GMX: Spotting the Future
Key Insights
- GMX is a decentralized spot and perpetual exchange that allows slippage-free trades on its platform.
- GMX uses a dual-token model – GLP for liquidity providers and GMX for governance. Platform fees are split 70-30 between GLP holders and GMX stakers.
- The protocol uses novel methods to incentivize protocol participation without increasing short-term supply.
- Instead of growth, the protocol optimizes for value capture for its governance token. Currently, it falls short of its goal of the ideal decentralized exchange.
GMX is a decentralized exchange for spot and perpetual future contracts on Arbitrum One and Avalanche. It is an attempt at building the mythical ideal exchange – a decentralized exchange that allows permissionless trading between any asset. Such an exchange would potentially be able to address the trading market of not just crypto assets but equities (spot and derivatives), bonds, commodities, and foreign currencies. This mythical exchange is sometimes referred to as the “decentralized FTX.”
Such an exchange would necessarily have the following properties:
Kunal previously worked in equity research and now considers himself a financial analyst in crypto. He specializes in valuation and bottom-up analysis for Layer-1 and DeFi protocols because he has yet to learn of a way to value NFTs.