Page 5

‍

Technology & Infrastructure Summary: Technologically, GMX stands out for its elegant architecture that balances performance with decentralization. By using an aggregated liquidity pool (GLP) and oracle-based pricing, GMX avoids on-chain order books and achieves near-instant trade execution at fair prices (GMX price today, GMX to USD live price, marketcap and chart | CoinMarketCap). It has successfully scaled on Arbitrum (leveraging Ethereum’s security with L2 speed) and Avalanche (high throughput), and it recently proved chain-agnostic by launching on Solana (GMX to Be Integrated With Solana — TradingView News). The smart contracts have been rigorously audited – multiple audits (ABDK, Dedaub, Guardian) found and helped fix dozens of issues before they could impact users (GMX smart contract audit report | Dedaub Audit Reports) (Comprehensive Smart Contract Audits | Guardian). As a result, GMX has not experienced any hacks or contract exploits, even while more than half a billion dollars are locked and the system is battle-tested daily. This reliability is a key differentiator in a DeFi space often marred by exploits. From a scalability perspective, GMX has room to grow: Arbitrum’s upcoming throughput improvements and potential expansion to new L2s or L3s will allow GMX to serve even more users without performance degradation. Decentralization-wise, GMX’s operations (trade matching, liquidations) are largely decentralized through permissionless keepers and community governance, though the team retains emergency multi-sig controls which thus far have been used judiciously. The network has proven resilient under extreme volatility – when centralized platforms faced overload or downtime, GMX continued to function, which showcased the strength of its infrastructure. In summary, GMX’s technology – a fusion of solid smart contract engineering and innovative DeFi mechanism design – underpins the platform’s competitive edge and offers investors assurance of its scalability and security.

Investment Thesis and Outlook: GMX represents a compelling investment in the “picks and shovels” of the crypto trading economy, with the token offering both growth and yield components. The exchange has demonstrated strong unit economics, converting trading volume into protocol revenue, a portion of which flows to token holders (GMX Review 2025: Major DEX on Arbitrum and Avalanche). Unlike many crypto projects that prioritize growth at the expense of revenue, GMX is already sustainably profitable – in the first two years of operation, it has generated around $100–$200 million in fees (with daily fees sometimes exceeding $500k on volatile days) (GMX - DefiLlama). This revenue not only incentivizes liquidity providers and stakers, ensuring the platform’s longevity, but also provides a valuation anchor for the GMX token (often valued by investors in terms of a price-to-earnings or price-to-fees multiple, which for GMX has often looked reasonable compared to traditional equities in the exchange sector).

Looking ahead, GMX’s growth trajectory appears robust. Key catalysts on the horizon include the introduction of new synthetic markets (which could dramatically increase volume by attracting stock/forex traders to DeFi), the roll-out of the X4 protocol (positioning GMX as a base layer for others and potentially generating additional fee streams), and expansion to other high-activity chains (Optimism, Base, etc.). Each of these is not just hypothetical – the groundwork is being laid, as evidenced by governance discussions and the technical progress of GMX V2 (A Guide to GMX: Decentralized Perpetual Exchange and Crypto). Moreover, macro trends favor GMX: the crypto community’s emphasis on “not your keys, not your coins” post-FTX aligns with GMX’s model, and even regulatory pushback on centralized derivatives might inadvertently push users toward decentralized options like GMX that are harder to shut down (we’ve already seen U.S. users quietly migrate to DeFi when certain exchange offerings were restricted).

Of course, as detailed in the risk section, investors must remain vigilant about challenges. The most significant wildcard is regulatory intervention, which could impact GMX’s accessibility or growth in certain jurisdictions. However, GMX’s global and decentralized nature – with no headquarters or easily targeted entity – makes it more resilient than a centralized exchange to outright shutdown. Another challenge is competition; while there are credible competitors emerging, GMX’s head start, loyal community, and continuous innovation (with features like limit orders, multi-collateral, and now cross-chain presence) have so far kept it a step ahead. It’s worth noting that GMX’s relationship with its competition can also be cooperative; for example, multiple Arbitrum projects (including some competitors like Gains Network) collectively helped Arbitrum’s ecosystem, which in turn benefits GMX through a larger pie of users on Arbitrum (GMX Biggest Winner in $40 Million Arbitrum Grant - BeInCrypto). GMX securing the largest Arbitrum grant highlights its perceived importance and likely means it will continue receiving support in that community (Perpetual Trading Protocol GMX Bags Biggest Chunk of $40M Arbitrum Grant ).

Actionable Next Steps: For an investor who has decided that GMX aligns with their crypto investment thesis, the next steps would be to determine position sizing and execution. Given GMX’s medium market cap relative to top crypto assets (it’s large for a DeFi project but still small compared to giants like Uniswap or centralized exchange tokens), there is substantial upside if GMX were to achieve similar scale. A phased entry strategy can mitigate short-term volatility risk – e.g., allocate a target percentage of the portfolio to GMX (either via direct token or a combination of token and GLP) and enter over several weeks. Engaging with the GMX community and developers can provide deeper insight; one might reach out in the Discord as a potential institutional participant to ask questions about roadmaps or even propose helpful initiatives (the DAO is quite receptive to constructive input). Setting up robust monitoring and alerts (for both on-chain metrics and off-chain news) will help in managing the investment. It would also be prudent to review technical documentation (e.g., the GMX docs, whitepaper, and audit reports) to fully appreciate how the system behaves, especially if one plans on large GLP provisioning – understanding scenarios that affect GLP can guide how to hedge that exposure, for instance.

Closing Thesis: In conclusion, GMX combines the best elements of DeFi – decentralization, transparency, community ownership – with the revenue-generating prowess of a traditional exchange. Its rise in the past two years from a niche experiment to a leading derivatives exchange underscores a viable product-market fit and hints at what could come as more of the trading world embraces DeFi. The GMX token offers a unique blend of equity-like upside (growth of a leading platform) and bond-like yield (fee distribution), which can be attractive in a balanced portfolio. By executing a diligent investment approach as outlined and staying actively engaged, investors can position themselves to benefit from GMX’s potential evolution into a cornerstone of the decentralized financial system.

The overarching investment thesis is that GMX is not just a DeFi app, but a decentralized trading infrastructure capturing an increasing share of a large market, with strong network effects and value accrual mechanisms. If GMX continues on its current trajectory and capitalizes on its opportunities, it could deliver outsized returns and become a long-term fixture in the crypto industry – much like how early investments in centralized exchanges (e.g., equity in Coinbase or Binance’s BNB token) proved extremely lucrative as those platforms became dominant. In the case of GMX, the growth is happening in a way that directly rewards token holders and liquidity providers along the journey, which makes it a particularly compelling opportunity in the Web3 investment landscape.

References (Executive Summary):

1. CoinMarketCap – GMX Overview and Launch (Arbitrum & Avalanche, trading volume, users) (GMX price today, GMX to USD live price, marketcap and chart | CoinMarketCap) (GMX price today, GMX to USD live price, marketcap and chart | CoinMarketCap)
   
   
2. Binance Academy – What is GMX? (Decentralized leverage trading from user wallets, up to 30–50×) (What is GMX? | Binance Academy)
   
   
3. CoinMarketCap Alexandria – FTX collapse driving DeFi usage (GMX TVL rose from $108M to $501M in 2022) (A Deep Dive Into GMX | CoinMarketCap) (A Deep Dive Into GMX | CoinMarketCap)
   
   
4. CoinMarketCap – GMX Unique Pool & Oracle Pricing (GLP multi-asset pool, Chainlink oracles for pricing) (GMX price today, GMX to USD live price, marketcap and chart | CoinMarketCap) (GMX price today, GMX to USD live price, marketcap and chart | CoinMarketCap)
   
   
5. CoinDesk – AVAX price manipulation exploit on GMX (loophole with 0% slippage, $565k profit by trader) (DeFi Trader Nets Over $500K by Using DEX GMX to Manipulate Avalanche Token ) (DeFi Trader Nets Over $500K by Using DEX GMX to Manipulate Avalanche Token )
   
   
6. CoinDesk – GMX response to exploit (capped AVAX open interest, fix expected in 2 weeks) (DeFi Trader Nets Over $500K by Using DEX GMX to Manipulate Avalanche Token )
   
   
7. CoinMarketCap – Tokenomics: GMX fee sharing (30% of fees to GMX stakers, 70% to GLP) (GMX price today, GMX to USD live price, marketcap and chart | CoinMarketCap) (GMX price today, GMX to USD live price, marketcap and chart | CoinMarketCap)
   
   
8. BeInCrypto – Team & Multisig (Founders undisclosed, multisig signers Krunal Amin and Benjamin Simon) (A Guide to GMX: Decentralized Perpetual Exchange and Crypto) (Gmx In-depth Report by AI — SoSo Value)
   
   
9. SoSo Value (Mirror.xyz) – Investors & Holders (Blocktower 2,400 ETH purchase, Arthur Hayes 200k GMX) (Gmx In-depth Report by AI — SoSo Value) (Gmx In-depth Report by AI — SoSo Value)
   
   
10. Arbitrum DAO (Coindesk) – GMX wins largest Arbitrum incentive grant (12M ARB, ~$10M) (Perpetual Trading Protocol GMX Bags Biggest Chunk of $40M Arbitrum Grant )
    
    
11. Guardian Audit Case Study – Security audits pre- and post-launch (351 findings resolved, 80 critical/high fixed) (Comprehensive Smart Contract Audits | Guardian) (Comprehensive Smart Contract Audits | Guardian)
    
    
12. Dedaub Audit Report – Audit of GMX v2 Synthetics (identified and fixed issues like reentrancy, order handling) (GMX smart contract audit report | Dedaub Audit Reports) (GMX smart contract audit report | Dedaub Audit Reports)
    
    
13. TradingView/Coindar News – GMX expands to Solana (March 12 launch, on-chain swaps with Chainlink pricing on Solana) (GMX to Be Integrated With Solana — TradingView News) (GMX to Be Integrated With Solana — TradingView News)
    
    
14. DefiLlama Stats – GMX cumulative volume, fees, and users (real-time dashboard of $140B+ volume, $170M+ fees, ~360k users) (GMX Stats)
    ‍

‍

2. Project & Team Analysis

Origins and Evolution of the Project

GMX’s journey began with the convergence of two earlier DeFi projects and has since been marked by continuous evolution and expansion. The platform’s roots can be traced to Gambit (GMT/xGMT), a decentralized trading and yield platform on Binance Smart Chain, and XVIX, an Ethereum-based deflationary token experiment. By mid-2021, the developers and communities behind these projects decided to merge their technologies and liquidity into a single, more ambitious platform. This led to the birth of GMX in September 2021, launched initially on the Arbitrum network (an Ethereum Layer-2) (A Guide to GMX: Decentralized Perpetual Exchange and Crypto). The launch involved a token swap and rebranding: holders of Gambit’s tokens (GMT and xGMT) and XVIX were allowed to exchange them for the new GMX token at a predetermined rate, effectively unifying the communities. Approximately 6 million GMX tokens (45% of the max supply) were allocated to this migration, ensuring that early supporters had a stake in GMX. This merger provided GMX with an immediate user base, a core pool of liquidity, and a tested codebase to build upon.

Upon launch, GMX introduced its flagship product: a decentralized perpetual swap exchange on Arbitrum, offering up to 30× leverage on major cryptocurrencies like BTC and ETH. In its first few months, GMX steadily gained traction among DeFi users, benefiting from Arbitrum’s low fees and fast confirmation times. Recognizing the importance of multi-chain presence, the team expanded GMX to Avalanche (AVAX) in January 2022. This was a strategic move to capture the growing user base on Avalanche’s C-Chain, which was experiencing a DeFi boom at the time. The expansion was executed seamlessly: GMX deployed the same protocol on Avalanche, with a separate GLP liquidity pool denominated in Avalanche assets, and the GMX token bridged over to serve both chains. By having a foothold on two chains, GMX could tap into liquidity and traders from both the Ethereum-centric and Avalanche ecosystems.

Throughout 2022, GMX’s development was characterized by rapid iterations and responsiveness to market events. A pivotal moment in GMX’s evolution was the collapse of FTX in November 2022, which sent shockwaves through the crypto industry. As centralized exchanges faced a trust crisis, GMX saw a surge of users and liquidity seeking decentralized alternatives. In a matter of weeks, GMX’s total value locked (TVL) skyrocketed from around $108 million to over $400 million. This influx tested the platform under high load and high volatility conditions, which it handled without major issues, thus reinforcing confidence in its infrastructure. Off the back of this, GMX’s community grew significantly, and the protocol’s reputation as a “safe haven” DEX solidified.

The team did not rest on its laurels; they used this momentum to deliver major upgrades. In early 2023, GMX rolled out what was informally known as GMX V2 (Synthetics). This upgrade introduced several enhancements:

• Support for More Asset Types: GMX V2 laid the groundwork for trading additional assets beyond the original set, including low-cap crypto and synthetic assets, by introducing isolated pools and risk parameters for each market.
  
  
• Improved Oracle Mechanisms: After observing the September 2022 AVAX price manipulation (where an exploiter took advantage of zero slippage trades by moving AVAX’s price off-platform), the team implemented a small “price impact” fee on large trades and an interval-based oracle update mechanism. Essentially, while most trades remain close to zero slippage, extremely large trades start to incur a slight spread to disincentivize manipulation.
  
  
• Advanced Order Types: GMX V2 introduced limit orders and trigger orders, a highly requested feature that allows traders to set predefined entry or exit prices without constantly watching the market. These are executed by GMX’s keeper network when oracle prices reach the specified levels.
  
  
• Multi-Collateral and Synthetic USD: Users could now use any whitelisted asset as collateral for any trade (e.g., using BTC as margin for an ETH trade), with the protocol internally swapping to a synthetic USD stablecoin to manage positions. This added flexibility and capital efficiency.
  
  
• Adaptive Funding Rates: To maintain balance between longs and shorts, GMX V2 implemented a refined funding rate mechanism that adjusts dynamically (dual-slope funding) to encourage equilibrium, thereby preventing extreme skew in open interest.
  
  

These upgrades not only improved user experience but also addressed the weaknesses revealed by the AVAX incident. It showed the team’s ability to learn and adapt. By mid-2023, GMX was one of the most feature-complete decentralized perpetual exchanges, while still maintaining simplicity of use.

On the governance and community front, GMX evolved from a small project to a community-driven DAO. Governance is conducted via Snapshot (off-chain voting), where GMX token holders vote on proposals ranging from parameter tweaks to use of treasury funds. Early on, the core team guided most decisions, but as the community grew (with ~63,000 members in the governance forum), more initiative came from token holders. For example, the community proposed and passed a significant fee increase on certain highly utilized markets to better compensate liquidity providers once it was clear demand was strong. Another example was the wind-down of the Gambit legacy token rewards, which the DAO voted to conclude after ample time for migration, simplifying tokenomics. Furthermore, GMX’s success on Arbitrum won it a huge endorsement: in Q3 2023, the Arbitrum community, through its short-term incentive program (STIP), voted to allocate 12 million ARB tokens to GMX – the largest grant to any protocol. This grant (roughly $10M in value) was earmarked to incentivize GMX’s continued growth on Arbitrum. The GMX DAO set up a committee to deploy these ARB rewards as trading incentives, GLP boosts, and development grants, which significantly boosted activity in late 2023 and early 2024.

By early 2024, GMX reached another milestone in its evolution: expansion to Solana. On March 12, 2024, GMX launched on the Solana blockchain, under a community-driven initiative called GMX-Solana. This move brought GMX into the realm of high-performance Layer-1 chains. The Solana deployment was tailored to Solana’s environment (written in Rust, using Pyth and Chainlink oracles) and introduced a Solana-native liquidity pool (GLP-SOL) for SOL and USDC. The Solana integration allows GMX to tap into Solana’s active trading community and benefit from near-instant finality, further diversifying its user base. Now, GMX is live on three chains (Arbitrum, Avalanche, Solana), demonstrating an impressive multi-chain adaptability that few DeFi protocols have achieved. Each deployment reinforces the core model while catering to the native assets and user preferences of that ecosystem.

In terms of ecosystem evolution, GMX’s influence spurred the creation of complementary projects. For instance, yield optimizers like Yield Yak on Avalanche and AutoGelato on Arbitrum created vaults to automate compounding of GMX and GLP yields. Rage Trade introduced a product offering leveraged GLP exposure (so users could 2× or 3× farm GLP yields) by integrating with GMX. These projects, built independently, expanded GMX’s reach and utility. GMX’s team supported such integration efforts, often collaborating on audits or parameters, reflecting a growing ecosystem mentality.

To summarize GMX’s evolution: in just over two years, it went from a merger of two niche projects to a blue-chip DeFi protocol across multiple chains. Key phases included:

• Launch and Merge (Q3 2021): GMX formed from Gambit/XVIX merger, launched on Arbitrum with community-owned distribution (A Guide to GMX: Decentralized Perpetual Exchange and Crypto).
  
  
• Multi-Chain Expansion (Q1 2022): Deployment on Avalanche, broadening user base and liquidity.
  
  
• Product Maturity (2022): Addition of features (cross-collateral swaps, UI improvements), steady growth in a bear market, and stress-testing during events like FTX’s collapse (Q4 2022) which GMX navigated while greatly growing TVL.
  
  
• Risk Event and Response (Late 2022): AVAX price manipulation incident ($565k GLP loss) and immediate protocol changes to prevent reoccurrence – a pivotal learning experience.
  
  
• GMX V2 Upgrade (Early 2023): Major improvements in functionality (limit orders, new asset support) and risk mitigation (dynamic pricing, better balancing).
  
  
• Community Empowerment (2023): DAO took a larger role (handling the ARB incentive program, initiating grant programs, formalizing multi-sig roles).
  
  
• Recognition and Funding (Late 2023): Winning the largest share of Arbitrum’s incentive allocation, reinforcing GMX’s status as a cornerstone of that ecosystem.
  
  
• Further Expansion (Early 2024): Launch on Solana, marking GMX’s presence in a non-EVM, high-throughput environment and showing the protocol’s portability.
  
  

Looking Forward: On the horizon for GMX is the anticipated “X4” protocol, aiming to open GMX’s liquidity and infrastructure for other projects to create markets (essentially a customizable GMX-as-a-service model). This represents the next stage in GMX’s evolution: from an application to a platform.

‍

Thank you for taking the time to read this article. We invite you to explore more content on our blog for additional insights and information.

https://www.thestandard.io/blog  

‍

"If you have any comments, questions, or suggestions, please do not hesitate to reach out to us at [ https://discord.gg/K72hed6FRE ]. We appreciate your feedback and look forward to hearing from you."

‍

CLICK HERE TO CONTINUE

PAGE 6: www.thestandard.io/blog/gmx-revolutionizing-defi-with-layer-2-scaling-governance-and-liquidity-innovation-in-2025-6