In brief
GMX is a decentralized, permissionless spot and perpetual swaps exchange. Traders can use it to easily trade on-chain cryptocurrencies simply by connecting their wallets. GMX's native token is called GMX, which functions as a governance token, accumulating value for the GMX protocol. Users can stake GMX tokens and earn a portion of GMX's protocol fees, plus benefit from other incentives. GMX currently supports Arbitrum and Avalanche networks.
Introduce
The application of blockchain technology in the field of finance and cryptocurrency has allowed the development of decentralized finance (DeFi). Mainstream recognition of DeFi began in 2020 with what is known as “DeFi Summer.” Now, GMX has proven that leveraged spot and perpetual trading is possible in a decentralized fashion. This trading experience is similar to the functionality of centralized exchanges but done directly from a personal cryptocurrency wallet.
What is GMX?
GMX is a decentralized spot and perpetual exchange that allows users to trade BTC, ETH and other popular cryptocurrencies directly from their crypto wallets. GMX users can execute spot swaps and trade perpetual futures contracts with up to 50x leverage, similar to how it is done on centralized exchanges. However, as opposed to using a centralized exchange, they retain custody of their assets by using cryptocurrency wallets.
GMX aims to provide a better trading experience with low swap fees and price-neutral trading. Trading takes place through its native asset pool, GLP, which charges fees to liquidity providers. Additionally, GMX uses Chainlink Oracles for dynamic pricing to aggregate prices from other high-volume exchanges.
GMX first launched on the Arbitrum One blockchain when the network went live in September 2021. Arbitrum is a layer 2 compilation of Ethereum, a solution designed to increase the speed and scalability of Ethereum smart contracts. Then, in January 2022, GMX deployment continued on Avalanche, which is also a high-speed EVM compatible blockchain.
How does GMX work?
Trading on GMX is supported by a multi-asset pool called GLP. It consists of 50-55% stablecoins, 25% ETH, 20% BTC and 5-10% other altcoins, such as Chainlink and Uniswap.
Liquidity is added when users mint GMX Liquidity Provider Tokens (GLP). In exchange for minting GLP, they earn 70% of all fees generated on that particular blockchain. In contrast to some liquidity pools, GLP does not incur temporary losses.
Anyone can become a provider of this liquidity pool and earn fees in return. And users who want to trade perpetual or spot swaps can do so using the assets provided. Furthermore, GLP pools are traders' partners; Because GLP token holders provide the liquidity used for leveraged trading, they profit when traders lose — and vice versa.
GLP tokens can be created using any of its index assets and burned for any index asset. Unlike GMX tokens, GLP tokens are automatically staked and cannot be transferred. GLP's price, rewards, and index composition vary between Arbitrum and Avalanche.
What is GMX Token?
GMX token is a utility and governance token. Holders of this token can use it to vote on proposals to help decide the future direction of the exchange.
Holders who stake their GMX also receive three other rewards that the protocol uses to reward users. First, 30% of the total generated protocol fees will be distributed to GMX staking participants. These fees are collected from market making, swap fees and leveraged trading and are paid in ETH or AVAX.
Second, stakers earn escrowed GMX tokens (esGMX). These esGMX tokens can also be staked for rewards or given away. These tokens will be converted back to GMX within 12 months when users redeem them. Therefore, emitting esGMX is a form of locked staking that prevents inflation and people immediately selling their GMX.
Finally, stakers can earn Multiplier Points that increase profits and reward long-term holders without contributing to token inflation. These dual incentives stimulate commitment to GMX and enhance decentralized ownership of the platform.
The GMX token has a maximum supply of 13.25 million, with 8.2 million tokens in circulation. More than 83% of circulating tokens are currently staked.
What makes GMX unique?
Trading system
GMX allows traders to open leveraged positions through a simple swap interface, similar to traditional trading platforms. Additionally, GMX is self-governed and trustless, meaning anyone can trade cryptocurrency directly from their own wallet.
Its dual exchange model supports both spot swaps and leveraged perpetual swaps. This will improve capital efficiency due to the high asset utilization of the GLP pool, allowing user deposits to generate additional profits and not stagnate capital.
GMX allows entering and exiting trading positions without affecting the price. This design can help traders get better entry prices than some order book-based exchanges, which can have problems with slippage. GMX also uses aggregation of Chainlink Oracles and other price data feeds to smooth out price fluctuations, which can keep positions safe from temporary liquidation wicks.
Ecosystem
GMX emphasizes the importance of community and has sought to foster a DeFi mindset that is all about interaction and tool-building among its users.
Community-built tools include the Telegram position bot, gmx.house charts, gmxstats.com site, Dune Analytics Dashboard, and calculators that benefit traders, investors, and liquidity provider. The list of collaborative projects building DeFi functionality with GMX composable off-the-shelf components is growing.
The community is also responsible for communicating about the GMX ecosystem. For example, the community-driven weekly newsletter The Blueberry Pulse highlights developments in the GMX ecosystem. Blueberry Podcast is done similarly but in audio format.
How to use GMX
Transaction
GMX's trading interface is displayed next to the price chart. To start trading with leverage, click "Long" or "Short" to set your options. Simple, low-fee spot swaps are also available on GMX. Click on the "Swap" tab to open the exchange interface between tokens in the GLP pool.
The first token is the collateral you provide, while the token below is the asset you trade. The leverage slider shows how much you borrow from the GLP pool. Limit orders, as well as take profit and stop loss orders are available.
Open trades will appear in the "Positions" section. You can click “Edit” to deposit or withdraw collateral. Opening and closing leveraged trades costs 0.1% of your position size. Merchants also pay hourly loan fees that depend on usage. For detailed instructions, visit their trading help page.
Staking
To stake your GMX tokens and earn rewards, you need to connect your wallet and press the "Stake" button.
Once you confirm the online transaction in your wallet, you will start earning 30% of GMX's total protocol fees, plus esGMX and Multiplier Point incentives.
You will clearly see the three types of increased rewards in the "Total Rewards" section of the GMX user interface. You can click the "Compound" button to stake your earned rewards and compound your profits.
How to buy GMX on Binance
You can buy GMX on cryptocurrency exchanges like Binance.
1. Log in to your Binance account and click [Trade] -> [Spot].
2. Enter “GMX” in the search bar to see available trading pairs. We will use GMX/BUSD as an example.
3. Go to the [Spot] box and enter the amount of GMX you want to buy. In this example, we will use the market command. Click [Buy GMX] to confirm your order and the purchased GMX will be credited to your Spot Wallet.
Development direction of GMX
GMX's decentralized autonomous organization (DAO), GMX DAO, has planned its roadmap through an internal governance process. GMX's vision is to become a more complete and user-friendly DEX for on-chain leveraged trading. Current roadmap includes:
General assets
Synthetics will be a new type of token that will be available on exchanges. Synthetic crypto assets derive their value from any underlying asset, such as stocks, commodities or digital currencies. They are essentially digital representations of derivatives.
Better UI and UX
GMX strives to further improve the protocol's user interface (UI) and user experience (UX) for users. For example, they are planning to integrate TradingView charts into the platform.
X4: Protocol controlled exchange
GMX's longer time frame vision is to become an advanced automated market maker (AMM) that allows other DeFi projects to build on top of its liquidity pool and fully customize pool functions their. These projects can then specify any custom behavior they want when buying and selling tokens, as well as for adding and removing liquidity.
Expand your network
GMX also plans to launch an exchange on a third blockchain network, alongside Arbitrum and Avalanche.
summary
Cryptocurrency trading has come a long way. GMX allows anyone with a cryptocurrency wallet to benefit from its transparent decentralized exchange services. Firstly, traders can use spot and perpetual swap platforms. Second, users can enjoy various benefits and have a say in governance by owning GMX tokens. As we know, the GMX community decides on the future of the platform; Therefore, in addition to what this exchange already offers, new services can still be added.