Although GMX V1 provided a relatively comprehensive on-chain derivatives solution and became the largest on-chain derivatives market by TVL, it had several user experience issues. These included high trading fees, potentially high borrowing costs for both long and short positions leading to high holding costs, significant skew in long and short positions causing losses for GLP holders, and the risk of a single asset causing losses for all GLP holders.
Although the GMX exchange went live on the Arbitrum blockchain network in September 2021, its prototype was completed as early as November 2020. Because GMX overcame many of the difficulties encountered when using decentralized exchange services, it was well received shortly after its launch and has been running on the Avalanche blockchain network since January 2022, with further expansion to other blockchains planned for the future.
This advantage is even more pronounced when large transactions are needed and decentralized exchanges such as 1inch have integrated GLP. Other decentralized exchanges, such as 1inch, also integrate liquidity from GLP liquidity pools. Yield YAK offers income products supporting GLP and GMX, and the profits earned are automatically reinvested.
The website also details GMX and GLP’s market capitalizations and highlights the project’s partnerships, integrations, and related community projects. It furthermore includes a documentation section, which provides information on the exchange’s various components, and suggests methods to bridge to Arbitrum or Avalanche, or to acquire GMX and GLP tokens. Thanks to its detailed dashboards, GMX gives off an impression of transparency. As a result, the protocol’s mechanisms are relatively simple to grasp.
Because of this interdependent relationship between liquidity providers and traders, there needs to be an incentive for users to provide liquidity.
Users should be cautious of CEXs that currently offer no-KYC services, as history has shown that many popular platforms initially allowed pelo-KYC trading but eventually adopted KYC to comply with regulatory pressures.
By offering both spot and perpetual exchange features, GMX enables users to trade cryptocurrencies with immediate settlements or take long and short positions with up to 50x leverage. This versatility makes GMX a one-stop-shop for copyright traders of all levels.
In 2021, there were roughly USD $57T perpetual swaps traded, almost a 6x increase from the previous year.
In that case, suddenly, a large number of users in the market using USDC stablecoins to buy LINK tokens in stock, the number of LINK tokens in the GLP liquidity pool will decrease dramatically, and the increased utilization of funds will prompt the contract to go long. The funding rate of LINK will rise rapidly. In other words, the price impact of large transactions on the liquidity pool is still there, but the cost is passed on to traders as funding rates.
The GMX token also has a floor price fund. It’s used to ensure that the GLP pool has sufficient liquidity, provide a reliable stream of ETH rewards for staked GMX and buy and burn GMX tokens in order to maintain a minimum price of GMX against ETH.
With its innovative technology here and unique features, GMX has the potential to disrupt traditional financial systems and pave the way for a new era of digital finance.
GMX can be purchased on several major copyright exchanges. Users can buy GMX with other cryptocurrencies or with fiat currencies, depending on the exchange.
* The information is not intended to be and does not constitute financial advice or any other recommendation of any sort offered or endorsed by Gate.io.
Almost all centralized exchanges now require KYC as a standard practice. Recent examples from 2024 include copyright and BingX, both of which have implemented stricter KYC protocols, receiving mixed reactions from users on forums like Reddit.