Decentralized Finance (DeFi) can be an intimidating space to enter. With several scams, complicated protocols, and hard-to-navigate interfaces, many new entrants to Web3 can be overwhelmed in the DeFi ecosystem.

This recurring series looks at one DeFi protocol, simplifies what the protocol provides for the end user, and illuminates trading strategies for each.

Now I know what you’re thinking… Origins is an NFT platform, why research DeFi protocols? Well, the answer is simple: crypto is the currency of NFTs whether you trade on ETH, SOL, or L2s, so every NFT trader’s strategy should be to grow their fungible token stack in any way possible.

This can be done in DeFi by testing and using platforms for either passive income generation (with risk of course) or farming airdrops.

Today’s deep dive will be on GMX.

• What is GMX?

• Tokenomics

• Trading Strategies

• Closing Remarks

GMX is a decentralized spot and perpetual exchange that supports low swap fees and zero price impact trades. GMX operates on both Arbitrum and Avalanche.

The Arbitrum ecosystem has been crushing recent adoption and growth. So understanding some of the other applications being built on the Layer 2 blockchain can help us grasp an accurate picture of the likely trajectory of the entire ecosystem. Sometimes taking a step back, outside of the immediate NFT asset bubble, can help us identify trends ahead of the curve and provide our wallets with a little more dry powder.

Trading is supported by a unique multi-asset pool that earns liquidity providers fees from market making, swap fees, and leverage trading. Dynamic pricing is supported by Chainlink Oracles and an aggregate of prices from leading volume exchanges. I know what you’re thinking… WHAT DOES THIS MEAN???

Well, in layman’s terms, GMX is used for leverage trading large-cap cryptocurrencies Ethereum (ETH), Bitcoin (BTC), Chainlink (LINK), and Uniswap (UNI). The protocol is fully decentralized and uses an average of prices from top exchanges to price assets. Fees generated by the platform are shared with users and liquidity providers.

GMX is the protocol’s governance token and is currently trading at $52.84 with a $444 million market capitalization. GMX has been the best-performing crypto asset during the bear market, falling just 23% from its all-time-high. Holders have the option to stake their GMX for:

1. Escrowed GMX.

2. Multiplier Points.

3. ETH/AVAX rewards.

30% of fees generated from swaps and leverage trading are converted to ETH (for stakers on Arbitrum) and AVAX (for stakers on Avalanche). Rewards for staking GMX are:

• Escrowed GMX (esGMX).

• Multiplier points.

• ETH/AVAX depending on which chain you are on.

Stakers have the option to compound, or claim rewards. Compounding will stake multiplier points and esGMX, increasing stakers’ rewards over time. Claiming transfers rewards to your wallet.

The current circulating supply of GMX is about 8.4 million and the total supply will ultimately be determined by the amount vested, but is forecasted to be around 13.25 million tokens.

esGMX can be used in two ways:

1. Staked for rewards similar to GMX tokens.

2. Vested to become actual GMX tokens over a period of one year.

Each staked esGMX token will earn the same amount of rewards as a regular GMX token. esGMX tokens can be converted into GMX tokens through vesting. When vesting is initiated, the average amount of GMX or GLP tokens that was used to earn the esGMX rewards will be reserved.

For example:

If you staked 1000 GMX and earned 100 esGMX tokens, then to vest 100 esGMX tokens, 1,000 GMX tokens will be reserved.

To vest 50 esGMX, 500 GMX tokens will be reserved. Vested esGMX will become GMX tokens one year after initiating vesting.

GMX stakers will receive multiplier points every second at a fixed rate of 100% APR. 1,000 GMX staked for one year would earn 1,000 multiplier points. This is used to reward long term holders without inflation of the GMX token by boosting APRs when staked.

GLP is the protocol’s liquidity provider token consisting of an index of assets used for swaps and leverage trading. It can be minted using any index asset (BTC, ETH, USDC, LINK, UNI) and redeemed for any index asset.

GLP is automatically staked, and holders earn esGMX and 70% of platform fees in ETH. Liquidity providers (GLP holders) make a profit when leverage traders make a loss. Past PnL data and other stats can be viewed here https://stats.gmx.io.

Fees for minting GLP will vary based on the amount of the asset within the protocol. For example, if there is 60% USDC and 12% ETH, fees will be cheaper providing ETH for liquidity.

As the leading DeFi platform on Arbitrum, GMX has several different investment strategies. High level degenerates can try their hand trading with leverage on the platform up to 50x (although would not recommend - it is incredibly risky, especially if you are new to leverage). As previously mentioned, the only assets available to trade are BTC, ETH, LINK, and UNI. One of the drawbacks to the platform is there is low liquidity, so at times leverage is capped much lower than 50x.

Another popular strategy for those not willing to touch leverage is parking some capital into GMX or GLP and collecting the rewards.

With GLP, stakers will earn both esGMX and ETH rewards as previously discussed. The APR for GLP stakers is currently 19.6% and has gone up as high as 30.0%. GMX APR is currently at 9.1%. The APR is determined through fees generated by the protocol. As displayed in the chart below, fees for the protocol are on an upward trajectory, and as Arbitrum continues to gain market share, this trend could continue.

Historically, GLP has also been remarkably stable as an asset. Below is a chart of GLP performance for the last month. (To caveat that the past is not indicative of the future but can guide us).

Another reason to be bullish on the platform is the volume it is generating. Below is a chart showcasing the volume on GMX over the course of the last month.

Increased volume means increased fees, and more potential rewards for GMX and GLP stakers.

In this time period, GMX token has increased 16.2%.

There are several reasons to be bullish on GMX. First, it’s on a Layer-2, Arbitrum, meaning gas fees are minuscule, and transactions are faster than on Mainnet. The blockchain is growing rapidly with the growth in developers, applications and unique active wallets, respectively. Having this broad understanding of the ecosystem growth enables us to make informed decisions within its NFT market.

Next, GMX is the most used DeFi protocol on Arbitrum as well as having the highest TVL of any derivatives exchange in all of crypto. In Layman’s terms, GMX is crushing the competition.

The last reason is GMX is a decentralized protocol that shares its fees with users and liquidity providers and is only dependent on audited smart contracts and the community. In light of the scenarios we experienced this year, this is arguably the most important reason to be bullish on GMX.

To get started with GMX, bridge ETH or USDC to Arbitrum and head over to the application.

At OriginsNFT we leverage data-driven decision-making, educational resources, and proprietary analytics to remain ahead of the curve with respect to blockchain tech and specifically NFTs. To find out more, please visit our website or Twitter.

To purchase a pass, please visit our Opensea page.

Decentralized Finance (DeFi) can be an intimidating space to enter. With several scams, complicated protocols, and hard-to-navigate interfaces, many new entrants to Web3 can be overwhelmed in the DeFi ecosystem.

This recurring series looks at one DeFi protocol, simplifies what the protocol provides for the end user, and illuminates trading strategies for each.

Now I know what you’re thinking… Origins is an NFT platform, why research DeFi protocols? Well, the answer is simple: crypto is the currency of NFTs whether you trade on ETH, SOL, or L2s, so every NFT trader’s strategy should be to grow their fungible token stack in any way possible.

This can be done in DeFi by testing and using platforms for either passive income generation (with risk of course) or farming airdrops.

Today’s deep dive will be on GMX.

• What is GMX?

• Tokenomics

• Trading Strategies

• Closing Remarks

GMX is a decentralized spot and perpetual exchange that supports low swap fees and zero price impact trades. GMX operates on both Arbitrum and Avalanche.

The Arbitrum ecosystem has been crushing recent adoption and growth. So understanding some of the other applications being built on the Layer 2 blockchain can help us grasp an accurate picture of the likely trajectory of the entire ecosystem. Sometimes taking a step back, outside of the immediate NFT asset bubble, can help us identify trends ahead of the curve and provide our wallets with a little more dry powder.

Trading is supported by a unique multi-asset pool that earns liquidity providers fees from market making, swap fees, and leverage trading. Dynamic pricing is supported by Chainlink Oracles and an aggregate of prices from leading volume exchanges. I know what you’re thinking… WHAT DOES THIS MEAN???

Well, in layman’s terms, GMX is used for leverage trading large-cap cryptocurrencies Ethereum (ETH), Bitcoin (BTC), Chainlink (LINK), and Uniswap (UNI). The protocol is fully decentralized and uses an average of prices from top exchanges to price assets. Fees generated by the platform are shared with users and liquidity providers.

GMX is the protocol’s governance token and is currently trading at $52.84 with a $444 million market capitalization. GMX has been the best-performing crypto asset during the bear market, falling just 23% from its all-time-high. Holders have the option to stake their GMX for:

1. Escrowed GMX.

2. Multiplier Points.

3. ETH/AVAX rewards.

30% of fees generated from swaps and leverage trading are converted to ETH (for stakers on Arbitrum) and AVAX (for stakers on Avalanche). Rewards for staking GMX are:

• Escrowed GMX (esGMX).

• Multiplier points.

• ETH/AVAX depending on which chain you are on.

Stakers have the option to compound, or claim rewards. Compounding will stake multiplier points and esGMX, increasing stakers’ rewards over time. Claiming transfers rewards to your wallet.

The current circulating supply of GMX is about 8.4 million and the total supply will ultimately be determined by the amount vested, but is forecasted to be around 13.25 million tokens.

esGMX can be used in two ways:

1. Staked for rewards similar to GMX tokens.

2. Vested to become actual GMX tokens over a period of one year.

Each staked esGMX token will earn the same amount of rewards as a regular GMX token. esGMX tokens can be converted into GMX tokens through vesting. When vesting is initiated, the average amount of GMX or GLP tokens that was used to earn the esGMX rewards will be reserved.

For example:

If you staked 1000 GMX and earned 100 esGMX tokens, then to vest 100 esGMX tokens, 1,000 GMX tokens will be reserved.

To vest 50 esGMX, 500 GMX tokens will be reserved. Vested esGMX will become GMX tokens one year after initiating vesting.

GMX stakers will receive multiplier points every second at a fixed rate of 100% APR. 1,000 GMX staked for one year would earn 1,000 multiplier points. This is used to reward long term holders without inflation of the GMX token by boosting APRs when staked.

GLP is the protocol’s liquidity provider token consisting of an index of assets used for swaps and leverage trading. It can be minted using any index asset (BTC, ETH, USDC, LINK, UNI) and redeemed for any index asset.

GLP is automatically staked, and holders earn esGMX and 70% of platform fees in ETH. Liquidity providers (GLP holders) make a profit when leverage traders make a loss. Past PnL data and other stats can be viewed here https://stats.gmx.io.

Fees for minting GLP will vary based on the amount of the asset within the protocol. For example, if there is 60% USDC and 12% ETH, fees will be cheaper providing ETH for liquidity.

As the leading DeFi platform on Arbitrum, GMX has several different investment strategies. High level degenerates can try their hand trading with leverage on the platform up to 50x (although would not recommend - it is incredibly risky, especially if you are new to leverage). As previously mentioned, the only assets available to trade are BTC, ETH, LINK, and UNI. One of the drawbacks to the platform is there is low liquidity, so at times leverage is capped much lower than 50x.

Another popular strategy for those not willing to touch leverage is parking some capital into GMX or GLP and collecting the rewards.

With GLP, stakers will earn both esGMX and ETH rewards as previously discussed. The APR for GLP stakers is currently 19.6% and has gone up as high as 30.0%. GMX APR is currently at 9.1%. The APR is determined through fees generated by the protocol. As displayed in the chart below, fees for the protocol are on an upward trajectory, and as Arbitrum continues to gain market share, this trend could continue.

Historically, GLP has also been remarkably stable as an asset. Below is a chart of GLP performance for the last month. (To caveat that the past is not indicative of the future but can guide us).

Another reason to be bullish on the platform is the volume it is generating. Below is a chart showcasing the volume on GMX over the course of the last month.

Increased volume means increased fees, and more potential rewards for GMX and GLP stakers.

In this time period, GMX token has increased 16.2%.

There are several reasons to be bullish on GMX. First, it’s on a Layer-2, Arbitrum, meaning gas fees are minuscule, and transactions are faster than on Mainnet. The blockchain is growing rapidly with the growth in developers, applications and unique active wallets, respectively. Having this broad understanding of the ecosystem growth enables us to make informed decisions within its NFT market.

Next, GMX is the most used DeFi protocol on Arbitrum as well as having the highest TVL of any derivatives exchange in all of crypto. In Layman’s terms, GMX is crushing the competition.

The last reason is GMX is a decentralized protocol that shares its fees with users and liquidity providers and is only dependent on audited smart contracts and the community. In light of the scenarios we experienced this year, this is arguably the most important reason to be bullish on GMX.

To get started with GMX, bridge ETH or USDC to Arbitrum and head over to the application.

At OriginsNFT we leverage data-driven decision-making, educational resources, and proprietary analytics to remain ahead of the curve with respect to blockchain tech and specifically NFTs. To find out more, please visit our website or Twitter.

To purchase a pass, please visit our Opensea page.