Analyze the advantages and potential of GMX and GNS from four aspects: protocol, adoption, profitability and potential

Written by: DAOtopia
Compiled by: TechFlow
 
The narrative of real returns and DEX trading has attracted a lot of attention recently.
 
Many protocols and forks have emerged on the chain ($MVX, $OPX, ..), but how can we tell which one is the most innovative and which one has the most potential?
 
In this series, we introduced GMX and GainsNetwork, and now it’s time to compare these two heavyweights. We will mainly discuss here:
protocol;
use;
Profitability;
potential;
 
First, what is $GMX?
 
$GMX is a spot and perpetual DEX that has a volume of $66 billion and redistributes its fees ($87 million) to token holders.
 
So, what is $GNS?
 
Gains Network is a synthetic asset trading DEX that allows trading stocks, cryptocurrencies, and forex with leverage (up to 1000x).
 
protocol
Their main difference lies in the product, $GMX relies on perpetual and spot trading, while $GNS relies on synthetic asset trading. Perpetual and spot trading require a liquidity pool to trade, which is why $GLP exists. (And can face impermanent loss)
 
However, it limits the number of tradable assets due to the need for liquidity.
 
Contrary to $GMX, $GNS chose synthetic assets that do not require liquidity pools. They can list as many tokens as they want, which improves capital efficiency.
 
Synthetic assets and FX/stock trading offer new opportunities for traders as it does not require any tokenization, liquidity pools, or third-party interactions.
 
The limitation of synthetic assets is the need for data providers, as prices are not determined by quotes/demands on the platform. $GNS integrates a powerful data streaming strategy that enables them to face fraud or price manipulation.
 
$GMX faced and solved this problem a few weeks ago.
 
use
Now let’s look at the adoption of both platforms. $GMX currently has the highest user adoption, they claim to have over 140k total users. GNS has over 8k unique users, with around 300 daily active users.
 
$GMX has a considerable advantage over $GNS as it was one of the first projects to start the DEX perpetual trading narrative, as well as being the largest project on Arbitrum, which is thriving.
 
Profitability
Both protocols are breaking records in TVL, daily volume, and yield, let’s break it down.
 
$GMX’s total trading volume reached a staggering $66 billion, while $87 million in fees were collected (0,1% of position value) and redistributed to holders of $GMX (30%) and $GLP (70%).
 
The $GMX token market cap is currently $328 million, while $GLP has $382 million in its pool.
 
The P/E ratio (market cap divided by revenue, year-over-year) is 4x, but 70% of fees go to $GLP, which increases GMX’s P/E ratio (staking market cap divided by stakeholder revenue) to 11.8x.
 
$GNS achieved $20 billion in trading volume while collecting $14 million in fees (0.08% of position value), of which 32.5% was redistributed to $GNS stakers/LPs.
 
GNS's market capitalization is currently $113 million. The P/E ratio is equal to 18.1 times.
 
Both protocols have nice P/E ratios, which makes them quite attractive.
 
GMX collects more fees from traders but redistributes them to holders, while GNS collects less fees but only redistributes 32% (to LPs and stakers).
 
potential
Now that we have our main metrics, it’s time to determine which project has more potential.
 
Both projects have great potential because they do not have any venture capital funding and enter the category of real-return narratives, which makes them extremely sustainable. Both are DEXs that allow leveraged trading without KYC and third-party dependencies. The recent FTX incident has attracted a lot of users who are worried about the misbehavior of centralized institutions.
 
Although $GNS is more centralized, the team is extremely engaged and community-oriented.
 
However, $GNS offers more than 70 trading pairs, forex, stock trading, and up to 1000x leverage, while $GMX only has 8 trading pairs and 30x maximum leverage.
 
To compete, $GMX is planning to open up synthetic assets and options trading in the future.
 
$GMX is built on Arbitrum, but $GNS is not far behind and plans to join the chain soon to grab a piece of the market.
 
Now you have basically all the necessary information about both protocols to discern which one has the most potential, whether in terms of fundamentals, financials, or communication strategy. But this article is not intended to provide financial advice, both protocols have their pros and cons, so remember to DYOR before investing.
 
Original link