Decentralized exchanges are a lucrative option for investors who don’t want to maintain the privacy of their data. Most of these exchanges use the automated market maker (AMM) where the network participants provide liquidity for the platform. The developers are now looking for innovative ways to modify the default AMM.
GMX is one of the leading platforms that offer a unique multi-asset liquidity model.
What is GMX?
GMX is a decentralized exchange that offers a leverage trading facility along with swap trading. The users can access its services through Avalanche (AVAX) blockchain and Arbitrum Layer 2 protocol. This exchange determines the prices of crypto assets with the help of Chainlink oracles.
The oracles are connected to a wide range of exchanges. They’re responsible for fetching live data from these exchanges. The multi-asset AMM model is one of the leading features of this platform that sets it apart. The platform offers on-platform index assets where investors can add their funds to provide liquidity.
In return, they receive GLP tokens from the platform. The platform offers escrow GMX rewards to GLP token holders from the liquidity provider’s fees. The Avalanche users receive rewards in the form of AVAX tokens whereas the Arbitrum users receive rewards in the form of ETH tokens.
The platform charges 0.1 percent of the total transaction when a trader opens or closes a position. The platform also charges 0.2 to 0.8 percent swap fees in case of swap trading. The best thing about GMX is that it offers up to 30x leveraging facility. It means the traders can borrow up to 30 ETH tokens if they’re adding 1 ETH token as collateral.
If the trader wants to open a long position, he needs to provide the collateral in the cryptocurrency they’re willing to borrow from the platform. But when it comes to opening a short position, they can provide the collateral in the form of four different stablecoins including USDC, USDT, FRAX, or DAI.
Unique Features of GMX
The Trading System
Leverage trading is the most important feature of GMX which is usually available in centralized exchanges. GMX provides a trustless and self-custodial environment for traders where they can directly buy and sell cryptocurrencies using their private wallet. GMX offers additional earning opportunities for investors through swap and leverage trading.
It means the deposits won’t sit idle during the bear market. And the investors will be able to earn extra yield during different market conditions. GMX also prevents the slippage problem that users often have to face with order book-based exchanges. Thus, the users can trade multiple cryptocurrencies without worrying about price impact.
Furthermore, the platform controls price fluctuations with the help of Chainlink Oracles. It eventually helps with avoiding the temporary liquidation wicks.
GMX has introduced composable lego blocks to build strong engagement with its community members. The platform has introduced a set of projects in collaboration with community members.
Telegram positions bot, Dune Analytics Dashboards, the gmxstats.com page, and gmx.house leaderboard are some of the leading community-built tools designed to facilitate liquidity providers, stakers, and traders.
The platform actively shares updates about the GMX ecosystem with the Blueberry Pulse, the community-driven weekly newsletter. Moreover, community members can also listen to the Blueberry Podcast to stay updated about the network’s development.
How Does GMX Work?
GMX uses a multi-asset pool to facilitate the trading of different crypto assets. Around 50-55% of the pool consists of stablecoins such as USDC, USDT, FRAX, and DAI. ETH and BTC cover almost 25% and 20% of the pool respectively. And the remaining 5 to 10 percent consists of altcoins like Uniswap, Chainlink, and more.
Investors can mint GLP tokens by locking their assets in the liquidity pool. The traders can purchase their desired tokens from this pool for a reasonable fee. Around 70% of the trading fees are transferred to the liquidity providers. Whether a trader wins or loses, the GLP token holders earn profit in both conditions because they provide liquidity for leverage trading.
Investors can choose from a range of cryptocurrencies while minting or burning GLP tokens. As it’s discussed earlier that the project is available on Avalanche and Arbitrum. So, the price of GLP may vary on both networks. It’s worth noting that the GLP tokens aren’t transferable and they’re automatically staked within the platform.
Staking on GMX
The users need to connect their crypto wallet to GMX if they’re willing to stake their GMX tokens. After pressing the “Stake” button, the user becomes eligible for 30% of all GMX’s protocol fees. The platform also offers a few additional benefits like Multiplier Points and esGMX incentives.
The user can again stake their rewards by pressing the “Compound” button.
Trading on GMX
The trader needs to choose the “Long” or “Short” option from the trading interface depending on their preferences. The users can go to the “Swap” tab if they’re willing to use the swap trading facility. The traders can adjust the leverage slider depending on the amount they’re willing to borrow from the platform.
The users can set the Take Profit and Stop loss orders on the exchange. Under the Positions tab, they can see all their open positions. The users need to pay 0.1 percent of the position size while opening or closing a trade. Moreover, the platform also charges hourly fees for borrowing funds.
GMX is the native token of the GMX platform that is used to provide liquidity to the network. Investors can use other crypto tokens to add liquidity. In return, they get GLP tokens that make them eligible for several rewards. The users can also stake their GMX tokens to earn staking rewards.
With a circulating supply of 8.54 million tokens, GMX has a market cap of $596 million. It ranks among the 100 best cryptocurrencies in terms of market cap.
GMX is a unique kind of decentralized exchange that provides a multi-assets trading facility with leverage trading. It sets the price of crypto assets with the help of Chainlink Oracles. Moreover, it offers low trading fees compared to other platforms. If you need more information about how GMX works, feel free to get in touch with us.