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GMX is a decentralized public exchange for perpetual swaps and spot trading. On this platform, traders can freely trade cryptocurrencies on the chain by simply connecting their wallets. GMX has its own native GMX token, which plays the role of a utility token and governance token, and is also used to accumulate funds in the GMX protocol. Users can stake GMX tokens and earn commissions on the GMX protocol, as well as enjoy other benefits of the exchange. GMX currently supports the Arbitrum and Avalanche networks.
Introduction
Blockchain technology and its financial instrument, cryptocurrency, have contributed to the development of the decentralized finance (DeFi) field. 2020 saw the beginning of general adoption of DeFi, and this period is commonly referred to as the “summer of DeFi.” Today, GMX offers trading opportunities on spot and leveraged perpetual contracts in a decentralized environment. Trading operations on this platform are almost no different from the functions of centralized exchanges, but are carried out directly from the user’s personal cryptocurrency wallet.
What is GMX?
GMX is a decentralized exchange for trading spot and perpetual swaps. Users have access to BTC, ETH and other popular cryptocurrencies, which can be traded directly from crypto wallets. In addition, GMX users can perform spot swaps and trade perpetual futures with up to 50x leverage, similar to centralized exchanges. However, the main difference from centralized exchanges is that assets are stored directly in cryptocurrency wallets.
GMX offers low swap fees and zero price impact trades, providing a seamless trading experience. Trades are carried out through a native pool called GLP, which backs various assets and earns commissions for liquidity providers. In addition, GMX uses Chainlink oracles for dynamic pricing by aggregating prices from other exchanges with high trading volume.
The GMX exchange was first launched on the Arbitrum One blockchain in September 2021, when the network itself went live. Arbitrum is a second-level Ethereum rollup. It was designed to improve the speed and scalability of Ethereum smart contracts. Later, in January 2022, GMX was deployed on Avalanche, another fast EVM-compatible blockchain.
How GMX works
Trading on GMX is carried out through a pool called GLP with support for various assets. This pool consists of 50-55% stablecoins, 25% ETH, 20% BTC, and 5-10% other altcoins such as Chainlink and Uniswap.
The pool is replenished with liquidity when users create GMX Liquidity Provider (GLP) tokens. In exchange for creating GLP, they receive 70% of all fees generated on this blockchain. Unlike some liquidity pools, GLP does not incur volatile losses.
Anyone can become a liquidity provider for this pool and earn commissions. Users trading perpetual swaps or making spot trades will be able to use the assets in the pool. Moreover, the GLP pool acts as a counterparty to traders: GLP token holders provide the liquidity used for leveraged trading. They make profits when traders make losses, and vice versa.
The GLP token can be created using any of the index assets and burned to redeem any index asset. Unlike GMX tokens, it is automatically staked and is not transferable. Arbitrum and Avalanche's pricing, rewards and GLP index composition differ.
What is GMX token
GMX is a utility and governance token. GMX owners can participate in voting and put forward proposals for changes, influencing the further development of the exchange.
Token holders who stake GMX also receive three other rewards that the protocol distributes to reward users. Firstly, 30% of all commissions generated by the puncture are distributed among GMX stakers. These fees are charged for performing market making, swaps and leveraged trading and are paid out in ETH or AVAX.
Secondly, stakers earn GMX tokens from escrow services (esGMX). esGMX tokens can also be locked or staked to receive rewards. When locked, tokens are converted back to GMX after 12 months. Thus, issuing esGMX is a form of locked-in staking asset designed to prevent inflation and the immediate sale of GMX.
Finally, stakers earn multiplier points that increase returns and rewards for long-term holders without increasing token inflation. These dual incentives reward loyal GMX users and promote decentralized ownership on the platform.
The maximum supply of the GMX token is 13,250,000 coins, of which 8,200,000 are in circulation (that is, more than 83% of the tokens).
What makes GMX unique?
Trading system
GMX allows you to open leveraged positions through a simple swap interface similar to traditional trading platforms. In addition, GMX is a self-sufficient and trustless system that allows anyone to trade cryptocurrency directly from their wallets.
The dual exchange model supports both spot swaps and leveraged perpetual swap trading. The use of GLP asset pools allows for increased efficiency in the use of capital, generating additional returns on deposits.
GMX allows you to enter and exit trading positions without affecting the price of the asset. This system provides traders with better entry prices than some exchanges with order books, where slippage may be an issue. GMX also uses oracles from Chainlink and other price channels to smooth out price fluctuations and protect positions from temporary liquidation wicks.
Ecosystem
GMX values its community and strives to involve DeFi users in the design and development of trading tools.
Tools created by the community include the Telegram bot for position management, the gmx.house rating, the gmxstats.com page, the Dune Analytics control panel, as well as calculators for traders, stakers and liquidity providers. GMX is actively developing collaborative projects as well as DeFi solutions using compatible GMX blocks.
The community also develops communication within the GMX ecosystem. For example, The Blueberry Pulse, a weekly community-driven newsletter, highlights what's happening in the GMX ecosystem. For users who want to hear news in audio format, the Blueberry Podcast is available.
How to use GMX
Trade
The GMX trading interface is displayed next to the price chart. To start trading with leverage, select the Long (long position) or Short (short position) option. Simple spot swaps are also available on GMX at low prices. Go to the Swap tab to open the interface for swapping tokens in the GLP pool.
The first token is the collateral that the user provides, and the token below is the tradable asset. The leverage slider shows how much you are borrowing from the GLP pool. Users have access to limit orders, as well as take profit and stop loss orders.
Open trades will be displayed in the Positions section. To deposit or withdraw your deposit, click on the Edit button. There is a fee of 0.1% of the position size for opening and closing a leveraged trade. Traders also pay hourly fees for borrowing. The size of the commission depends on the use of funds. Detailed instructions can be found on the trading help page.
Staking
To stake GMX tokens and receive rewards, you need to connect your wallet and click the Stake button.
After confirming on-chain transactions in your wallet, you will begin to receive 30% of all GMX protocol commissions, as well as esGMX and Multiplier rewards points.
In the GMX UI, the Total Rewards section will display the three reward types with all changes. To stake received rewards and increase profitability, click Compound.
How to Buy GMX on Binance
GMX can be purchased on cryptocurrency exchanges such as Binance.
1. Log into your Binance account, click on “Trading” and then “Spot”.
2. Enter "GMX" in the search bar to see a list of available trading pairs. We will use GMX/BUSD as an example.
3. Go to the “Spot” tab and enter the amount of GMX you want to purchase. In this example we will use a market order. Click “Buy GMX” to confirm the order and the purchased coins will be transferred to your spot wallet.
The future of GMX
GMX's own decentralized autonomous organization (DAO) called GMX DAO has planned its roadmap as part of its internal governance process. GMX aims to become an even more advanced and user-friendly DEX for on-chain leveraged trading. The roadmap currently includes:
Synthetic assets
Synthetic assets will become a new class of tokens available on the exchange. The value of synthetic crypto assets is based on the value of their underlying assets, such as stocks, commodities or digital currency. They are essentially digital representations of derivatives.
Convenient user interface
GMX is committed to improving the user interface (UI) and experience (UX) for users. In particular, it is planned to integrate TradingView charts in the future.
X4: protocol-driven exchange
In the longer term, GMX is expected to become a cutting-edge automated market maker (AMM) that will allow other DeFi projects to build liquidity pools on top of it and freely customize their pool features. In the future, these projects will be able to regulate user behavior when buying and selling tokens, as well as when adding and removing liquidity from pools.
Network expansion
GMX also plans to deploy the exchange on a third blockchain network, along with Arbitrum and Avalanche.
Summary
Cryptocurrency trading has come a long way. GMX allows any owner of a cryptocurrency wallet to use the services of a transparent decentralized exchange. Traders can use this platform for perpetual swaps and as a spot exchange. In turn, holders of GMX tokens have access to various benefits, as well as the opportunity to participate in governance through voting. In other words, the future of the platform is determined by the GMX community, so new services can be added in addition to the solutions already available on the exchange.
