Following the path of GMX, Kinetix aims to revolutionize the kava chain with perpetual swaps
Launched in early September 2021 as a decentralized, permanent exchange offering swaps and leveraged trading, GMX caused quite a stir in the DeFi community.
If you haven’t heard from GMX, we bring you up to date: The launch of GMX on Arbitrum has been seen as a major DeFi milestone. Aside from proving Arbitrum to be an effective scaling solution for Ethereum L2, GMX stood out for two important reasons:
- The first DEX and Perpetual market to be launched in the Arbitrum ecosystem.
- A common liquidity pool system minimizes the price impact on trades of any size without affecting the market price.
Within a month of launch, GMX increased its TVL to over $30 million, which translates to an average daily trading volume of about $1.4 million. GMX has evolved into a liquidity mining program, an NFT marketplace, and a yield farming platform. Its continued growth has given it a TVL of over $450 million and boasts a 24-hour trading volume of $1 million at the time of writing.
The growth and adoption of GMX also boosted the value of the GMX token. The GMX token market price on September 13, 2021 was $14.74. A month later it was $22.33. It’s $46.27 a year later and $36.66 at the time of writing — a price increase of more than 200% since launch.
Looking back, it’s safe to say that launching GMX on Arbitrum was a huge success. The demand for a decentralized perpetual market on Arbitrum was and is – high.
But why did a perpetual market and a common liquidity pool system affect Arbitrum’s growth? And what does that have to do with Kinetix and Kava Chain?
perpetual propulsion
The development of DEXs and derivatives markets (like perpetual swaps) in crypto provides developers with novel tools to drive DeFi and incentivize users for early adoption.
Kinetix Finance, a state-of-the-art v3 Perpetual DEX, brings the same potential to the Kava chain that GMX brought to Arbitrum. The flywheel effect works like this: the launch of the first DEX and perpetual market protocol in an ecosystem creates a positive market sentiment, which accelerates liquidity growth and user activity on the protocol and, in turn, on its ecosystem.
GMX offered Arbitrum users the flexibility of perpetual swaps with no expiration date, thereby attracting a larger pool of experienced and novice traders into the ecosystem, which helped increase liquidity and activity.
This resulted in an increase in TVL, reflecting increased capital allocation within the Arbitrum ecosystem. The non-expiring nature of GMX’s perpetual contracts resulted in higher trading volumes for these new users, who were able to adjust their positions without being tied to contract expiration dates.
This increased activity increased Arbitrum’s overall liquidity and motivated more people to join and participate in the Arbitrum ecosystem.
Why is Kinetix Finance ready to experience the same flywheel effect?
The Kinetix v3 DEX & Perpetual Market
The Kinetix team builds on their previous successful experience with Quickswap, the largest DEX on Polygon in over three years, peaking at ~1.5B in TVL and ~1B in 24-hour trading volume.
For their next project, they decided to build on top of Kava Chain, a Layer 1 blockchain that combines the speed and interoperability of Cosmos with the developer power of Ethereum.
Kinetix aims to be a one-stop DeFi hub, but its advanced tools also allow for the enabling of sophisticated trading strategies never before seen in the Kava or Cosmos ecosystems.
At launch, Kinetix will be a v3 DEX (similar to Uniswap v3), making it the first decentralized trading venue with a common liquidity system. But for power users, there will also be a perpetual swaps market (based on QuickPerps, a GMX fork) for leveraged trading.
The Kinetix Perpetual Market offers advanced traders access to powerful trading strategies and benefits including:
- Margin Trading: Trade with up to 50x leverage for bigger profits (or losses).
- Copy Trades: Learn from the best by copying other traders’ trades.
- Hedging: Reduce risk by taking opposite positions in different assets.
- Safer Liquidations and Better Price Execution: Dynamic liquidation price, frequent price updates, and more efficient keeper bots.
- No Hidden Spread: No mark-up on asset prices.
- Assets that can be used across multiple assets: Entry and exit from positions with different assets.
- Intuitive Interface: User-friendly interface for easy trading with robust analytical charts.
- No Slippage and Zero Impact Trades: Get the price you want when you place an order.
- Reduced liquidation risks: fraud wick protection, circuit breaker and dynamic liquidation price.
- Built-in temporary loss protection: Protect your liquidity provider’s positions against temporary losses.
- Long and Short Positions: Reduce volatility and balance the market.
- Improved pricing for underlying assets: Traders can trade 24/7, resulting in better liquidity and more accurate pricing.
At launch, Kinetix will support $KAVA and $USDT, with more assets like $wBTC and $wETH to be added soon.
Is Kinetix the Next GMX?
While it’s impossible to capture lightning in a bottle, the Kinetix team’s previous experience with Quickswap and Quickperps (a GMX fork) has direct experience with it, which has contributed to its success.
Kinetix launches with the same two main factors as Quickswap: it is the first shared liquidity DEX and the first perpetual swap market in the Kava Chain and Cosmos ecosystems. Only time will tell if the same results will materialize.
Ultimately, DeFi aims to transform global TradFi systems and bring financial inclusion, transparency, and innovation to the world.
But you don’t just “transform” traditional financial systems.
Central banks, commercial banks, and stock exchanges have a firm grip on the accounts, wallets, and piggy banks of most people looking to save money or build wealth. People trust the authority of the big TradFi brands. They know how they work, feel safe and protected by ancient regulations, and apply them almost without a second thought. You don’t know any different.
But while TradFi has our finances firmly in its grip, many belligerent degens, developers, and early adopters are taking the risk and building or using cutting-edge DeFi protocols like GMX and Kinetix to make this future a real possibility. Some find the risk/reward tradeoff to be worth it; some not.
With all the risks that come with building and using DeFi early on, the reward — alongside potential financial benefits — is that the sum of all activity and liquidity flowing from TradFi to DeFi shows the rest of the world what escapes them.
- Follow Kava Chain and Kinetix on X (formerly Twitter) for the latest updates and announcements.
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