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How GMX Works On Arbitrum: Here's Why You Should Use It!


In this guide I will talk about GMX: one of the most interesting platforms on Arbitrum. This is a step-by-step guide, if you already know how to transfer funds from an exchange or how to use Metamask you can immediately get to the point that interests you!

WHAT IS GMX?
GMX is a dex that allows you to make trades (spot and perpetual) and to provide liquidity. Perpetual offers the possibility of trading on leverage by applying for a loan. The platform incorporates the Chainlink oracle for price tracking and a tool called twap (which averages the prices of FTX, Binance and Bitfinex). You can also insure your funds on GMX: Crypto Insurace
You can use GMX via two blockchains:

1) Arbitrum (Layer2)
2) Avalanche

I advise you to use Arbitrum because this layer2 doesn't have the token yet. It is very likely that if they were to create their token they will do an airdrop for all those who have used Arbitrum and in particular GMX (which today is the most important platform as it is native to the protocol).

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WHAT CAN YOU DO ON GMX?
1) Spot trading
2) Trading in leverage (perpetual)
3) Provide liquidity (you make money, when traders lose money! This is possible if you provide liquidity in the GLP pool!)
4) If you use the GLP pool or GMX token you will also earn Eth passively (range APR: 7-27%)
5) Get a thousand dollar airdrop, IF Arbitrum will make its token (I remember Optimism, the other layer2 on Ethereum, 2 months ago made an airdrop for everyone who used their blockchain!)


SPOT TRADING 
Spot trading is very simple. When you go to GMX, you will see "trade" at the top right. Press on it and in the new screen you will have 3 possibilities: long, short, swap.
If you hit "swap" you can buy and sell spots. You can also place "limit" orders. There is no slippage on the dex.
7c073e9d09356361a941925b43ef9852101675315736090da6e69532c8c5a47c.png

PERPETUAL TRADING (LEVERAGE)
Still in the same section, you notice "Long" and "Short". "Long" means to earn on the rises of the market, "Short" instead means to earn on the falls. The leverage you can read below and it goes from 2x to 30x.
bcc1ef4ff7448b5868257b012eb2705f38eb3f20701c74af2036cb6bdd6ad05e.pngIf you are not an expert, I advise you to use spot trading or low leverage. The higher the leverage...the greater the gain but the greater the chances of being liquidated. In any case, below you can also read the liquidation price (due to the borrow fee, the liquidation price increases slightly over time).
If I decide to open a "short" on Eth, it means hoping that the price will drop. The profit will be paid in Usdc. If I go "long", the profit is paid in Eth. The open fee when opening the position is 0.1% (it is calculated on the total position, including the leverage used), when closing it always 0.1%. If I have 100 Usdc and use 2x leverage, I will have 200 Usdc to open my position (long or short). I can also insert "stop loss" and "take profit" by clicking on "edit" in the summary of my open position.
7e2c70c87b0ef29cd07f7de7f2b49a79ec67b69ed592b91409d16cc7367d81c0.png

EARN BY DEPOSITING LIQUIDITY (GLP) WITHOUT TRADING
It is possible to provide liquidity using GLP. GLP is like an index that tracks the price of 9 tokens (a basket of tokens supported by GMX: wBTC, wETH, Usdc, Usdt, Uni, Dai, Frax, Link, Mim). You go to the "earn" section and then click on "Buy GLP" below.
7e59c8b5239575036029ac74d628f06a3aa517f254c71ccb75ef735e6d4b5bda.pngIf you buy GLP, you will make money when traders lose money on the platform. GLP is the liquidity provider token. If you hold a GLP holding you will earn 70% of the platform fees. Is it convenient to have GLP as an LP? As you know, traders usually lose money. You can check it here: GMX (stats) and if you notice the "red" loss bar is greater than the "green" one (traders' gains).
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What are the revenues of the platform?
1) Swap fee
2) Open fee for leveraged positions
3) Close fee for leveraged positions
4) Borrow fee (to keep a leverage position open)
5) Liquidation fee

In addition to the platform fees, if you bought GLP you will earn 27% APR in Eth (platform fee)! If you use GMX on Avalanche, you will be paid in Avax. A part is also paid in the native GMX token (we will see what it is below). There are also "multiplier points apr" which boost returns while maintaining liquidity for as long as possible.
b208492464e03c39856315a8394b73dd8e1b66969973979aad39f105207ed631.pngYou can sell GLP whenever you want. Just click on "sell GLP" and sell in Eth or stablecoin.

GMX STAKING
GMX instead is the native token of the platform and allows you to earn 30% of the platform fees + an APR of 22% (if staked). 22% will be paid in 15% in GMX and 7% in Eth. GMX is also the governance token (DAO). You can always find it in the "earn" section.

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STEP BY STEP GUIDE
1) Go to Binance and buy Eth. You can withdraw it directly on Arbitrum (0.50 $ fee) but I recommend you use a bridge (to have a better chance of receiving the Arbitrum airdrop).

2) If you want to use a bridge to deposit on Arbitrum, I recommend using Polygon. You can also use Ethereum but you will pay a few dollars in commission. If you use Polygon you will pay a $ 0.01 bridge fee. If you decide to use Polygon, please withdraw using the Polygon network on your Polygon receiving address (Metamask).

3) If you have already configured Polygon on Metamask, you can make the withdrawal on your address. If you do not have the network Polygon configured, open Metamask, click on "Ethereum Mainnet" and then at the bottom on "add network" and enter the data:
9173ac8e53f55412cb1080a92c762053391aa1b9d3b24314893e6dc2badc1320.png
To set up the Arbitrum network, you need to do the same thing. Always "add network" and enter the data:
5fd28e6f45714ad62bf65b0104fdafe8746cf421153c532b0c357bccd01bd6d2.pngAlternatively, if you go directly to GMX, when you try to connect the wallet, the site lets you add the "Arbitrum data" automatically.

4) Well, you have the Polygon and Arbitrum networks configured on Metamask. At this point, withdraw Eth from Binance on Polygon address and then you can use Across.to (Bridge For Arbitrum). Select the sending chain "Polygon", the asset you want to transfer "Eth" and then the destination chain "Arbitrum". Confirm the required smart contracts (via Metamask) and in about ten minutes you will have your Eth on Arbitrum. Remember that on Arbitrum the fees are paid via Ethereum! Arbitrum is very cheap. Across bridge could also make an airdrop for those who use their bridge!

5) You connect to GMX and follow the guide above. You can trade spot, trade perpetual, provide liquidity (GLP LP) or buy GMX and stake it. In addition to having a possible profit on everything you do on the platform, I remind you that you may be eligible for the Arbitrum airdrop IF one day they will launch their token. You can also do some weekly swaps proving that you are an active user of the Arbitrum network. It might be enough for the airdrop.
How big was the Optimism airdrop? On average around $1500. Some users received 15,000 $OP which in the first few hours of launch was worth $45,000! How much did I get from the Optimism airdrop? You can read it in the photo below (I sold for about $2, below is today's $OP price):

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Don't be frightened by all these steps. If you know how to use Metamask it is very easy to use Arbitrum. I made this step by step guide to help those who have never used Metamask and DeFi in general! I have been using GMX for several months and I am doing very well, however I remind you to always do your research (DYOR) before investing in a token or using a platform!

 

Are you interested in ways to earn crypto bonus? Check it out here: Some Sites To Earn Crypto Bonus: Old & New (August 2022)

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