GMX is the leading DeFi project in terms of total value locked (TVL) and the biggest perpetual exchange on the Arbitrum network, with a TVL of $531.38 million, close to 223k users, and 5.9k daily active users.
If you are interested in trading perpetual contracts for cryptocurrencies or exploring the Arbitrum ecosystem, GMX is one of the essential decentralized applications (DApps) you must try.
GMX is a decentralized perpetual exchange that offers both spot and perpetual trading options, with support for low swap fees and zero-price impact trades on the Arbitrum and Avalanche networks. The trading on GMX is supported by a unique multi-asset pool, known as GLP, that enables liquidity providers to earn fees from market making, swap fees, and leverage trading. Traders on GMX can also benefit from leveraged trading, with leverage of up to 50x available. GMX is recognized for its innovative model, which prioritizes the efficient use of capital to optimize spot and perpetual trading. This is achieved through the GLP, which comprises several large-cap tokens and stablecoins.
As the largest decentralized perpetual exchange on Arbitrum, GMX excels in its trading systems and community ecosystem.
GMX offers a straightforward swap interface similar to traditional trading platforms that allow traders to open leveraged positions. It is also self-custodial and trustless, allowing anyone to trade cryptocurrency directly from their crypto wallet. GMX’s dual exchange model supports both spot swaps and leveraged trading of perpetual swaps, resulting in improved capital efficiency due to the high asset utilization of the GLP pool. This feature enables user deposits to generate extra yield and not sit idle. Additionally, GMX permits entering and exiting trading positions with no price impact, offering better entry prices than some order book-based exchanges that may have issues with slippage. The platform also leverages an aggregate of Chainlink Oracles, and other price feeds to mitigate price fluctuations and keep positions safe from temporary liquidation wicks.
Regarding the community ecosystem, GMX is committed to fostering the DeFi mindset of engagement and tool-building within its user community. The platform offers community-built tools and calculators that benefit traders, stakers, and liquidity providers. Furthermore, GMX has a growing list of collaborative projects building DeFi functionality within the GMX ecosystem. The community takes responsibility for communicating updates and developments about GMX, including the weekly newsletter and podcast, which highlight developments in the ecosystem.
GMX operates using a dual token model comprising GLP, the liquidity pool token, and GMX, the platform’s governance token.
The multi-asset pool, GLP, facilitates trading on GMX and comprises 50% stablecoins and 50% large-cap tokens. The large-cap tokens on Arbitrum consist of BTC, ETH, LINK, and UNI. To provide liquidity on GMX, users can mint GMX Liquidity Provider Tokens (GLP) using any of the tokens in the pool. Liquidity providers are incentivized to mint GLP with assets that are underweighted in the pool to maintain its composition. GLP is rebalanced continuously by GLP minters and redeemers. Traders on GMX trade against the pool, with GLP serving as the counterparty to traders on the platform. GLP token holders provide liquidity for leverage trading and profit when traders lose and vice versa. The GLP token can be burnt to redeem any of its index assets. It is automatically staked and non-transferable. GLP’s price, rewards, and index composition differ between Arbitrum and Avalanche.
The GMX token is a utility and governance token, with token holders using it to vote on proposals and decide the exchange’s future direction. GMX generates revenue through swap fees, borrow fees on leveraged trading, liquidations, and the minting and burning of GLP. The fees are split between GLP and GMX stakers. Since GLP stakers bear the platform’s trading risk, 70% of platform fees are distributed to liquidity providers, and the remaining 30% is given to GMX stakers. This reward is distributed in ETH on Arbitrum and AVAX on Avalanche, which is unique compared to most DEXes that distribute liquidity provision incentives in their native token.
Other than platform fees, GMX also distributes two other reward forms: escrowed GMX (esGMX) and multiplier points. GMX stakers earn esGMX tokens, which can be staked or vested for rewards. The tokens are converted back into GMX over 12 months when a user vests them. Thus, esGMX emissions are a form of locked staking that prevents inflation and people from immediately selling their GMX. GMX stakers also earn multiplier points that boost their yield and reward long-term holders without contributing to token inflation. These incentives encourage commitment to GMX and further the platform’s decentralized ownership.
How to Use GMX
1. Launch the BitKeep wallet and switch to the Arbitrum network. Then, click on [DApp] and search for [GMX].
2. Review the details of the DApp and click on [Confirm] to enter GMX.
3. Click on [Connect] to connect your BitKeep wallet. Once the connection is successful, you can start using GMX and perform various transactions such as “Long”, “Short”, and “Swap”.
4. Click on the left menu bar to explore other functional pages on GMX. You can stake GMX to earn extra income or purchase GMX or GLP tokens.
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