In the last 12 months, GMX (GMX.io) token price has increased by 22%, whereas Bitcoin (BTC) and Ethereum (ETH) have both decreased by 57%.

How does GMX.io work?

GMX.io is a decentralized spot and perpetual exchange that enables users to trade BTC, ETH or AVAX and other cryptos directly from their self-custody wallets - e.g., MetaMask, TallyHo or Coinbase wallet. This DeFi (Decentralized Finance) application is available on Arbitrum (Ethereum's layer-2) and Avalanche chains. GMX users can do spot swaps and trade perpetual futures up to 50x leverage, similarly to how it is done on a centralized exchange.

There are two tokens on GMX.io:

• GMX is the utility and governance token which accrues 30% of the platform generated fees, i.e., stakers earn a part of the fees paid by the traders;
• GLP is the liquidity provider token, which accrues 70% of the platform generated fees and consists of an index of assets, with 50-55% stablecoins, 25% ETH (on Arbitrum) or AVAX (on Avalanche), 20% BTC, and 5-10% other altcoins, such as Chainlink and Uniswap.

Therefore, the generated revenue from fees is split 70% with GLP and 30% with GMX stakers. The APR (Annual Percentage Rate) is currently 33% with GLP and 13% with GMX on Arbitrum, and 55% with GLP and 15% with GMX on Avalanche. GMX.io is one of the platforms generating the highest fees:

As shown above, GMX.io generates more fees than BNB Smart Chain or Bitcoin. Only Ethereum and Uniswap generate higher fees.

What are the possible strategies on GMX.io?

There are three possible strategies, from the most risky to the least risk one:

• To use GMX.io as a trader with long or short and leverage (please do it at your own risk...);
• To stake GMX to earn fees and bet on a possible increase of GMX token price;
• To stake GLP to earn (higher) fees and bet on the stability of GLP index.

The earned fees will be esGMX (escrowed GMX) and ETH (on Arbitrum) or AVAX (on Avalanche). The esGMX can be vested by reserving as much GMX or GLP that has been staked to earn them. It means that a significant portion of the stakers will rebuy GMX for vesting esGMX, what is good for token price.

Disclaimer: this article does not contain any financial advice. The information is provided for general informational and educational purposes only.

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