Brief content

GMX is a decentralized inclusive spot exchange that supports perpetual swaps. Traders can use it to easily trade on-chain cryptocurrency by simply connecting their wallets. GMX has a native token called GMX, which functions as a governance token, a utility token, and a store of value token for the GMX protocol. Users can stake GMX tokens and receive a portion of the GMX protocol fees as well as other incentives. GMX currently supports the Arbitrum and Avalanche networks.

Introduction

Blockchain and its applications in finance and cryptocurrency have contributed to the development of decentralized finance (DeFi). The mainstream recognition of DeFi started in 2020 with what is called the "Summer of DeFi." Now GMX demonstrates that it is possible to trade spot and futures on a decentralized exchange. The trading experience resembles the functions of centralized exchanges, but is carried out directly from a personal crypto wallet.

What is GMX?

GMX is a decentralized spot and futures exchange that allows users to trade BTC, ETH and other popular cryptocurrencies directly from their crypto wallets. GMX users can make spot swaps and trade perpetual futures with leverage of up to 50x, similar to how it is done on a centralized exchange. However, unlike a centralized exchange, they independently store their assets using a cryptocurrency wallet.

GMX strives to provide the best trading experience with low swap fees and no price impact deals. Trading takes place through GLP's native multi-asset pool, which earns a commission for liquidity providers. In addition, GMX uses Chainlink oracles for dynamic pricing and price aggregation 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 rollup on Ethereum, a solution designed to increase the speed and scalability of Ethereum smart contracts. Later, in January 2022, the GMX deployment continued on Avalanche, which is also a high-speed EVM-compatible 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 minting GLP, they earn 70% of all commissions generated on that particular blockchain. Unlike some liquidity pools, GLP does not suffer from erratic losses.

Anyone can become a provider of this liquidity pool and, in return, receive commissions. And users who want to trade perpetual swaps or spot pairs can do so using the assets provided. In addition, the GLP pool is a counterparty for traders; since GLP token holders provide the liquidity used for leveraged trading, they profit when traders lose, and vice versa.

The GLP token can be minted using any index asset and burned to redeem any index asset. Unlike the GMX token, it is automatically used for staking and cannot be transferred. The price, rewards and composition of the GLP index are different on the Arbitrum and Avalanche blockchains.

What is GMX Token?

The GMX token is a utility token and a management 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 receive three other rewards that the protocol uses to reward users. First, 30% of all generated protocol fees are shared among GMX stakers. These fees are collected from market making, swap fees and leveraged trading and are paid out in ETH or AVAX.

Second, stakers earn escrow GMX tokens (esGMX). These esGMX tokens can also be placed for rewards or transfers. Tokens are converted back to GMX within 12 months when the user wants to withdraw them. Thus, esGMX issuance is a form of fixed staking that prevents inflation and instant selling of GMX.

Finally, stakers earn increased points that increase their profitability and reward long-term holders without contributing to token inflation. These dual incentives drive commitment to GMX and facilitate decentralized ownership of the platform.

GMX has a maximum supply of 13.25 million tokens and a circulating supply of 8.2 million tokens. Over 83% of the tokens in circulation are currently staking.

What makes GMX unique?

Trade system

GMX allows traders to open leveraged positions through a simple swap interface that resembles traditional trading platforms. Additionally, GMX is non-custodial and trustless, meaning anyone can trade cryptocurrency directly from their private wallet.

Its dual exchange model supports both spot swaps and leveraged perpetual swaps. This should improve capital efficiency through high asset utilization of the GLP pool, allowing user deposits to generate additional income and not be idle.

GMX allows you to open and exit trade positions without affecting the price. Such a mechanism can help traders get a better entry price than some order book-based exchanges, which may have problems with slippage. GMX also uses a collection of Chainlink oracles and other price channels to smooth price fluctuations, which can protect positions from temporary liquidation.

Ecosystem

GMX emphasizes the importance of community and strives to promote awareness of the importance of engaging in DeFi and building tools among its users.

Its community-built tools include a Telegram position bot, gmx.house leaderboard, gmxstats.com, Dune Analytics dashboards and calculators that benefit traders, stakers and liquidity providers. GMX has an ever-growing list of collaborative projects building DeFi functionality using GMX Legos.

The community also takes care of communication around the GMX ecosystem. For example, The Blueberry Pulse's weekly newsletter highlights happenings in the GMX ecosystem. The Blueberry Podcast does the same in audio format.

How to use GMX

Trade

  1. The GMX trading interface is displayed alongside the price chart. Click "Long" or "Short" to start a leveraged trade. Simple, low-fee spot swaps are also available on GMX. Click on the "Swap" tab to open the interface for swapping between tokens in the GLP pool.

  2. The first token is the collateral you provide and the token below is the asset you trade. The leverage slider shows how much you borrow from the GLP pool. Limit orders, as well as take-profit and stop-loss orders are available in the interface.

  3. Open contracts will be displayed under the tab "Positions." You can click "Edit" to deposit or withdraw collateral. A commission of 0.1% of the size of your position is charged for opening and closing a leveraged agreement. Traders also pay an hourly borrowing fee that depends on usage. For detailed instructions, visit their trading help page.

Staking

To stake GMX tokens and receive rewards, you need to connect your wallet and click "Stake".

As soon as you confirm an onchain transaction in your wallet, you will start earning 30% of all GMX protocol fees, as well as esGMX incentives and increased points.

You will clearly see the three types of rewards increase in the "Total Rewards" tab in the GMX UI. You can click "Compound" to stake your earned rewards and increase your profits.

How to buy GMX on Binance

You can buy GMX on cryptocurrency exchanges such as Binance.

1. Log in to your Binance account and click [Trade] -> [Spot].

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

3. Go to the [Spot] field and enter the amount of GMX you want to buy. 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 in store for GMX?

The GMX project has a decentralized autonomous organization (DAO), the GMX DAO, and has planned its roadmap through an internal governance process. GMX's vision is to become a more convenient DEX for on-chain leveraged trading. The current roadmap includes:

Synthetic assets

Synthetic assets are a new class of tokens that will become available on the exchange. Synthetic cryptoassets derive their value from any underlying asset such as a stock, commodity or digital currency. In essence, they are digital representations of derivatives.

Better interface and user experience

GMX aims to further improve the user interface (UI) and user experience (UX). For example, it is planned to integrate TradingView into the platform.

X4: Protocol-driven exchange

GMX's longer-term vision is to become an advanced Automated Market Maker (AMM), allowing other DeFi projects to build on top of its liquidity pools and fully customize their own pool functions. These projects can then specify any special desired behavior for buying and selling tokens, and for adding and removing liquidity.

Adding networks

GMX also plans to deploy the exchange on a third blockchain network, alongside Arbitrum and Avalanche.

Results

Cryptocurrency trading has come a long way. GMX allows anyone with a cryptocurrency wallet to benefit from transparent decentralized exchange services. First, traders can use the perpetual swap and spot platform. Second, users can enjoy various benefits and influence management by owning GMX tokens. As we learned, the GMX community decides the future of the platform, so new services can be added on top of what the exchange already offers.