GMX
GMX is a decentralized leverage trading platform currently deployed on the Arbitrum and Avalanche networks. It offers users low swap fees and zero price impact trades through unique protocol mechanics and tokenomics.
- Documentation
- Auditors
- Please see our FAQ on experienced auditors
- Website
- Token: GMX
- Tags: Derivatives
- TVL: $172.4M (Rank #56)
- TVL Ranking by Derivatives: #3
- Blockchain: Arbitrum, Avalanche
- Chain TVL
- Arbitrum: $119.61M
- Avalanche: $52.76M
- Code reviewed by several experienced auditors including ABDK and Quantstamp
- Anonymous team reduces transparency
- No documented protocol hacks since launch
- Core protocol launched in 2021; maturity over one year minimizes technical risk as smart contracts are well battle-tested
- Top 5% by total value locked reduces risk
- Multisig wallet controls protocol upgrades
- Multisig consists of at least 4 signers, which means the protocol is less susceptible to centralization risks
- Timelock is less than 48hrs, which provides users with less time to exit if any malicious upgrades are approved
- Low voting power concentration reduces risk
- No death spiral concerns
- Robust controls to mitigate oracle price manipulation
- This protocol is susceptible to risks related to decentralized derivatives, such as LPs serving as the counterparty for all platform traders
How GMX works
GMX operates as a mix of a perpetual and spot exchange for traders, as well as a crypto index fund for liquidity providers. Perp traders can long or short assets from the protocol's liquidity pool with up to 30x leverage. Spot traders can swap tokens from the same pool with nearly zero price impact as GMX uses Chainlink price oracles in combination with FTX and Binance market data to price assets. This is in contrast to the traditional automated market maker (AMM) formula so users don't incur slippage. To achieve all this, GMX created the GMX liquidity provider token (GLP) which holds a basket of assets including BTC, ETH, and USDC. As such, GLP holders are exposed to the price volatility of the underlying assets, adjusted by the positions of traders (LPs automatically take other side of each trade so profits when traders lose). LPs add liquidity to mint the GLP token by adding any one of the basket assets to a multi-asset pool.
How GMX makes money
GMX charges a 0.1% fee for opening and closing positions plus a dynamic borrowing fee based on utilization rates and the underlying asset you choose to profit in. Swap fees are also dynamic and based on whether a swap improves the weights of assets in the GLP pool towards or away from the target allocations. Minting and redeeming of GLP similarly incurs a dynamic fee based on whether the selected asset is currently over or under-weight.
How you make money on GMX
You can make money by placing directionally levered bets on the crypto market. If you have a more long-term view, you can earn a portion of all protocol generated revenues from staking either the native GMX token or the GLP token. The fee split is currently 70% paid to GLP stakers and the remaining 30% paid to GMX stakers.
