Brief Summary
GMX; It is a decentralized, permissionless long-term swap and spot exchange. Traders can use GMX to easily trade on-chain cryptocurrency by simply connecting their wallet. GMX has a native token called GMX, which serves as a governance, utility, and value accumulation token for the GMX protocol. In addition to being able to stake GMX tokens and earn a portion of GMX's protocol fees, users can also benefit from other incentives. GMX currently supports Arbitrum and Avalanche networks.
Entrance
Blockchain and the use of this technology for finance have enabled the development of decentralized finance (DeFi). Widespread recognition of DeFi began in 2020 with the “summer of DeFi.” Now GMX shows that leveraged long-term and spot exchange trading is possible in a decentralized manner. The trading experience resembles the functions of centralized exchanges, but transactions are made directly through a personal cryptocurrency wallet.
What is GMX?
GMX is a decentralized spot and long-term contract exchange that allows users to buy and sell BTC, ETH and other popular cryptocurrencies directly from their crypto wallets. GMX users can trade spot swaps and longs with up to 50x leverage, similar to centralized exchanges. However, unlike centralized exchanges, they keep control of their assets because they carry out their transactions through a cryptocurrency wallet.
GMX aims to provide a better trading experience with low exchange fees and zero price impact transactions. Trades are executed through the platform's native multi-asset pool GLP, which earns commissions for liquidity providers. Additionally, GMX uses Chainlink Oracles for dynamic pricing to aggregate prices from other high-volume exchanges.
GMX was first made available on the Arbitrum One blockchain when the network went live in September 2021. Arbitrum is an Ethereum layer-2 rollup, a solution designed to increase the speed and scalability of Ethereum smart contracts. In January 2022, GMX was also deployed on Avalanche, a high-speed and EVM-compatible blockchain.
How Does GMX Work?
Trades on GMX are handled by a multi-asset pool called GLP. The pool consists of 50-55% stablecoins, 25% ETH, 20% BTC, and 5-10% other altcoins such as Chainlink and Uniswap.
Liquidity is added when users mine GMX Liquidity Provider Tokens (GLP). In exchange for GLP mining, 70% of all fees generated from that blockchain go to users. Unlike some liquidity pools, GLP does not experience temporary losses.
Anyone who wants can provide liquidity to this liquidity pool and earn commissions in return. Users who wish to engage in long-term swaps or spot trading can do so using the assets offered. Moreover, since GLP token holders provide the liquidity used for leveraged trading, the GLP pool is the counterparty with which investors trade, and when the investor loses, the pool profits and vice versa.
The GLP token can be mined using any of the index assets and burned to redeem any index asset. Unlike GMX token, it is not automatically staked and cannot be transferred. GLP's price, rewards and index composition differ from Arbitrum and Avalanche.
What is GMX Token?
GMX token is a utility and governance token. Token holders can use this token to vote on proposals that will help decide the future direction of the exchange.
Token holders who stake their GMX receive three more rewards that the protocol uses to reward users. First, 30% of all protocol commissions earned are distributed to GMX stakers. These commissions are collected from market making, exchange fees, and leveraged trading and are paid in ETH or AVAX.
Secondly, stakers earn from escrowed GMX (esGMX) tokens. It is also possible to hold these esGMX tokens or stake them for rewards. When tokens are held by the user, they are converted back into GMX within 12 months. So, esGMX emissions are a form of locked staking that prevents inflation and prevents people from immediately selling their GMX.
Finally, those who stake earn Multiplier Points, which increase their returns and reward those who hold their tokens long-term without contributing to inflation. This dual incentive encourages loyalty to GMX and furthers decentralized ownership of the platform.
GMX token has a maximum supply of 13.25 million, of which 8.2 million are in circulation. More than 83% of tokens in circulation are currently staked.
What Makes GMX Unique?
trading system
GMX allows traders to open leveraged positions through a simple trading interface similar to traditional trading platforms. In addition, GMX is user-controlled and trustless, meaning anyone can buy and sell cryptocurrencies directly from their private wallets.
The dual exchange model supports both spot swaps and leveraged trading with long-term swaps. This model increases capital efficiency as the GLP pool utilizes assets at a high level, allowing user funds to generate extra returns and not remain idle.
GMX allows entering and exiting trading positions without having an impact on the price. This design can help traders get better entry prices compared to some order book-based exchanges, which can be problematic with slippage. GMX combines Chainlink Oracles and other price feeds to smooth out price fluctuations and protect positions from temporary liquidation wicks.
Ecosystem
GMX emphasizes the importance of community and has sought to foster DeFi's mindset of engagement and tool development among its users.
Community-created tools include a Telegram position bot, gmx.house leaderboards, gmxstats.com page, Dune Analytics Dashboards, and calculators useful to traders, stakers, and liquidity providers. A growing number of partner projects are developing DeFi functionality by leveraging GMX's composable elements.
The community also takes care of communication about the GMX ecosystem. For example, The Bluebell Pulse, a weekly newsletter produced by the community, sheds light on developments in the GMX ecosystem. The Blueberry Podcast does the same thing in audio format.
How to use GMX?
Purchase and sale
GMX's trading interface is located next to the price chart. To initiate a leveraged trade, choose between "Long" and "Short" options. Simple, low-fee spot swaps are also available on GMX. Click the "Swap" tab to open the interface to switch between tokens in the GLP pool.
The first token is the collateral you offer, and the one underneath is the asset you are trading with. The Leverage slider shows how much you borrow from the GLP pool. Besides limit orders, you can also use take profit and stop loss orders.
Open trades will appear under the "Positions" section. You can click the “Edit” button to deposit or withdraw collateral. To open and close a leveraged trade, you must pay a fee of 0.1 percent of your position size. Investors also pay a usage-based, hourly borrowing fee. You can find detailed instructions on the 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 transaction on-chain in your wallet, you start earning 30% of all GMX protocol fees, as well as esGMX and Multiplier Points incentives.
Under the “Total Rewards” section in the GMX user interface, you can clearly see that three types of rewards have increased. You can click the "Compound" button to stake the rewards you earn and compound your returns.
How to Buy GMX on Binance?
You can buy GMX from cryptocurrency exchanges like Binance.
1. Log in to your Binance account and click [Buy-Sell] -> [Spot].
2. Type "GMX" in the search bar to see available trading pairs. Here we will use the GMX/BUSD pair 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 a market order. Click [Buy GMX] to confirm your order. The GMX you purchase will be deposited into your Spot Wallet.
What awaits GMX?
GMX's own decentralized autonomous organization (DAO), GMX DAO, has planned its roadmap through its own internal governance process. GMX's vision is to become an even more complete and user-friendly DEX for on-chain leveraged trading. The current roadmap includes:
synthetics
Synthetics will be a new class of tokens that will be available on the exchange. Synthetic cryptoassets derive their value from any underlying asset such as stocks, commodities, and digital currencies. These are essentially digital representations of derivatives.
Better user interface and user experience
GMX is working to improve the user interface (UI) and user experience (UX) of the protocol. For example, TradingView charts are planned to be integrated into the platform.
X4: Protocol Controlled Exchange
GMX's longer-term vision is to become an advanced automated market maker (AMM) that allows other DeFi projects to build on top of its liquidity pools and can fully customize the functionality of its pools. These projects will then be able to define any custom approach they want to buying, selling, adding and removing liquidity.
Expand the network
GMX plans to make the exchange available on a third blockchain network alongside Arbitrum and Avalanche.
Last word
Cryptocurrency trading has come a long way. GMX allows anyone with a cryptocurrency wallet to benefit from transparent decentralized exchange services. First, investors can use GMX's long-term swaps and spot exchange platform. Secondly, by owning GMX tokens, one can benefit from various advantages and have a say in governance. As we mentioned before, the future of the platform is decided by the GMX community. Therefore, new services can be added to the services the exchange currently offers.
