Today let’s talk about a star project GMX. This project claims to be the king of on-chain contracts.

GMX is a decentralized exchange (DEX) for trading perpetual cryptocurrency futures. It currently has a total number of users of 283,000 and is the leading derivatives decentralized exchange on the Arbitrum and Avalanche chains. It currently ranks No. 1 on Arbitrum, with a locked-up amount of US$570 million, and ranks third on Avalanche, with a locked-up amount of US$76.94 million.

GMX currently ranks 80th in market capitalization in the entire web3 industry, with a circulating market capitalization of US$464 million, a circulating supply of 8,886,456 units, a total supply of 9,308,341 units, and not much unlocked supply. Only about 5% remains. It can be said that there is very little selling pressure.

The founding team of GMX is anonymous, so it is impossible to query the past information of the founder, so it is impossible to judge in this regard.

Currently, the number one GMX holding is Arthur Hayes. His average holding price is about 45. I have always shared with everyone that I should start building positions in batches below 60U. GMX once briefly fell to more than 40U, and then rebounded immediately. Indicates that the funds have voted for it. Following the big players is actually a kind of following the banker. With this price anchor, we don’t have to worry too much and are less likely to take orders above 60, which reduces the possibility of long-term losses.

Below I will briefly introduce some information about the GMX project for your reference.

GMX adopts the AMM (automatic market maker) model, where users and the asset pool are counterparties to each other.

In centralized exchanges, users are rivals. Unless the order volume is small, the exchange has to act as a user to take orders from its opponents to increase liquidity.

Therefore, the liquidity of GMX depends on LP providers, and the platform needs to consider the profitability of LP, so as to encourage more LPs to provide liquidity to the platform. So 70% of the revenue goes to LP providers.

The GMX platform adopts a zero-slippage mechanism. The counterparty to the transaction is a capital pool, and the quotation is provided by an oracle, which can quickly complete the transaction. Since it has zero slippage, traders can buy and sell at a more stable price, even if the transaction volume is high. Even when it is huge, its oracle's zero-slippage mechanism still ensures price stability. There is very little wear and tear, and this design gives GMX unlimited mobility. And there will be no price fluctuations due to a particularly large amount of user funds.

How to understand this? For example, if you want to buy 1 billion U.S. dollars, the inflow of such a large amount of funds in a normal exchange will immediately cause price fluctuations, but this will not happen in GMX. Its price is predicted and it is responsible for providing quotations.

Of course, this disadvantage is that it is vulnerable to attacks. For example, if the price is raised in the spot market, people who place orders on GMX can receive price feeds from the oracle and close their positions according to the latest quotation. This can easily cause LP Huge losses may be huge profits on the contrary. Easily exploitable by attackers. Therefore, if the currency is very small, it is not suitable for derivatives trading on GMX.

GMX also has a distinctive feature, that is, as long as you trade long and short on it, both parties have to pay funding fees. The funding rate is used to balance the price difference between the spot market and the futures market, but GMX cannot balance the power of long and short. When the market rises unilaterally, the long side has to pay the short side the funding rate, but there is no funding rate. Both parties have to pay the funding rate. This is a shortcoming criticized by many people, but it is not necessary in my personal opinion, because no one plays this to eat the funding rate. To put it simply, this is a decentralized on-chain casino, and anyone can Anyone can become a gambler by becoming a chip provider.

So here we can also draw a clear conclusion. In the world of gambling, gamblers are the source of profits for casinos and code dealers. Naturally, gamblers have a high probability of losing, and GLP has a greater chance of winning. In the long run, a single contract contract The winning rate is basically less than 40%. The probability of a gambler making money in a real casino is less than 20%.

In addition, GMX has a very good value capture capability. 30% of the platform fee is given to GMX pledgers, and the remaining 70% is given to GLP pledgers. GMX gives 100% of platform fees to token pledgers. The better the development of the platform, the higher the income of token holders. That is, the value of GMX tokens is deeply bound to the development of the platform. This is also The main reason for the increase in GMX price.

The tokens gained from staking GMX are not the GMX coins themselves, but ETH and AVAX. This design is very interesting, so GMX will not continuously release GMX due to staking, playing a one-sided matryoshka game. I still admire the structure of the project side. Of course, it’s not just that. When the project team designed it, for example, the assets used to form LP are required to have fair value before they can be used as collateral. This setting excludes gmx itself. The assets used to form GLP are The liquidity tokens are composed of several value coins such as BTC, usdc eth, LINKUNI, DAI, and USDT. And the ratio between stablecoins and non-stablecoins here is almost 1:1.

I predict that the market value of GMX will perform well in the next bull market. I currently think that DYDX will not be able to do so for the time being. It provides an innovation for on-chain perpetual transactions. However, the project party itself has not made any money from this. The project party can only hope to increase the market value of the currency, and later make profits by selling the currency. It can be said that it has done a good job at this point. If the project wants to make money, it must make the currency rise.

The above opinions do not constitute investment opinions and are intended for exchange and discussion with everyone. Increase awareness of the project.

I've finished writing, come on. I am the inspirational brother of Circle B.