Rewards Token: GMX Explained — Perpetuals Trading with Real Fee Sharing
🏷️ Basics: The leading protocol for perpetual and spot trading on Arbitrum and Avalanche. It offers leverage of up to 100x with minimal price impact. Its key innovation is the distribution of actual trading fees in ETH/AVAX to stakers (who lock the protocol’s native token) and LPs (Liquidity Providers who deposit assets into the pools so others can trade).
🎯 Main Functions:
🗳️ Governance: Decisions on parameters, fee distribution, and treasury.
💰 Real Fee Share: Stakers receive ETH/AVAX + additional incentives.
🛡️ Isolated Liquidity: GM Pools by market in v2.
(This means that each trading market has its own isolated liquidity pool. For example, the ETH/USD pool is separate from the BTC/USD pool. This setup protects liquidity providers: if an issue occurs in one market, any losses are contained within that specific pool and do not affect the others.) ⚔️
💰 Evolution of Reward Systems
📜 v1 — GLP Model (The Initial Foundation):
GLP was a “basket” of several assets that acted as the single counterparty everyone traded against.
Those who had GMX locked (stakers) earned:
30% of the fees in ETH/AVAX (real and liquid money).
esGMX: Like “vouchers” or tokens that gradually turn into real GMX.
Multiplier Points: An extra profit bonus for being a long–term staker.
⏳ v2 — GM Pools (The Current System):
🌊 For Liquidity Providers (LPs) — Isolated Funds (GM Pools):
Now each market (like ETH or BTC) has its own separate pool.
Key advantage: The risk is isolated. If one market faces issues, the others are not affected. It’s like keeping your eggs in different baskets! 🥚
Earnings: Fees from perpetual trades + swaps + lending + liquidations.
🥩 For Stakers — GMX Staking:
Real ETH/AVAX: A fixed percentage of ALL protocol fees.
esGMX: Still works like a “voucher” that turns into GMX over time.
Multiplier Points: Provide a +1% annual yield per point and are non–inflationary (they’re burned when you unstake).
🔮 Future — Active Governance:
Buyback and Distribution (BB&D): Ideas are proposed to adjust how funds are used.
Fee Distribution: Ongoing debate on what percentage of fees should go to stakers and what percentage to LPs.
💡 WAFFTip: Stay alert to governance votes — they can change how rewards are distributed!
📊 Tokenomics & Supply (Key Data)
🔸 The GMX Token:
- Staking: Receive ETH/AVAX (real fees) + esGMX (tokens that unlock over time) + Multiplier Points (bonus for long–term staking).
Supply: Limited, with a partially deflationary mechanism through token buyback and burn (Buyback & Distribute).
Emissions and Distribution: Controlled by governance, balancing incentives and dilution.
Total Supply: 13.25M GMX (fixed maximum, no inflation).
🔸 The GM Pools (v2):
- Liquidity: Separated by specific market (e.g., ETH, BTC).
Advantage: Better risk management vs GLP v1 (issues in one pool do not affect the others).
🔸 Value Alignment:
- GMX staking to receive fees in ETH/AVAX
Possible buyback and burn of tokens decided by governance
Reward system aligned with the protocol’s success
Buyback Mechanism (BB&D): Up to 14% of fees are used to buy back and burn GMX, reducing the supply.
🎪 How to Earn Money with GMX Today
1. 💧 Be a Liquidity Provider (LP) in GM Pools:
- What is it? You act as “the bank” for a specific market (such as ETH or BTC), providing funds so traders can open positions.
How do you earn? You receive a portion of trading fees, proportional to the amount you’ve provided.
The risk? You’re exposed to the profits and losses of that specific market. If traders win as a group, you earn less; if they lose, you earn more.
2. 🥩 GMX Staking:
- What is it? You lock your GMX tokens in the protocol to help secure it.
How do you earn?
○ You automatically receive ETH/AVAX (real trading fees).○ You accumulate esGMX (like “vouchers” that gradually turn into more GMX).
○ You earn Multiplier Points (a bonus for long–term commitment).
The Strategy: The longer you stake, the more rewards you accumulate.
3. 🗳️ Active Governance:
- What is it? Participating in community decision–making.
How do you earn? By voting on proposals that can affect your profitability (APR), such as how fees are distributed. Your vote helps shape the protocol’s future — and therefore, your earnings.
💡 WAFFTTip: The winning combo is usually long-term GMX staking while keeping an eye on key governance votes.
🛑 WAFFT+ (Deep Analysis):
✅ Advantages:
- Proven Real Yield: You earn fees in ETH/AVAX (real value assets), not in inflationary tokens that can be diluted.
- Sustainable Model: Your income is directly correlated with the protocol’s real trading volume, not to artificial token emissions.
- Continuous Innovation: v2, with its isolated pools, significantly improves risk management for liquidity providers.
⚠️ Risks:
- Market Risk (For LPs): Your profit or loss (PnL) depends on the collective performance of traders in your pool. If most traders win, your earnings will be lower.
- Increasing Complexity: v2 requires deeper analysis to select the right pools, since each market is now an independent fund with its own risk profile.
- Active Governance: Changes in fee distribution, voted on by the community, can directly impact your yield percentage (APR).
📌 WAFFT Checklist for GMX:
✔︎ Real Yield? YES — Fees in ETH/AVAX for stakers.
✔︎ Multiple Paths? YES — GMX Staking + LP in GM Pools.
✔︎ Controlled Risk? PARTIAL — v2 isolates risk but doesn’t eliminate it.
✔︎ Active Governance? YES — Monitor fee split votes.
💎 WAFFT Conclusion:
GMX represents the most mature evolution of “real yield” in DeFi. Its v2 model with isolated pools and ETH/AVAX payouts positions it as a leader in decentralized derivatives. Ideal for users seeking real exposure to trading fees without token inflation.
🔗 Key Sources:
📘 Docs: https://gmx-docs.io/docs/intro/
💹 Trading v2: https://docs.gmx.io/docs/trading/v2/
🗳️ Governance: https://gov.gmx.io
💰 Rewards: https://docs.gmx.io/docs/tokenomics/rewards/