GMX – The New DeFi “Real Yield”

I. What is GMX?

GMX is a spot and decentralized exchange project on Arbitrum. As one of the first derivatives exchanges on Arbitrum, GMX gained a lot of users, then continued to expand into Avalanche.

GMX provides traders with a full suite of tools to trade spot as well as long/short, taking advantage of cost savings, no arbitrage, no funding rate (thanks to using Oracle), and minimizing potential liquidation capacity. Currently the project is being considered as a competitor to other names such as dYdX, Perpetual,…  More specifically, GMX has a very special tokenomics and I will talk about it below.

II. Tokenomics

Currently, GMX has 2 main tokens, $GMX and $GLP:

GMX – the main utility and governance token, holding and staking tokens will receive 30% transaction fee, in addition will also receive minted esGMX. However, to convert this esGMX reward to GMX, users must lock GMX within 1 year. During the vesting period, esGMX will not be charged additional bonus.

Regarding token allocation, $GMX is allocated as follows:

– XVIX, Gambit Migration: 45.3%

– Liquidity on Uniswap: 15%

– Reserved for vesting from esGMX: 15%

– Floor Price Funds: 15%

– Marketing, partnerships and community developers: 7.5%

– Team: 1.9%

As you can see, team allocation accounts for very little, including marketing; it is about less than 10% → there is a high possibility that the team also has to stake GMX to receive more rewards. Currently, up to 50% of the total supply (8 million GMX) has been circulated on the market, the current price cap is about $ 420 million (According to Coingecko). However, according to my check, more than 80% of $GMX has been staked in the platform ⇒ meaning that in reality there is only about 1 million $ GMX circulating outside the market ⇒ the actual cap is only about 80 million. 

GLP (token add liquidity) – this is a token for Liquidity Providers, if you buy and hold this token, you are providing liquidity to the GMX exchange and earning money. the Profit is 70% of the exchange’s trading fees.

The special thing here is that buying a GLP coin means buying a pool of tokens including ETH, BTC, LINK, UNI, USDC, USDT, DAI, FRAX (as shown below). The $GLP token price will fluctuate based on the value and number of tokens in the pool. When the assets in the asset basket increase, the GLP token price will increase and vice versa, when the asset basket value decreases, the GLP token price will decrease.

III. Roadmap

– Improved security and enhanced monitoring of platform activity (avoiding exploits like before)

– Synthetix market support

– New model PvP AMM and new X4 chain (if there is a chance, I will talk about this)

Source link: https://medium0.com/@gmx.io/gmx-update-3-33341d13571d

GMX currently is focusing on developing and upgrading the user experience, and at the same time, to produce a new model to provide more trading pairs and optimize profits for traders.

IV. Team

There is a risk that the current dev team is anonymous, but I see that they are still building and quite active. Social channels on Discord and Twitter are still being fully updated and transparent. Hopefully the team will continue to release quality upgrades (Previous Uniswap dev team is also anonymous)

Community Forum page: [https://gov.gmx.io/](https://gov.gmx.io/)

V. Conclusion

In general, GMX is a project leading the “Realyield” trend, supported by the DeFi alpha community, and listed on the first major and reputable exchanges in the Arbitrum system. Therefore, the project has the opportunity to catch the first cash flow when the market recovers.

In addition to anonymous dev, one risk for GMX as well as for derivative projects is that it must continuously keep and attract revenue steadily, or else the APR will decrease and be lost. lose users, and at the same time liquidity for the project.

For example, in the image above, we can see traders who lose the most during a market crash (September 12 – September 19). And when the BTC and ETH markets tend to increase, traders will get more profits.

⇒ If the market is uptrend and most traders make a lot of profit, then the project’s revenue is likely to be negatively affected %APR reduction for stakers and liquidity providers users no longer want to provide liquidity ⇒ low LP will cause traders to lose trust (due to slippage) ⇒ lose users ⇒ no more positive feedback loop.

Therefore, although there are many profits during this period, GMX will also need to consider changing and upgrading the model to avoid these risky situations during the uptrend period.