We briefly discuss below the advantages and disadvantages of the GMX protocol for three types of users: users of exchange assets, liquidity providers, and speculative traders. What are the advantages and disadvantages?
The number of coins circulating in the market and available to the public for trading, similar to publicly traded shares on the stock market.
Traders or users who exchange assets use the GLP liquidity pool to buy and sell. Regarding spot trading, the GLP liquidity pool is not very different from other automated market maker agreements in that it charges 0.
$GMX is the protocol’s utility and governance token. $GMX has a forecasted maximum supply of 13.25 million tokens, which can be increased if there are more products launching and liquidity mining is required. But that will be subjected to a governance vote before any changes.
In many ways, the GMX exchange is a better trading platform from a trader’s point of view. Open and close positions at GMX are not bought and sold with an order book or AMM liquidity pool, so there are pelo slippage issues. In addition, the GMX protocol uses Chainlink’s dynamic aggregation prognostic machine to aggregate quotes from multiple exchanges, which filters out illiquid and abnormal extreme value prices, thus reducing the risk of liquidation.
As you can see, the GLP liquidity provider is in a betting relationship with the trader, and when the trader wins, the GLP liquidity pool shrinks. Conversely, when a trader loses money, the GLP liquidity pool grows.
GMX has a strong and active community of users and supporters. This community plays a crucial role in the development and success of the GMX project.
This reduces the price volatility of GMX and provides a stable source of income for pledgers. Users who stake GMX tokens also receive Multiplier Points, which boost the user’s share of GLP liquidity pool proceeds by a certain percentage.
Regarding protocol development, the GMX exchange has also issued GMX tokens. GMX tokens can be used for the protocol’s governance and staking, to adjust the rate structure and the weight of different copyright assets that affect the GLP liquidity pool, and to receive 30% of the transaction fees, funding rates, and clearing fees in the GLP liquidity pool. The proceeds are directly converted to ETH or AVAX.
GMX is a decentralized spot and perpetual exchange that supports low swap fees and zero price impact trades. GMX is the native utility and governance token.
GMX is a decentralized exchange click here that supports spot and perpetual contract trading. It encourages users to deposit copyright assets into a liquidity pool to become market makers and earn transaction fees.
GMX also supports perpetual contract trading with up to 30x leverage, zero spreads, and aggregated oracle quotes to help traders reduce liquidation risk, more accurately control positions, and predict gains and losses.
* The information is not intended to be and does not constitute financial advice or any other recommendation of any sort offered or endorsed by Gate.io.
The most important thing for an exchange is liquidity, which is needed to create a deep enough trading market to attract many people to use and generate revenue.