Cryptocurrency GMX Review 2023-Must Read Before You Get It

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GMX is a decentralized spot and perpetual exchange that supports low swap fees and trades with zero price impact.
Trading is backed by a unique multi-asset pool that earns liquidity provider commissions for market creation, swap fees, leveraged trading (spreads, funding and liquidation fees) and asset rebalancing.

Token
GMX tokens can be linked between Ethereum and Arbitrum, but please do not use this feature unless absolutely necessary. All features are on Arbitrum, so there shouldn’t be a good reason to merge tokens. If you transfer tokens from Arbitrum to Ethereum, there will be a 7-day waiting period during which you will not have access to your tokens.

Floor Fund
The GMX token has a floor price fund in ETH and GLP. It grows in two ways:
20% of platform fees are converted into GLP and transferred to the floor fund.
GMX/ETH liquidity will be provided and owned by the protocol, fees from this trading pair will be converted into GLP and deposited into the bottom price fund.
The current minimum price fund can be viewed in the control panel.
In the first months after launch, the goal is to maximize the bottom price fund. This will provide liquidity in GLP and ensure a reliable flow of ETH rewards for all GMX staked.
As the floor price fund grows, it can eventually be used to buy back and burn GMX if (floor price fund) / (total GMX supply) is less than the market price, this will result in a floor price on GMX in terms of ETH and GLP .

Supply
The GMX supply at launch will be 6 million GMX tokens, with an additional 1 million GMX staking ranging from $2.00 to $20.00. Uniswap V3 for liquidity.

The circulating supply after 12 months will vary depending on the number of tokens to be transferred, the number of tokens used for marketing / partnerships, and the number of tokens purchased from Uniswap. The projected maximum supply is 13.25 million GMX tokens.

Minting in excess of the maximum amount of 13.25 million is controlled by a 28-day time block. This option will only be used if more products are launched and liquidity mining is required.

6 million GMX from XVIX Gambit and Migration.
2 million GMX paired with ETH for liquidity on Uniswap.
2 million GMX are reserved for the transition from the Transferred GMX award.
2 million GMX tokens will be managed by a floor price fund.
1 million GMX tokens reserved for marketing, partnerships and community developers.
250,000 GMX tokens are distributed among the team linearly over 2 years.

GLP
The GLP consists of an index of assets used to trade swaps and leverage. It can be minted using any index asset and burned to buy back any index asset. The minting and redemption price is calculated based on (total asset value in the index) (GLP offer).

GLP token holders receive Escrowed GMX rewards and 50% platform fees distributed in ETH.
Because GLP holders provide liquidity for leveraged trading, they will profit when leveraged traders incur losses and vice versa. Based on Gambit’s past PnL data, profits and losses are on average equal.

Rebalancing
The fees for minting GLP, writing GLP, or doing swaps will depend on whether the action improves or reduces the asset balance. For example, if an index has a high percentage of ETH and a small percentage of USDC, actions that further increase the amount of ETH the index holds will have a high fee, while actions that decrease the amount of ETH the index holds will have a low payout. The weight of the tokens can be seen on the toolbar.

The average price of an asset at the time it was used to mint the GLP is used to calculate the relative asset balance. For example, if the price of ETH is $5,000 and GLP minting uses 100 ETH + $500,000, then the protocol tracks that the index consists of $500,000 in ETH and $500,000 in USD. If the price of ETH rises to $10,000, the index will still target the same balance of 100 ETH + $500,000 because the average price at the time of minting is used.

Price values ​​are updated once a week, so in the example, if the price of ETH is $10,000 at the time of rebalancing, then after the price update, the index will target a composition of 75 ETH worth $750,000 + $750,000.

This mechanism improves index performance by ensuring that it does not rebalance too frequently, while at the same time allowing the protocol to algorithmically maintain a balanced impact on index assets.

In cases where prices fluctuate in a range for several weeks, the rebalancing mechanism can outperform a conventional buy and hold strategy.

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