How GMX Became an Incidental Beneficiary of Eroded Trust in Centralized Exchanges

Investing

Published: December 13, 2022 10:19 pm

Decentralized perpetual exchange GMX has continued to attract more users and even outperform its decentralized peers. The platform’s native token, GMX, has gained more than 60% over the past 30 days despite the overall sour market conditions.

Notably, GMX has further extended its daily gains after the recent news around Sam Bankman-Fried, the disgraced founder and former CEO of FTX, who has been arrested in the Bahamas.

GMX Outperforms Peers to Rise as the Biggest Winner of FTX Collapse

GMX, the native token of the decentralized perpetual exchange GMX, has become the best performer among its peers. The token has gained more than 60% over the past month, approaching an all-time high for the third time in the last year.

As of now, GMX is trading at $59.16, up by 4.6% over the past day. The token is just 5% away from its all-time high of $62.10 recorded in mid-January 2022. By comparison, tokens of other decentralized trading platforms have underperformed considerably over the same period.

For instance, Gains Network (GNS) and Perpetual Protocol (PERP) have seen their native tokens gain 24% and 14% over the past month. The native tokens of some decentralized trading platforms like dYdX (DYDX) and Futureswap (FST) have even posted negative gains, losing over 9% and 34% over the past month.

What is GMX? What is Special About it?

GMX is a decentralized spot and perpetual trading platform that allows users to trade a wide range of digital assets directly from their crypto wallets. Unlike centralized crypto exchanges like Binance and Coinbase, GMX is non-custodial, facilitating trustless leveraged trading using smart contracts rather than taking custody of users’ assets.

The DEX has seen a steep rise in popularity amid the collapse of FTX. As reported, FTX filed for Chapter 11 bankruptcy in early November after failing to secure emergency funding. The company reportedly has about $10 billion in liabilities. The incident eroded user trust in centralized players and also created a gap in the perpetual market.

Consequently, GMX, Gains Network, and Uniswap started to attract new users and increase volume and open interest. According to a Dune Analytics Dashboard, GMX saw a record trading volume of over $1.1 billion on November 11, the day FTX filed for bankruptcy.

The income of GMX has also increased by 107%, reaching $5 million in November. Notably, the platform earned a record $1.15 million in trading fees on November 20, surpassing Uniswap’s $1.06 million for the first time ever.

First launched on the Arbitrum One blockchain in 2021, GMX has several unique features that make it stand out from the crowd. For one, it aims to provide a better trading experience with low swap fees and zero-price impact trades. It also allows users to trade crypto assets with up to 50x leverage directly from their wallet.

The platform has two tokens. GMX is its utility and governance token, while GLP is the GMX Liquidity Provider token. Users can stake these tokens and earn rewards. For instance, GMX holders make 30% of all generated protocol fees, and the remaining 70% is distributed among GLP owners.

This article originally appeared on The Tokenist

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