and swap tokens with leverage options ranging from 1.1x to 30x. The pool comprises various assets like BTC, ETH, USDC, and more. Swaps, executed at market prices determined by oracles, incur fees ranging from 0.2% to 0.8% based on the pool's composition .

For perpetual trading, GMX V1 offers leverage from 1.1x to 30.5x, multiple order types, and charges a 0.1% fee for opening and closing positions. Additionally, an hourly borrowing fee, calculated based on borrowed assets, is levied at a rate of 0.01% .

GLP (Liquidity Provider Token) is pivotal in GMX V1, allowing users to earn fees from leverage trading, borrowing, and swaps. GLP's price is determined by the total worth of assets in the index, providing a mechanism for minting and redemption. Liquidity providers benefit from profits when leverage traders incur losses, creating a symbiotic relationship.

GMX V1 introduces innovative features like stop-loss/take-profit orders, diverse token weights influencing fees, and a liquidation mechanism to mitigate risk. Trading fees stand at 0.1% of the position size, and execution fees cover network costs for opening, closing, or editing positions. Stablecoin pricing mechanisms address depegging scenarios, ensuring stability during volatile market conditions .

In essence, GMX V1 revolutionizes decentralized trading, offering a user-friendly interface, transparent pricing through oracles, and a unique liquidity provision system, contributing to a dynamic and efficient trading ecosystem.

GMX V2

GMX V2 introduced its Testnet in May 2023, going live on Arbitrum and Avalanche mainnets in August. It offers standard trading functionalities, including market, limit, and trigger orders, with a focus on flexibility and risk management. The platform allows users to experiment with pools, collaterals, and funding fees to tailor trading strategies. Liquidity providers can engage in isolated GM pools, earning incentives for maintaining balance. Chainlink Data Streams integration enhances real-time pricing updates and on-chain transactions.

GMX V2 uses GM pools for liquidity, where users can buy and sell GM tokens based on index price feeds. Bridging funds is facilitated for various tokens. Leveraged trading is supported, with options to open, manage, and close positions. The platform implements adaptive funding rates, aiming to balance long and short positions. Users face fees for opening, closing positions, and swaps, while positive funding fees can be claimed. The risk of liquidations and Auto-Deleveraging (ADL) is managed through measures such as collateral adjustments and adaptive funding. The platform encourages arbitrage opportunities for balanced pool trading. Users connect wallets through platforms like Rabby, and GMX emphasizes user caution, offering details on potential smart contract risks and stablecoin pricing strategies.

Token Economics

Token Utilities

GMX, the native token of the GMX platform, functions as a utility and governance token, deriving value from protocol fees and emissions.

Stakers receive rewards in the form of escrowed GMX, multiplier points, and ETH/AVAX. Escrowed GMX can be staked or vested, preventing immediate token sales and mitigating inflation. Multiplier points, earned at a 100% APR, promote long-term holding and can be staked for additional fee rewards.

The distribution of swap and trading fees occurs in ETH or AVAX, depending on the staking network. GMX Rewards, including the gradual conversion of escrowed GMX to GMX over a year and continuous multiplier point rewards, fosters user engagement. The Earn page offers options to manage rewards, providing a user-friendly interface for staking, claiming, and converting rewards within the GMX ecosystem.

Why Is GMX Valuable?

Firstly, GMX has proven to be a lucrative platform for token holders and liquidity providers (LPs). The platform generates fees through spot swap fees and leveraged trading fees, which contribute to the overall value of GMX. This success has attracted competition, highlighting the value and potential of the platform.

Secondly, GMX offers a decentralized spot and perpetuals exchange, providing transparent on-chain trading and deep liquidity. Traders can enter and exit positions with minimal spread and zero price impact, reducing liquidation risks. This reliable pricing is achieved through aggregated price feeds, ensuring a fair and efficient trading experience for users. The platform's focus on transparency and liquidity makes it valuable to traders and investors.

Furthermore, GMX provides a fantastic user experience with its cheap transaction fees and fast transaction speed on two blockchains. This makes trading on GMX more cost-effective and efficient compared to other platforms. Additionally, GMX has a unique automated market maker (AMM) methodology that supports high liquidity without relying heavily on total value locked (TVL). This innovative approach enhances the platform's value proposition and attracts users.

Moreover, GMX's value is also influenced by factors such as brand reputation and competitive landscape. GMX is considered a premium platform compared to its competitors, which contributes to its pricing power. Additionally, the emergence of cheaper alternatives on different Layer 2 solutions could pose a challenge to GMX's market share . However, GMX's established position in terms of user base and trading volumes gives it a competitive advantage.

In terms of future potential, GMX has plans to introduce synthetic assets and use Chainlink low-latency oracles for better access to real-time market data. These developments are expected to further enhance the value and utility of GMX.