Whether you want to trade derivatives or spots, there are several decentralized exchanges (DEXes) that allow you to do so. One of the recommended DEXes is GMX. But what separates it from others? This guide explains the unique features that make GMX stand out. You will also learn how it works.
What is GMX?
Originally known as Gambit Financial, GMX is an Arbitrum-based DEX that supports perpetual and spot trading. It was launched in late 2021. Before it got migrated to Arbitrum, GMX operated on Binance’s BNB Smart Chain. The DEX has now expanded its presence to Avalanche. DefiLllama’s data shows the total value locked on the GMX exchange is $2 billion, with Arbitrum accounting for $1.05 billion of the figure.
Team Behind GMX
GMX developers have remained anonymous since their DEX went live. However, the individuals who can access the platform’s multi-sig wallet are prominent crypto players. They include UniDex’s founder, Krunal Amin, and Stealth Crypto’s co-founder, Benjamin Simon.
As a decentralized platform, the GMX governance is decentralized. The number of users eligible to vote on DEX’s proposals has now surpassed 70,000.
GMX Funding
Since its launch, GMX has not had any funding rounds. The project only raised money through an Initial Coin Offering in 2021. At the time, it collected $1.85 million in USDC. However, it is worth mentioning that some firms have invested in GMX by holding a massive amount of the DEX’s native token, GMX. For example, Blocktower recently spent over 2,350 ETH to buy GMX tokens and then staked some of them. Food Capital is another company holding a significant number of GMX tokens (316,098 GMX).
Meanwhile, the founder of the BitMEX crypto exchange, Arthur Hayes, is the largest GMX individual holder, currently holding 200,500 tokens.
Roadmap
GMX’s roadmap was updated and released in May last year. Among the things that the team behind the DEX is looking to achieve is the deployment of GMX to new blockchains like Base. The developers also plan to develop an improved automated market marker (AMM) that will allow pool creators to have total control over the functions of the pool.
How Does GMX Function?
Besides allowing users to trade crypto by simply connecting their wallets to the platform, GMX supports the staking of its native token. It also lets anyone provide liquidity to the DEX in exchange for rewards.
Here are the three major components of the GMX decentralized exchange:
The Pool and Liquidity Providers
To ensure users are able to swap tokens easily, GMX provides a community-owned asset pool that holds several cryptocurrencies, including DAI, USDC, BTC, USDT, BTC, FRAX, and LINK. This pool is known as the GLP pool. Liquidity providers add liquidity to the pool by locking the assets mentioned above. After doing so, they are given GLP tokens equivalent to the amount of tokens locked. GMX distributes 65% of collected trading fees to liquidity providers.
Staking
Along with providing liquidity, users can decide to stake their GMX tokens to receive rewards, which are divided into three: rewards in AVAX or ETH, multiplier points, and escrowed GMX. Those who stake GMX for a year get multiplier points equivalent to their stake. For example, if you stake 2,000 GMX tokens for a year, you will receive 2,000 multiplier points.
Traders
Crypto traders on the GMX decentralized exchange enjoy considerably low trading fees. In addition, they can quickly enter and exit the market thanks to the sufficient liquidity available on the DEX. For users who like trading on leverage, GMX allows them to borrow funds at a fee.
The GMX Tokenomics
The total supply of the GMX token is 13.25 million. CoinGecko’s data shows there are 8.9 million GMX tokens in circulation.
Here is how GMX was allocated:
GMX early contributors – 350,000 tokens (5%).
Token sale – 6 million tokens (45%).
Community developers – 1.2 million tokens (10%).
Floor price fund – 2 Million tokens (15%).
Staking rewards – 3 million tokens (25%).
Conclusion
Being one of the most liquid decentralized exchanges, GMX is likely to witness growth in its user base. The low trading fee is another aspect that will fuel the DEX mass adoption.
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