Summary

GMX is a decentralized trading platform open to the public for spot trades and perpetual swaps. Traders can use it to easily trade cryptocurrencies on-chain by simply linking their wallets to it. GMX has a native token called GMX, which serves as the governance, service, and value accrual token of the GMX protocol. Users can store GMX tokens and earn a portion of the GMX protocol fees, in addition to taking advantage of other incentives. GMX currently supports the Arbitrum and Avalanche networks.

the introduction

Blockchains and their use in finance and digital currencies have enabled the development of decentralized finance. DeFi began to be recognized in 2020 with the so-called “Summer of DeFi.” Now, GMX demonstrates that it is possible to do perpetual leveraged trading and spot trading in a decentralized way, where the trading experience resembles the functionality of centralized trading platforms, but is done directly from a personal cryptocurrency wallet.

What is GMX?

GMX is a decentralized instant and perpetual trading platform that enables users to trade BTC, ETH and other popular cryptocurrencies directly from their cryptocurrency wallets. GMX users can make spot swaps and trade perpetual futures with up to 50x leverage, similar to how it is done on a centralized trading platform. However, unlike using a centralized trading platform, they maintain collateral for their assets through the use of a cryptocurrency wallet.

GMX aims to provide a better trading experience with low swap fees and zero-impact trades. Trading occurs through the original multi-asset pool, GLP, which earns fees for liquidity providers. Additionally, GMX uses Chainlink's dynamic pricing middleware to aggregate prices from other high-volume trading platforms.

GMX was first released on the Arbitrum One blockchain when the network went live in September 2021. Arbitrum stands for Layer 2 Ethereum Pool, a solution designed to enhance the speed and scalability of Ethereum smart contracts. Later, in January 2022, GMX continued to be deployed on Avalanche, which is also a high-speed blockchain compatible with the Ethereum Virtual Machine (EVM).

How does GMX work?

Trading on GMX is facilitated by a multi-asset aggregator 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 tokens (GLP). In exchange for minting GLP tokens, they earn 70% of all fees generated by this blockchain. Unlike some liquidity pools, GLP does not suffer any non-permanent loss.

Anyone can become a supplier of this liquidity pool and, in return, earn fees. Users who wish to trade perpetual or spot swaps can do so using the assets provided. Furthermore, the GLP pool serves as the counterparty to traders; Because holders of the GLP token provide the liquidity used for leveraged trading, they profit when traders lose — and vice versa.

The GLP token can be minted using any of its index assets and burned to redeem any of its index assets. Unlike the GMX token, it is automatically stored and cannot be transferred. The GLP price, rewards and index composition differ between Arbitrum and Avalanche.

What is a GMX token?

The GMX token is a service and governance token. Holders of this token can use it to vote on proposals to help determine the future direction of the trading platform.

Token holders who store their GMX tokens also receive three other rewards that the protocol uses to reward users. First, 30% of all generated protocol fees are distributed to those who have stored GMX tokens. These fees are collected from market making, swap fees and leveraged trading, and are paid in either ETH or AVAX.

Second, vaults earn guaranteed GMX (esGMX) tokens. These esGMX tokens can be stored for rewards as well or given away. Tokens are converted back into GMX over a 12-month period when the user grants them. Therefore, esGMX emissions are a form of reserved storage that prevents inflation and people from selling GMX immediately.

Finally, stakers earn compounding points that boost their return and reward long-term holders without contributing to token inflation. These dual incentives incentivize commitment to GMX, and promote decentralized ownership of the platform.

The maximum stock of GMX tokens is 13.25 million, with 8.2 million in circulation. More than 83% of the tokens in circulation are currently stored.

What sets GMX apart from others?

Trading system

GMX allows traders to open leveraged trades through a simple swap interface similar to traditional trading platforms. Additionally, GMX is a transparent, self-custodial, trustless system, meaning anyone can trade cryptocurrencies directly from their own wallet.

Its dual trading model supports both spot swaps and leveraged trading of perpetual swaps. This improves capital efficiency due to the high asset utilization of the GLP pool, allowing user deposits to generate additional return and not remain idle.

GMX allows entering and exiting trades without any impact on the price. This design may help traders obtain better entry prices than some order-list-based trading platforms, which may have slippage issues. GMX also uses a combination of Chainlink middleware and other price feeds to mitigate price volatility, which can keep trades safe from temporary liquidation price volatility lines.

The system

GMX emphasizes the importance of community and has tried to foster a DeFi mentality of sharing and building tools among its users.

Its community-created tools include a Telegram trades bot, gmx.house leaderboard, gmxstats.com page, Dune Analytics dashboards, and calculators that benefit traders, stockists, and liquidity providers. GMX has a growing list of collaborative projects building DeFi functionality using GMX's composable LEGO chains.

The community is also interested in communication regarding the GMX ecosystem. For example, The Blueberry Pulse, a weekly community-driven newsletter, highlights developments in the GMX ecosystem. The Blueberry podcast does the same thing in audio format.

How to use GMX

Trading

  1. The GMX trading interface is displayed along with a price chart. To start a leveraged trade, click “Buy” or “Sell” to set your preference. Simple, low-fee spot exchanges are also available on GMX. Click on the “Swap” tab to open the interface for swapping tokens in the GLP pool.

  2. The first token represents the security you are offering, while the token below is the asset you are trading. The leverage slider indicates the amount you are borrowing from the GLP pool. Limit orders, as well as take profit and stop loss orders are also available.

  3. Open trades will appear under 'Trades'. You can click "Edit" to deposit or withdraw collateral. Opening and closing a leveraged trade costs a fee of 0.1 percent of your trade size. Traders also pay hourly borrowing fees based on usage. For detailed instructions, visit their trading instructions page.

Storage

To store your GMX tokens and earn rewards, you need to link your wallet and press the “Store” button.

Once the on-chain transaction is confirmed in your wallet, you will start earning 30% of all GMX protocol fees, as well as esGMX incentives and Multiplier Points.

You will clearly see the three types of rewards increased under “Total Rewards” in the GMX UI. You can click the "Double" button to claim your earned rewards and double your return.

How to buy GMX on Binance

You can buy GMX on cryptocurrency exchanges, such as Binance.

1. Log in to your Binance account, then go to [Trade] → [Instant].

2. Type “GMX” in the search bar to view available trading pairs. We will use GMX/BUSD as an example.

3. Go to the [Instant] box and enter the number of GMX tokens you wish to purchase. In this example, we will use a market order. Click [Buy GMX] to confirm your order, then the amount of GMX tokens you purchased will be added to your instant wallet.

What are the next steps for GMX?

GMX's decentralized autonomous organization has mapped out the roadmap through its own internal governance process. GMX's vision is to become a more complete and user-friendly decentralized trading platform for on-chain leveraged trading. The current roadmap includes:

Compound assets

The compounded assets must represent a new class of tokens that will become available on the trading platform. Composite digital assets derive their value from any underlying asset, such as stocks, commodities, or digital currency. They are essentially numerical representations of derivatives.

Better user interface and user experience

GMX strives to improve the user interface and user experience of the protocol for users. For example, it plans to integrate TradingView charts into the platform.

X4: Protocol-based trading platform

The longer timeframe vision for GMX is to become an advanced automated market maker (AMM) that allows other DeFi projects to build on their own liquidity pools, fully customizing the pools' functionality. These projects can then define any custom behavior they desire when buying and selling tokens and adding and removing liquidity.

Network expansion

GMX also plans to roll out the trading platform on a third blockchain, alongside Arbitrum and Avalanche.

Concluding thoughts

Cryptocurrency trading has come a long way. GMX allows anyone with a cryptocurrency wallet to benefit from transparent, decentralized trading services. First, traders can use the perpetual swap and spot trading platform. Second, users can enjoy many benefits and have a say in governance by owning GMX tokens. As we've learned, the GMX community decides the future of the platform; Therefore, it is still possible to add new services in addition to what the trading platform already offers.