The Arbitrum ecosystem has been gaining a ton of traction lately from investors (especially with the anticipation of $ARBI token) and developers alike. This has seen TVL sitting at a whooping $1.03b despite the ugly market condition.
This is a remarkable feat, and with GMX leading with a TVL of over $408m, it’s pretty much decent to find out why it’s gaining momentum.
So, what’s GMX?
GMX is a decentralized spot and perpetual exchange that supports low swap fees and zero price impact trades with up to 50x leverage. It is currently launched on two networks – Arbitrum & Avalanche.
And with all the chaos and uncertainty fueled by the FTX collapse, traders are beginning to switch to decentralized exchanges as they no longer trust their centralized counterparts. GMX has helped provide a seamless and incredibly fast trading experience to traders and this has helped grow its user base.
GMX also follows the ‘Real Yield’ narrative which is obviously one of the recent remarkable innovations in DeFi. Protocols who adopt the ‘Real Yield’ narrative pay out their rewards in either stablecoins or $ETH rather than inflationary tokens intended to attract user funds. These tokens accrue little or no utility to holders and are eventually dumped when they are claimed.
This is why protocols who adopt the ‘Real Yield’ narrative are gaining traction amongst investors, and GMX is not excluded.
It has gone on to witness exponential growth since its launch with its current TVL across parent chains rounding off to over $463m.
That’s an awesome feat in my books.
Two tokens make up the GMX ecosystem – $GMX & $GLP. GMX can be bridged between Arbitrum and Avalanche using Synapse.
Stakers of $GMX accrue 30% of fees generated from swaps and leverage trading are converted to $ETH/$AVAX. Stakers of $GMX on Arbitrum receive $ETH as rewards while their counterparts on Avalanche receive $AVAX as reward.
Holders of the $GLP token earn $esGMX (Escrowed GMX) rewards and 70% of platform fees distributed in ETH/AVAX depending on the network it’s minted on.
Here’s what this means – 100% of the fees generated from the protocol are distributed back to users of the protocol and stakers/holders of $GMX & $GLP tokens.
In fact, many protocols have gone ahead to build their yield aggregators & vaults on $GLP because of the real yield narrative.
Here are some of them:
- https://twitter.com/rage_trade (most liquid, composable & Omnichain ETH Perp on Arbitrum).
- https://twitter.com/GMDprotocol (New era of decentralized perpetual exchange on Arbitrum).
Due to the success amassed by GMX protocol, it has seen forks from even other blockchain networks.
The $GMX token is currently trading at $42 with a market cap of over $354m. The circulating supply is sitting at $8.3m which is pretty cool in my opinion thus driving demand amongst investors. And with over 83% of the circulating supply staked in the protocol, you can only but imagine where the price may skyrocket to when the market conditions are favorable again.
Plus the MC/TVL ratio (which is used to discern whether a protocol is currently overvalued or undervalued) is currently sitting at 0.9 according to https://defillama.com. This suggests that GMX is currently undervalued and still has room for tremendous growth.
The MC/TVL ratio is calculated by dividing the market cap (MC) of a protocol by its total value locked (TVL). MC/TVL ratio of over 1.0 may signify that a protocol is currently overvalued while one that is less than 1.0 may signify that the protocol is undervalued and still has growth potential.
Now, all of this does seem pretty cool but none of this is financial advice as this post is strictly designed for educational purposes only. It is, however, advised that you do your due diligence before investing in any protocol.
If you want to learn more about GMX Protocol, here are your go-to places:
Twitter : @GMX_IO
Docs : https://t.co/ElgcJu2NSe
Discord : https://t.co/kjumoTGJYN
Website : https://t.co/0YFAIATkOk
Written by : Paschal Lawrence.