GMX is a decentralized perpetuals and spot exchange on Arbitrum and Avalanche. It's one of the longest-running on-chain perp DEXes and pioneered the liquidity pool-as-counterparty model that Drift Protocol and others have since adopted.
GMX v2: The Current Architecture
GMX v2 launched in 2023 with isolated markets replacing the single shared liquidity pool. Each market in v2 has its own GM (GMX Market) pool.
GM pools: Each trading pair (BTC/USD, ETH/USD, SOL/USD) has a dedicated GM pool with a long token, a short token, and a synthetic price exposure. LPs deposit into a GM pool and earn trading fees from that specific market.
Example: The ETH/USD GM pool holds ETH (as long collateral) and USDC (as short collateral). Traders long ETH use ETH as collateral; traders short ETH use USDC. The pool profits when traders lose.
Synthetics: GMX also supports synthetic markets — any asset can be traded using USDC as collateral, without the protocol holding the actual asset. This enables markets for stocks, commodities, and long-tail crypto.
GLP: The Legacy Pool (v1)
GMX v1 used a single multi-asset pool (GLP) as counterparty for all trades. GLP held ETH, BTC, LINK, UNI, USDC, USDT, DAI, and FRAX.
GLP holders earn:
- 70% of all trading fees from GMX v1
- Yield from the underlying assets when not being used as trader collateral
GLP is still active and earns significant yield, but v2 GM pools are now the primary venue for new markets.
How Perp Trading Works on GMX
- Go to app.gmx.io and connect your Ethereum wallet (Arbitrum network)
- Select a market (e.g., ETH/USD)
- Choose Long or Short, enter size and collateral
- Set leverage (up to 100x) — GMX shows liquidation price
- Confirm — trade executes against GM pool liquidity
Fees: GMX charges an opening fee (0.05–0.1% of position size) and a borrowing fee (based on pool utilization, charged hourly).
Price feed: GMX uses Chainlink + Pyth oracle feeds. Prices are pulled from multiple sources to prevent oracle manipulation.
GMX vs Drift vs Hyperliquid
| Feature | GMX | Drift | Hyperliquid | |---------|-----|-------|-------------| | Chain | Arbitrum/Avalanche | Solana | Hyperliquid L1 | | Max leverage | 100x | 20x | 50x | | LP mechanism | GM pools | JLP pool | HLP vault | | Synthetics | Yes | No | No | | Token | GMX | DRIFT | HYPE |
GMX excels at high-leverage synthetics on EVM. Drift is the Solana-native choice. Hyperliquid dominates raw volume.
GMX Token and Staking
GMX is the protocol's governance and revenue-sharing token. Stake GMX to receive:
- 30% of platform fees in ETH/AVAX
- Multiplier Points (boost staking yield over time)
- esGMX (vested GMX) as additional rewards
esGMX (escrowed GMX) vests over 1 year into real GMX. It can also be staked for the same rewards while vesting.
Risk Factors
Counterparty risk: GM pool LPs are counterparty to traders. A sustained run of profitable traders (e.g., during a sharp directional move) reduces pool value.
Oracle risk: Large positions can be affected if oracle prices deviate from market prices during high volatility.
Smart contract risk: GMX has been audited but holds hundreds of millions in TVL.