Do you really know Arbitrum, if you do not know its dominant player?
#realyield generating blue-chip DeFi protocol
Low-cost swaps and perps trading w up to 50x leverage
>200,000 users, >$90B in traded volume
I. GMX Overview
- A decentralized spot and perps exchange on #Arbitrum and #Avalanche
- Users can do spot swaps and trade perps w up to 50x leverage, low swap fees, and zero price impact
- GLP, a native multi-asset pool, facilitates market making, low swap fees, and lev. trading
- Uses #Chainlink Oracles to aggregate prices from leading volume exchanges
- Has multiple integrations with other DeFi protocols, and also bots to help users track various metrics (e.g., trading stats, positions, staking, fees etc.)
II. Features
Why should traders choose GMX?
Reduction in liquidation risks
#Chainlink Oracles’ high-quality price feeds smoothen out price fluctuations which keeps positions safe from temporary wicks.
Low costs
Users can enter/exit positions w minimal spread and zero price impact, at no additional costs.
Simple
$GMX has a simple swap interface for a smooth UX.
Self-custodial and trustless
Users can trade directly from their wallet.
III. Tokenomics
$GMX token distribution
Forecasted max supply - 13.25M
XVIX and Gambit migration – 6M
#Uniswap liq. – 2M
esGMX rewards – 2M
Floor price fund – 2M
Marketing, partnerships and community developers – 1M
Contributors – 250K (distributed linearly over 2yrs)
$GMX token utility
Native governance and utility token of the GMX protocol
$GMX token holders have governance rights, and can stake their $GMX tokens for #realyield
$GMX token accrues 30% of platform generated fees.
Staked GMX receives 3 types of rewards:
Multiplier Points (MP)
$ETH / $AVAX rewards
Escrowed GMX (esGMX)
Floor price fund
- Helps to ensure liquidity in GLP and provide a reliable stream of $ETH rewards for all staked $GMX
- The GMX token has a floor price fund composed of $ETH and $GLP, which grows in 2 ways:
1) $GMX/$ETH liquidity is provided and owned by the protocol, the fees from this trading pair will be converted to $GLP and deposited into the fund
2) 50% of funds received from Olympus bonds are sent to the fund, the other 50% for marketing
- As the floor price fund grows, it can also be used to buyback and burn $GMX if the avg. floor price fund $GMX price < market price, leading to a min. price for $GMX
$GLP token
- Liquidity provider token of $GMX protocol which is minted when users deposit their assets into GLP (index of assets)
- $GLP holders earn esGMX rewards, and 70% of the platform fees distributed in $ETH/$AVAX
- GLP is the source of Protocol-owned-liquidity (POL), which is used for swaps and leverage trading
- When traders are profitable, GLP value ↓
- When traders are losing, GLP value ↑
IV. Rewards
Escrowed GMX (esGMX)
- Can be staked for rewards similar to regular $GMX tokens
- Vested over a year to convert into $GMX tokens
- When vesting is initiated, the average amt. of $GMX/$GLP tokens that was used to earn the $esGMX rewards will be reserved
- $esGMX tokens that have been unstaked and deposited for vesting will not earn rewards
- $GMX, $esGMX and MPs can be used interchangeably for the required reserve amount
Multiplier points (MP)
- Used to reward long-term holders w/o any inflation
- $GMX stakers receive MPs every second at a fixed rate of 100% APR
- Can be staked for fee rewards
- When $GMX or $esGMX tokens are #unstaked, the proportional amt. of MPs is burnt
A summary of rewards and mechanics:
$GMX: Earns $ETH / $AVAX, esGMX, Multiplier Points when staked
$esGMX: Earns $ETH / $AVAX, esGMX, Multiplier Points when staked
Multiplier Points: Boost $ETH / $AVAX APRs when staked
$GLP: Earns $ETH / $AVAX, esGMX, auto staked on mint
V. TL;DR
GMX protocol is a decentralized swap and perps trading protocol on Arbitrum and Avalanche
With GMX, traders can get trade with low costs, a simple interface, reduction in liquidation risks, all from their own private wallet.
$GMX is the native governance and utility token, which can be staked to receives 3 types of rewards: esGMX, Multiplier points, and $ETH/$AVAX.
$GLP is the liquidity provider token which earns esGMX rewards and 70% of platform fees in $ETH/$AVAX.
$esGMX can be staked for similar rewards as $GMX, and can be vested into $GMX tokens.
Multiplier points help to boost the $ETH/$AVAX APR for staked $GMX.
VI. Concluding thoughts
- GMX has proven itself to be a successful protocol in terms of tokenomics and operational model
- I believe perps trading will be around in the future, and $GMX can still take a larger slice of the pie even though there are new competitors
- #realyield generation helps to ease investors as the protocol is not thriving on ponzinomics.
- Introducing new trading pairs + asset classes would help to strengthen its product suite and user retention rate.
- With a huge dominance on Arbitrum + real yield generation, there are many protocols which have been launched to take advantage of $GLP.
While it is great that there are beneficial network effects, conversely, the contagion effect could be detrimental.
