Due to their unique value proposition, GMX is positioning itself to be a leader in this derivatives product offering space because of two main points:
GMX is a decentralized perpetual exchange tailored for copyright futures trading. According to the protocol, it boasts minimal swap fees and zero price impact. It also offers traders the flexibility to leverage up to 50x on major cryptocurrencies like BTC, ETH, among others.
In terms of perpetual contracts, the GLP liquidity pool works interestingly, a bit like an AAVE type of lending agreement, where the trader deposits a portion of the assets in the GLP liquidity pool as margin, then lends a higher value asset from the GLP liquidity pool to bet against the GLP liquidity pool, paying a percentage of interest every hour before the margin is liquidated or the asset is returned.
Additionally, 86% of the current circulating supply is staked on the platform showing investors’ trust in the project despite the bear market.
copyright futures are financial contracts that allow traders to speculate on the future price of cryptocurrencies, without owning the underlying assets.
GMX is founded by a completely anonymous team. However, it is known that the team has a track record of two other successful protocol launches in XVIX and Gambit.
GMX is a decentralized exchange that supports spot and perpetual contract trading. It encourages users to deposit copyright assets into a liquidity pool to become market makers and earn transaction fees.
But are the traders winning, or are the liquidity providers at GLP making money? Long-term performance data gives us the answer. In the case of Arbitrum, the most heavily traded market, as of October 2022, users of GMX for perpetual contract trading had accumulated losses of over $45 million.
Users do not exchange assets and trade on GMX as they do on centralized exchanges, where many users submit limited buy and sell orders in the order book. Trading with GMX is done by depositing and withdrawing assets from a liquidity pool called GLP, which is the counterparty to all traders.
GMX is powered by Chainlink Oracles. It uses an aggregate price feed from leading volume exchanges to reduce liquidation risk from temporary wicks.
AMM allow digital assets to be traded in a permissionless and automatic way by using liquidity pools instead of a traditional market of buyers and sellers.
Because of this interdependent relationship between liquidity providers and traders, there needs to be more info an incentive for users to provide liquidity.
For traders in regions with strict regulations like the USA, UK and China, finding copyright futures exchanges that don’t require identity verification is crucial.
GMX innovatively redefines liquidity pools, allowing users to exchange assets at a low cost and without price slippage, even for large transactions. For liquidity providers, GLP liquidity pools are not plagued by impermanent losses. They can add and redeem liquidity with a single asset and earn various revenues, such as transaction fees, funding rates, and liquidation fees.