What is GMX (GMX)?

GMX operates as a decentralized, permissionless perpetual swap and spot exchange, enabling traders to effortlessly engage in cryptocurrency trading directly through wallet integration. 

Anchored by its native token, GMX serves multiple roles within the protocol including governance, utility, and value accrual. Stakeholders have the opportunity to earn a share of protocol fees by staking GMX tokens, alongside additional incentives. Presently, GMX is compatible with the Arbitrum and Avalanche networks.

GMX operates as a decentralized exchange facilitating spot and perpetual trading of BTC, ETH, and various cryptocurrencies directly from users' crypto wallets. Users can execute spot swaps and trade perpetual futures with leverage of up to 50x, mirroring the functionality of centralized exchanges. However, unlike centralized exchanges, GMX users retain custody of their assets by utilizing a cryptocurrency wallet.

The platform aims to enhance the trading experience by offering low swap fees and trades without price impact. Trading occurs through the GLP native multi-asset pool, generating fees for liquidity providers. Additionally, GMX leverages Chainlink Oracles for dynamic pricing by aggregating prices from other high-volume exchanges.

GMX made its debut on the Arbitrum One blockchain upon the network's launch in September 2021. Arbitrum One is an Ethereum layer-2 Rollup solution designed to enhance the speed and scalability of Ethereum smart contracts. Subsequently, in January 2022, GMX expanded its deployment to Avalanche, another high-speed EVM-compatible blockchain.

Who are the founders of GMX?

In 2021, an anonymous team established GMX, a decentralized cryptocurrency swap and perpetual exchange. The GMX protocol emerged from the merger of XVIX and Gambit, with the founders opting to remain anonymous to mitigate potential legal challenges.

What is the working mechanism of GMX?

Trading on GMX is enabled through a diversified asset pool known as GLP, comprising approximately 50-55% stablecoins, 25% ETH, 20% BTC, and 5-10% various altcoins, including Chainlink and Uniswap.

Liquidity is introduced into the system when users create GMX Liquidity Provider Tokens (GLP), receiving 70% of all transaction fees on that blockchain as a reward. Notably, GLP does not experience impermanent loss, setting it apart from some other liquidity pools.

This liquidity pool is open to anyone willing to contribute, offering them a chance to earn transaction fees. Additionally, it supports users in executing perpetual swaps or spot trading using the provided assets. The GLP pool acts as the counterpart for traders, meaning that as traders take losses, GLP token holders gain profits from the liquidity they've supplied for leverage trading, and the reverse is also true.

The GLP token can be created with any asset from its index and redeemed for any index asset upon being burnt. In contrast to the GMX token, GLP is automatically staked upon acquisition and is not transferable. The pricing, rewards, and composition of the GLP index vary between the Arbitrum and Avalanche blockchains.

What are the benefits of GMX?

• Diverse Asset Liquidity Pool: GMX distinguishes itself from other decentralized trading platforms by implementing a diverse asset liquidity pool through the GLP token. This system supports a variety of tokens and stablecoins for both investors and traders, driven by the economic framework of the GLP token. Liquidity providers receive GLP incentives for supplying liquidity across various tokens, facilitating automatic rebalancing of the asset pools.

• Competitive Swap Fees: This exchange is known for its low swap fees in the cryptocurrency market, along with offering trades with no price impact. Users of the platform are subject to only two fees: a platform fee, which is 0.01% to initiate a trade, and a borrowing fee, calculated as the total borrowed assets divided by the pool's size.

• Leverage Trading with Perpetual Contracts: GMX stands out by allowing up to 50x leverage for trading perpetual contracts. The platform combines a user-friendly interface with minimal fees, making it an ideal choice for advanced cryptocurrency trading. GMX excels in providing a secure trading environment along with the advantage of lower trading fees.

To read more on GMX, visit Suncrypto Price Explorer