What is GMX?

Résumé
GMX is a decentralized and permissionless Spot and perpetual swaps exchange platform. Traders can use it to easily trade cryptocurrency on the blockchain by connecting their wallet. GMX has a native token called GMX, which functions as a governance, utility, and value accumulation token for the GMX protocol. Users can stake GMX tokens and earn a portion of the protocol fees, while benefiting from other incentives. GMX currently supports the Arbitrum and Avalanche networks.
IntroductionBlockchain and its application to finance, cryptocurrencies, have enabled the development of decentralized finance (DeFi). Widespread recognition of DeFi began in 2020 with the so-called "Summer of DeFi." Today, GMX demonstrates that it is possible to trade spot and perpetual swaps with effect of leverage in a decentralized manner. The trading experience resembles the functionality of centralized exchange platforms, but takes place directly from a personal cryptocurrency wallet.
What is GMX?GMX is a decentralized spot exchange and perpetual swaps platform that allows users to trade BTC, ETH and other popular cryptocurrencies directly from their wallets. GMX user can spot swap and trade perpetual futures contracts with up to 50x leverage, just like on a centralized exchange platform. However, unlike using a centralized exchange platform, they retain custody of their assets by using a cryptocurrency wallet.
GMX aims to provide a better trading experience through low swap fees and zero price impact trades. Trading is done through its multi-asset pool, GLP, which charges fees for liquidity providers. Additionally, GMX uses Chainlink oracles for dynamic pricing to aggregate prices from other high-volume exchanges.
GMX was first launched on the Arbitrum One blockchain when the network went live in September 2021. Arbitrum is a Layer 2 Ethereum Rollup, a solution designed to increase the speed and scalability of Ethereum smart contracts. Later, in January 2022, GMX deployment continued on Avalanche, which is also a high-speed and EVM-enabled blockchain.
How does GMX work?Trading on GMX is facilitated by a multi-asset pool called GLP. It consists of 50-55% stablecoins, 25% ETH, 20% BTC, and 5-10% other altcoins, such as Chainlink and Uniswap.
Liquidity is added when users mint GMX Liquidity Provider (GLP) tokens. In exchange for this issuance, they earn 70% of all fees generated on this blockchain. Unlike some liquidity pools, the GLP does not suffer any non-permanent losses.
Anyone can become a provider of this liquidity pool and, in return, earn fees. Users who wish to trade perpetual or Spot swaps can do so using the provided assets. Additionally, the GLP pool is a trader counterparty; Because GLP token holders provide the liquidity used for leveraged trading, they make gains when traders lose, and vice versa.
The GLP token can be issued using any index asset and burned to redeem any index asset. Unlike the GMX token, it is automatically staked and is not transferable. The price, rewards, and index composition of GLP differ between Arbitrum and Avalanche.
What is the GMX token?The GMX token is a utility and governance token. Token holders can use it to vote on proposals that will help decide the future direction of the exchange.
Token holders who stake their GMX also get three other rewards, which the protocol uses to reward users. First, 30% of all protocol fees generated are distributed to GMX stakers. These fees are levied on market making, swap fees, and leveraged trading, and are paid in ETH or AVAX.
Second, stakers earn locked GMX tokens (esGMX). These esGMX tokens can be staked for rewards or locked. Tokens are converted back to GMX over a 12-month period when the user locks them. Therefore, esGMX issuance is a form of locked staking that prevents inflation and people from immediately selling their GMX.
Finally, stakers earn multiplier points which increase their yield and reward long-term holders without contributing to token inflation. These two incentives drive engagement with GMX and promote decentralized ownership of the platform.
The GMX token has a maximum supply of 13.25 million tokens, of which 8.2 million are in circulation. More than 83% of tokens in circulation are currently staked.
What makes GMX unique?The trading systemGMX allows traders to open leveraged positions through a simple swap interface, which resembles traditional trading platforms. Additionally, GMX is self-custodial and trustless, meaning anyone can trade cryptocurrencies directly from their private wallet.
Its dual trading model allows trading spot swaps and perpetual swaps with leverage. This is expected to improve capital efficiency due to the high asset utilization of the GLP pool, which allows user deposits to generate additional yield and not remain idle.
GMX allows you to enter and exit trading positions without impacting prices. This design can help traders get better entry prices than some order book-based exchanges, which can have slippage issues. GMX also uses a Chainlink oracle aggregate and other feeds to smooth price fluctuations, which can protect positions against temporary liquidation wicks.
The ecosystemGMX emphasizes the importance of community and has strived to encourage the DeFi mindset of engagement and tool building by its users.
Community-developed tools include a Telegram positions bot, the gmx.house leaderboard, the gmxstats.com page, Dune Analytics dashboards, and calculators that benefit traders, stakers, and providers. liquidity. GMX has a growing list of collaborative projects building DeFi functionality with GMX's composable Lego blocks.
The community also takes care of communication on the GMX ecosystem. For example, the weekly community newsletter The Blueberry Pulse highlights developments in the GMX ecosystem. The Blueberry podcast does the same in audio format.
How to use GMXTradingThe GMX trading interface is displayed next to the price chart. To initiate a leveraged trade, click “Long” or “Short” to set your preference. Simple and inexpensive Spot swaps are also available on GMX. Click on the “Swap” tab to open the interface for trading GLP pool tokens.
The first token is the collateral you provide, while the token below is the asset you trade. The leverage slider indicates the amount you borrow from the GLP pool. Limit orders, as well as take profit and stop loss orders, are available.
Open trades appear under “Positions”. You can click “Edit” to deposit or withdraw collateral. Opening and closing a leveraged trade incurs a fee of 0.1% of your position size. Traders also pay an hourly borrowing fee depending on usage. For detailed instructions, visit their trading help page.
StakingTo stake your GMX tokens and earn rewards, you need to connect your wallet and press the “Stake” button.
Once you confirm the transaction on the blockchain in your wallet, you will start earning 30% of all GMX protocol fees, as well as esGMX and multiplier points.
You will clearly see all three reward types increasing under “Total Rewards” in the GMX UI. You can click on the “Capitalize” button to stake your earned rewards and capitalize your return.
How to buy GMX on Binance?You can buy GMX on a crypto exchange platform like Binance.
1. Log in to your Binance account and navigate to [Trader] - [Spot].
2. Type “GMX” in the search bar to display the available trading pair. We will use GMX/BUSD as an example.
3. Go to the [Spot] box and enter the amount of GMX you want to purchase. In this example, we will use a market order. Click [Buy GMX] to confirm your order, and the purchased GMX will be credited to your Spot Wallet.
What’s next for GMX?GMX's own Decentralized Autonomous Organization (DAO), GMX DAO, has planned its roadmap through its internal governance process. GMX’s goal is to become an even more comprehensive and user-friendly DEX for leveraged trading on the blockchain. The current roadmap includes:
SyntheticsSynthetics will be a new class of tokens that will be available on the exchange. Synthetic cryptoassets derive their value from any underlying asset, such as a stock, commodity, or digital currency. These are essentially digital representations of derivatives.
Better user interface and user experienceGMX strives to perfect the user interface (UI) and user experience (UX) of the protocol for users. For example, GMX plans to integrate TradingView charts into the platform.
X4: exchange controlled by the protocolLonger term, GMX aims to become an advanced automated market maker (AMM) that allows other DeFi projects to build on its liquidity pools and fully customize their pool functionality. These projects can then specify any custom behavior they want for buying and selling tokens as well as adding and removing liquidity.
Network expansionGMX also plans to deploy the exchange on a third blockchain network, alongside Arbitrum and Avalanche.
To concludeCryptocurrency trading has come a long way. GMX allows anyone with a cryptocurrency portfolio to benefit from its decentralized and transparent exchange services. First, traders can use its perpetual swap and Spot swap platform. Second, users can enjoy various benefits and have a say in governance by owning GMX tokens. As we have learned, it is the GMX community that decides the future of the platform; it is therefore possible that new services will be added to what the exchange already offers.