GMX is a decentralized permanent exchange with up to 50x leverage.
In this post, we will explore what GMX is, review the GMX and GLP tokens, and show you how to use this exchange.
What is GMX?
Launched in September 2021, GMX is a perpetual trading platform for top cryptocurrencies.
In contrast to decentralized spot exchanges, you trade with GMX with perpetual securities. You are not actually buying or selling a token. Instead, you post collateral and can take long and short positions. Upon settlement, profit is paid in USDC (for short positions) or the other token of the pair (for long positions).
At GMX you get leverage of up to 50x.
Coupled with zero price impact transactions, limit orders and low swap fees, GMX became a magnet for Degens. Especially those trying to qualify for a possible arbitrum airdrop.
Market prices are based on Chainlink’s oracles, which aggregate price feeds from leading exchanges. This protects positions from being liquidated due to random ticks at a single automated market maker.
This made GMX the top dapp on TVL’s Arbitrum and the leading perpetual exchange in the DeFi space. Total trading volume surpassed $80 billion in December 2022.
The overall value of GMX rose in the bear market. Source: DeFiLlama
The founding team
GMX is founded by Anons.
The protocol started as a merger of XVIX and Gambit, which turned their tokens into GMX. One of the publicly available developers is X.
While a completely anonymous team might pose a risk, it also protects the dapp from regulations and frivolous lawsuits.
How does GMX work?
GMX isn’t the first decentralized derivatives market, but it has many unique features that other projects lack.
The core feature of GMX is a community-run “unionized” liquidity pool – the GLP pool. GLP is an index used to provide liquidity for leveraged trading. GLP holders earn when traders lose (leverage makes it easy!) and vice versa.
Traders lost to GLP holders. Source: GMX statistics
Traders on GMX benefit from zero price impact trades and pay two types of fees:
- Trading fee of 0.1% of the position size for opening a trade
- “Loan Fee” equals (Borrowed Assets)/(Total Assets in Pool) * 0.01% per hour
This borrowing fee depends on the usage of the asset: it is lower for less popular assets and higher for more popular assets.
All platform fees are shared between GMX and GLP token holders:
- 30% to GMX players
- 70% to GLP owners, i.e. liquidity providers.
GLP, the liquidity provider token
GLP is an LP token to provide liquidity to traders.
You can buy GLP tokens with any asset that is in the liquidity pool: USDC, WETH, WBTC, DAI, etc.
The fee depends on what is in the liquidity pool. It is cheaper to buy GLP with index stocks that are in demand by the market but are underrepresented in the pool.
GLP on Arbitrum and Avalanche are different tokens. They have different compositions, different prices and cannot be bridged.
GLP composition. Source: https://www.gmxstats.com/
Importantly, earnings for GLP holders are not based on GMX emissions.
The GMX token
GMX is the governance token for the GMX ecosystem.
A maximum supply of 13.25 million is expected (but it could still be increased). The total supply is currently around 8.2 million tokens, 85% of which are staked.
Use GMX
There are three types of rewards for wagered GMX tokens:
- Escrowed GMX tokens (esGMX tokens) that come from liquidity incentives and are gradually transferred
- Variable ETH and AVAX APR from the 30% of fees generated by leveraged trading
- Multiplier points that increase APRs and encourage long-term bets
How can you use GMX?
The GMX exchange is a viable Web3 alternative to centralized exchanges. It allows you to both trade and earn by providing liquidity for market making.
Trading with leverage
There is no registration process, no account, all you need is a wallet!
With zero price impact transactions and a user-friendly interface, GMX could be a great way to satisfy your dagger itch without visiting a centralized exchange.
Thanks to the low fees at Arbitrum and Avalanche, the leveraged trading experience is close to what you could get on a CEX. But be careful with leverage.
Zerion Wallet dapp browser allows you to trade on GMX on mobile
Use GMX to earn a return
By using GMX tokens, you can earn a compounding yield and increased rewards.
However, the GMX token is not covered by anything. Its price depends entirely on supply and demand. However, there is a minimum price fund to support the GMX price in terms of ETH and GLP.
GMX yield is ~10% in ETH before any increases.
Provision of liquidity with the GLP pool
You can get a “real yield” by trading any token into the GLP pool.
The GLP pool is backed by assets in a transparent manner. The return comes from leveraged traders. But it’s not without risk: when traders win, GLP holders lose. Degens will lose on average, but a clever whale might find a way to exploit the model.
The GLP yield is ~19% in ETH. It is not fixed and will change.
Where can you buy a GLP pool?
You can only buy GLP from GMX.
Buy GLP on the GMX website
- Connect your wallet to GMX
- Go to the Buy GLP tab.
- Select the asset you wish to trade – it is cheaper if the asset is underrepresented in liquidity pools
- GLP is automatically staked
Zerion displays all staked tokens from your GLP index:
Track assets from your deployed GLP in Zerion Wallet
Where to buy GMX tokens?
You can buy GMX on one of the many decentralized exchanges.
Zerion Swap can help you find the best GMX price in all markets.
- Connect your wallet to the Zerion web app
- Go to the Zerion Swap tab or simply open your Zerion wallet
- Select GMX, the Arbitrum network and the token you want to pay with
- Approve and sign the transaction
Zerion can find you the best price for GMX
Once you have GMX in your wallet, you can use it to generate income.
How to use GMX
- Connect your wallet to GMX
- Go to the GMX Earn tab.
- Approve and sign the transactions
- Zerion displays your wagered GMX balance and pending rewards
Use GMX
With Zerion Wallet you can trade on GMX, join liquidity pools and stake your tokens to earn a return – all on mobile!
Try Zerion Wallet
FAQ
What are GMX and GLP tokens?
GMX tokens are used for governance and account for 70% of the total fees. GLP tokens are used by liquidity providers for the remaining 70% of fees.
GMX vs. GLP token
Is GMX a good investment?
It depends on your goals and risk tolerance. GMX offers an attractive rate of return, but it’s certainly not risk-free.
What is GMX? Who owns the GMX stock exchange?
GMX is a permanent exchange owned by the community of GMX token holders. The GMX team is completely anonymous and there are no verified outside investors.
Where can I get GMX tokens?
You can buy GMX on any of the cryptocurrency exchanges where it is listed. Zerion Swap can help you find the best rate for GMX on Arbitrum and Avalanche.
How do I use GMX tokens?
You can stake GMX tokens on the GMX platform to earn swap fees and leverage trading fees.
How to sell GMX crypto?
You can sell GMX on decentralized spot exchanges on the Arbitrum network. Alternatively, you can trade with Zerion’s trade aggregation.
What is a GLP token?
GLP is a token-backed index security for which GMX offers perpetual futures.
What is the GMX Blockchain?
The GMX Perpetual Exchange is used in the Arbitrum and Avalanche networks. GMX can be used to earn 70% of swap fees. With a total trading volume of over $80 billion, even low swap fees add up to decent earnings.
Fees Collected by GMX
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