GMX, a new-gen crypto perpetuals exchange, leverages Arbitrum and Avalanche (AVAX) for its complex liquidity system that has already on-boarded over 120,000 users. So, what is special about GMX offering in 2022 - and how does it set a new benchmark for DeFi?
What is GMX, crypto decentralized perpetuals exchange: Basics
Since its first mainnet launch on Ethereum’s Arbitrum in late Q4, 2021, GMX established itself as one of the most technologically advanced DeFi ecosystems on EVM-compatible blockchains.
- GMX is a decentralized crypto exchange focused on perpetual contracts;
- GMX platform is designed to enable spot and leveraged trading of Ethereum (ETH), Wrapped Bitcoin (WBTC), Avalanche (AVAX), Chainlink (LINK), Uniswap (UNI), and other tokens with up to 30x leverage;
- GMX supports both centralized - U.S. Dollar Tether (USDT), USD Coin (USDC) - and decentralized (Dai (DAI), Frax Finance (FRAX)) USD-pegged stablecoins;
- GMX token underpins the tokenomics of GMX cryptocurrency exchange;
- ‘Earn’ module of the platform unlocks various opportunities for passive income including staking, vesting, and so on.
As such, GMX can be used for assets conversion, leveraged trading, and on-chain staking of cryptocurrency tokens.
Image by GMX
In Q3, 2022 only, it processed almost $60 billion in trading volume on both blockchains despite a painful recession on blockchain markets.
What are perpetual contracts and why are they popular?
In stocks, commodities and indexes, perpetual contracts should be referred to as the subclass of futures contracts without the expiry date. As such, traders can close them whenever he/she wants. Perpetual contracts are derivatives: they derive their value from the rates of underlying assets, for instance, Gold price, S&P 500 rate or Tesla stock price.
In cryptocurrencies, perpetual contracts work in the same manner: for instance, a perpetual contract on the BTC/USDT pair derives its value from the price of Bitcoin (BTC). Likewise, the contract can be ‘closed’ at any time: no expiration date is set for this type of derivatives.
In crypto, derivatives contracts are normally available with high leverage: traders can borrow funds and operate way more impressive deposits than they actually have. For example, with 30x leverage and $100 deposit, traders can open ‘short’ and ‘long’ positions for $3,000.
How does GMX work?
GMX is a decentralized cryptocurrency perpetuals platform launched on Arbitrum and Avalanche. That being said, GMX platform is:
- 360° on-chain: the platform doesn’t use centralized storages for keys or crypto;
- Available for spot (with no leverage) and margin (with up to 30x leverage) trading enthusiasts;
- ‘Out-of-a-box’ one: no installations and downloads are required;
- Cross-platform service: both Avalanche (AVAX) and Arbitrum (Ethereum-based) wallets can be used for trading;
- Multi-product ecosystem: Web3 enthusiasts can trade perpetuals and spot positions and earn on their passive crypto without leaving single interface;
- Fiat-friendly exchange: GMX supports seamless integration with Banxa’s paygate for Visa, MasterCard and bank accounts.
To start trading, users should connect their Arbitrum or Avalanche wallets to GMX; MetaMask, Coinbase Wallet and TrustWallet are compatible with the exchange.
First of all, GMX is designed for leveraged perpetuals on major cryptocurrencies. For instance, as displayed beyond, with a $100 deposit in USDT and 10x leverage, traders can use $986 ($1000 in equivalent minus fees) for opening short and long positions on Ethereum (ETH) pairs.
Image by GMX
In this case, ‘long’ position will be liquidated once ETH price drops below $1,162 while ‘short’ position will be erased with Ethereum (ETH) reaching $1,396.
What is GMX crypto?
GMX is a core native cryptocurrency of GMX service. It is a building block of its tokenomics and main governance and utility token of the service’s ecosystem. GMX token can be staked with 12,4%-12,6% in APY. Stakes can get three types of rewards while staking GMX:
- escrowed GMX (esGMX), a synthetic token that can be restaked for compounding rewards; esGMX can be converted to GMX;
- multiplier points, a sort of ‘in-app currency’ for GMX: users can lock it with fixed APR of 100%;
- direct ETH or AVAX rewards, bonuses from fees pool: 30% of fees are distributed between stakers.
GMX coin is one of the few cryptocurrencies that perform well despite the falling market. By press time, it is changing hands at $33,67, being more than 153% up from its 2022 low.
Image by CoinMarketCap
GMX Coin, GLP Coin: What’s the difference?
GMX and GLP, two cryptocurrencies of the platform, represent two models of income that are available for GMX users.
As we’ve already mentioned above, GMX is a dual-type utility and governance cryptocurrency of the platform. It allows users to have a say in crucial referendums and to enjoy special utilities on GMX. The token can be staked; its holders can get periodical rewards for their contribution.
GLP is designed to be a liquidity providers (LP) token of the GMX ecosystem. GLP represents a flexible index of assets used for swaps and leveraged trading. GLP owners distribute 70% of platform fees for their role in keeping the liquidity ecosystem of GMX healthy and sustainable. GLP tokens can also be staked for 15-16% in APY.
GMX Ecosystem: Array of community-driven crypto products
GMX protocol enthusiasts created a vibrant and feature-rich ecosystem of the products designed to advance profitability and user experience of the platform's users. Namely, it features app-specific Telegram bots, yield simulators, staking calculators, and so on.
Image by GMX
Also, GMX supporters released a number of fan content collections on NFT marketplaces, traders leaderboards and other community-first developments.
Simply put, GMX is a user-friendly and feature-rich decentralized platform for perpetuals. It seamlessly works with ETH, USDT, BTC, AVAX and so on with up to 30x leverage in a non-custodial manner.
Besides trading, users can benefit from various initiatives associated with GMX and GLP, two core cryptocurrencies of the GMX platform.