What is GMX coin in crypto? Should you buy GMX coin?

GMX is a cryptocurrency that was listed on Binance on 5/10/2022, and has recorded impressive price increases. However, for many, what GMX coin is still remains a question. Therefore, in this article, let’s explore in detail the content below.

What is GMX coin, should you invest?

What is GMX coin?

GMX is a decentralized exchange built on Avalanche and Arbitrum. It allows users to trade spot and derivatives with up to 30x leverage of their collateral assets by borrowing from a large liquidity pool. A special feature of GMX is that traders can trade with low fees, 0 slippage, and 0 funding rate using the unique GLP Pool model.

The GMX protocol first appeared on Arbitrum in September 2021 before launching on Avalanche in early 2022.

GMX provides users with a complete set of tools for spot trading as well as long/short, focusing on cost-saving advantages, no price slippage, no funding rate, minimizing the possibility of liquidation. The project is currently seen as a rival to other names like dYdX, Perpetual, MCDEX, etc.

“GMX” clearly doesn’t represent anything specific. Many people on Discord have analyzed that GMX means Gambit (GM) and Exchange (X). But that might just be speculation. In short, just remember GMX is a decentralized exchange (DEX) on both Arbitrum and Avalanche networks. Like most exchanges, on GMX, you can perform 30x leverage trades, swaps, and it also has its own native token, GMX. Additionally, they have the GLP token (which I will explain more in the section below).

*** GMX coin was announced to be listed on Binance on 5/10/2022. The GMX token increased nearly 40% after this event. ***

Who are the founding team of GMX coin?

GMX coin was founded by an entirely anonymous team. However, it is known that the team has a track record of two other successful protocol launches in XVIX and Gambit.

The team is also actively building a new AMM called X4.

According to various sources, X (Twitter: https://twitter.com/xdev_10) seems to be the main developer.

What makes GMX coin special?

GMX may initially be Gambit Financial, a Spot and Perpetual exchange on BSC, then it was renamed and expanded on Arbitrum. At that time, most of GMX’s Spot trading volume was on BSC, however, after successfully developing the Perpetual product on Arbitrum, GMX ceased operations on BSC. Currently, the GMX exchange operates on both Arbitrum and Avalanche chains.

So what is GMX coin and what makes GMX special?

The special thing is that GMX coin is positioning itself as a leader in the space of providing derivative products. GMX can facilitate every transaction with low costs and no price slippage risk. To achieve this, GMX uses its own liquidity pools and trading prices are determined by Chainlink’s Oracle, using TWAPs (Time-Weighted Average Prices) from major DEXs.

GMX operates on Arbitrum and Avalanche, both of which are blockchains with low transaction fees and high transaction speed, providing a smooth and time-saving trading experience. Notably, GMX was one of the first Perpetual exchanges on Arbitrum and attracted a lot of attention at launch, with steady revenue growth in its first three months of operation.

GMX coin is an exchange with a quite unique operating model, it does not use an order-book model like dYdX, nor does it use AMM pools like Perpetual. It has its own liquidity pools and prices are traded based on the Oracle’s price.

For example, if you want to swap ETH for DAI on GMX, the process would be as follows:

• First, your ETH will be transferred to the ETH Pools.
• After confirming that ETH has been transferred, GMX will transfer DAI from the DAI pools to your account.
• The price will be calculated based on the Oracle provided by Chainlink, using TWAPs from major DEXs.

Similarly for Margin and Perpetual features:

• At GMX, you can use up to x30 leverage. The condition is that you must have collateral assets, GMX accepts any asset traded on GMX as collateral (example in the image is USDC).
• For example, if you want to use x5 leverage to buy ETH, you can simply open a Long/ Short position at the Oracle price, the project will implicitly understand that you are borrowing USDC to buy ETH.

To provide liquidity on GMX, users can use various tokens (ETH, BTC, LINK, UNI, USDC,…), and when providing liquidity, they will receive GLP tokens (representing GMX’s liquidity pools), and when they no longer want to provide liquidity, they can sell GLP to receive back tokens in the pool.

Because of its unique operating model, GMX continuously grows in volume and has tried to capture a small share of dYdX’s market. The average daily trading volume has surpassed 150 million USD since the beginning of the year.

Evaluation of GMX coin’s tokenomics

The GMX protocol maintains a dual-token system, meaning it has two tokens: GMX and GLP.

GLP was created as a unique method to encourage and attract liquidity on its exchange, and this is what makes GMX stand out compared to its competitors.

GLP token represents an index of assets used in GMX’s trading group. GLP can be minted using assets like BTC or ETH and can be burned to exchange these assets. The price of GLP depends on the price of its underlying assets, as well as the user’s exposure to the GMX market.

$GLP holders have exposure to all these assets, as well as transaction fees and some rewards in the form of $esGMX tokens.

• On Arbitrum, GLP holders earn 70% of the platform fees in ETH.
• On Avalanche, GLP holders earn 70% of the platform fees in AVAX.

GLP tokens minted must be held for a minimum of 15 minutes before they can be exchanged. Note that GLP on Arbitrum and Avalanche cannot interact and cannot be transferred between the two chains.

GMX: is a utility and governance token. It can now be staked with an interest rate of 22.95% on Arbitrum and 22.79% on Avalanche.

• Token Name: GMX
• Ticker: GMX
• Blockchain: Arbitrum, Avalanche
• Token Standard: ERC-20, ARC-20
• Contract:
  • Arbitrum: 0xfc5a1a6eb076a2c7ad06ed22c90d7e710e35ad0a
  • Avalanche: 0x62edc0692bd897d2295872a9ffcac5425011c661
• Token Type: Utility, governance token
• Total Supply: 13,250,000 GMX
• Circulating Supply: 9,836,466 GMX

The maximum supply of GMX is projected to be 13.25 million GMX, which may increase if more products are launched and liquidity mining is required. However, any changes must be voted on by governance beforehand.

Below is the allocation of 13.25 million GMX tokens:

• 6 million GMX from the migration process of XVIX and Gambit.
• 2 million GMX paired with ETH for liquidity on Uniswap.
• 2 million GMX reserved for registration from staked GMX rewards.
• 2 million GMX to be managed by the floor price fund.
• 1 million GMX for marketing, partnerships, and community development.
• 250,000 GMX linearly distributed to the team over 2 years.

It’s evident that most GMX tokens (45.3%) are allocated for the migration of XVIX and GMT (Gambit) holders. The migration process involves swapping original assets (XVIX, XLGE, and GMT) for GMX at a price of 1 GMX = 2 USD.

Additionally, GMX has a unique feature called the Floor Price Fund. The Floor Price Fund ensures liquidity in the GLP and provides ETH rewards for those who stake GMX. This fund grows in two ways:

• GMX/ETH liquidity provided and owned by the protocol, fees from this trading pair are converted into GLP and sent to the Floor Price Fund.

• 50% of the funds received through Olympus bonds are sent to the Floor Price Fund, with the remaining 50% used for marketing.

As the Floor Price Fund grows, it can be used to buy back and burn GMX if (Floor Price Fund) / (Total Supply of GMX) is less than the market price of GMX. This leads to a minimum floor price for GMX calculated in ETH and GLP.

What are the benefits of holding GMX coin?

GMX is a cryptocurrency with several benefits for its holders, not just ordinary governance. Holding GMX tokens of the project, you receive several benefits:

Firstly, as GMX is the utility token of the GMX exchange, you will have voting rights for governance activities.

Additionally, GMX holders will receive various types of rewards when staking the token:

• Revenue Sharing: GMX holders stake tokens to receive 30% of the total transaction fees in AVAX or ETH, depending on the chain you stake on.
• Escrowed GMX (esGMX): Staking GMX helps you earn esGMX, which can be used in two ways:
  • Continue to stake for esGMX and ETH similar to GMX.
  • Vesting to convert into GMX over one year. During the vesting period, esGMX does not accrue additional rewards.
• Multiplier Point: MP is another type of reward when you stake GMX, with a fixed APR of 100%. When you receive MP, you can continue to stake MP and receive rewards equivalent to staking 1 GMX. This helps long-term GMX holders receive a lot of rewards. However, if you unstake GMX, a corresponding amount of MP will also be burned.

Is GMX coin safe?

The GMX team is completely anonymous, meaning all users should research carefully. However, it’s worth noting that the protocol has accumulated over 375 million dollars in total value locked (TVL), meaning it is trusted by institutional investors and those with high net worth. This platform has also been thoroughly audited by ABDK Consulting, and you can find the complete audit on GMX Github.

Should you invest in GMX coin?

What are the advantages of GMX coin?

After understanding what GMX coin is and reviewing the operating model of GMX coin, I rate this as a very good project, being one of the most innovative and interesting products in the Defi field for the following reasons:

• GMX owns a strong revenue sharing model, an impressive liquidity pool model, and has the potential to rank GMX among the best DEXs currently available.
• The GMX platform is user-friendly with smooth trading experience and a system that provides users with complete data. Whenever entering or closing a trading position, it’s easy to find the size of the collateral asset, leverage amount, entry price, liquidation price, fees, available liquidity, slippage, spread, and PnL (profit and loss).
• Information about the GMX project on the website is very comprehensive, detailing the market capitalization of GMX and GLP and highlighting partnerships, integrations, and related community projects. It also provides information about the various components of the exchange and suggests methods to connect to Arbitrum or Avalanche, or how to get GMX and GLP tokens. In summary, GMX creates an impression of transparency.
• With permissionless access and leveraged trading, GMX combines the strengths of both decentralized and centralized exchanges.
• The trading volume of the GMX protocol has consistently shown impressive growth, even in bear market conditions, showing its immense competitive strength.
• GMX is relatively new compared to many competitors, but what it has achieved is quite astonishing. It’s evident that GMX has a lot of room to grow, making it worth your attention and inclusion in your watchlist.

What are the risks of GMX coin?

However, despite having many advantages, there are still some risks for GMX such as:

• Although GMX has an impressive revenue-sharing model, the revenue structure of the GMX protocol is based on the fact that the house will win (similar to other CEXs).
• GMX impresses with high APR/APY rates, but it is certain that these high rates will not last forever. As more users turn to GMX, these interest rates will decrease.
• GMX really only started operating around September 2021, and most of it was in a bear market, so it’s hard to evaluate its price performance.
• The anonymous founding team is always a concern for many investors, which is why Binance has placed it in the “Innovation Zone” – a place for coins with higher risks than usual.
• Projects like GMX and DEXs in general are often not “favored” by regulators, so they may face some regulatory issues in the future.

Does GMX coin have potential?

The derivatives market is the largest market in the world. Cryptocurrency derivatives also account for 61.7% of the traded cryptocurrency volume (as of May 2022) and continue to grow. This indicates that demand for derivative products remains strong despite the current market outlook being unfavorable.

Therefore, GMX is well-positioned to continue developing its platform with low fees and fast transactions. Additionally, the upcoming GMX team will create opportunities for other projects to build on GMX, expanding its reach and user base.

It’s noteworthy that 86% of the current circulating supply is staked on the platform, showing investor confidence in the project, despite the bear market.

Having a large amount of circulating supply staked will reduce panic selling and unnecessary market sales. This is evident as GMX is currently trading at a discount of only 54% compared to its ATH, while many cryptocurrencies have fallen an average of 80% from their ATHs.

Overall, GMX is one of the more unique and useful Defi projects. They provide a fast, smooth trading experience, offering many utilities for investors on Arbitrum and Avalanche.

The GMX token itself is also a valuable coin. Therefore, if you are looking for a Defi project to invest in, consider buying GMX coin with a small amount of capital. Surely, when the market recovers, the price of GMX will increase and bring you profits.

This article provides all the information about what GMX coin is. Hopefully, through this article, you have formed your own opinion about this coin, allowing you to make a decision on whether to buy GMX coin or not. If you have any questions, please leave a comment below for me to answer. Thank you for reading and I wish you successful investments.