GMX, the perpetual trading decentralized exchange (DEX) allows 50X leverage, now creates Higher trading fees than BNB Smart Chain (BSC) and Bitcoin.
GMX is the third most active platform.
According to the data, GMX’s 1-day fee on January 19 was about $589,000, while BSC and Bitcoin on-chain fees, in the same period, were $524,232 and $328,935, respectively.
Ethereum and Uniswap are the only two major protocols that are more active than perpetual trading decentralized exchanges according to the data above. During that time, the total gas fees accumulated in Ethereum exceeded $5 million. At Uniswap, it was over $2.1 million, about 4x the daily fees of GMX and BSC.
GMX supports trading of various coins including BTC, ETH, and AVAX. At writing, GMX had $96,802,651,673 in total trading volume with open interest, meaning the number of open positions, long and short, was $207,102,720. Meanwhile, more than 208,000 active traders were using the platform to trade on Arbitrum and Avalanche. Launched on GMX Arbitrum and AvalancheConsidering their scalability and low fees vs Ethereum.
Arbitrum is Ethereum’s Layer 2 platform that allows for scalability and low trading fees. Avalanche, on the other hand, is scalable and boasts the fastest settlement time in crypto. By launching on these two platforms, GMX says it allows users to save costs by entering and exiting positions with minimal spreads and zero price impact.
Traders take profits from selling positions in USDC and quote tokens when they go long. GMX prices are based on Chainlink’s decentralized oracles to prevent price manipulation.
Trading fees as a measure of activity
Trading fees generated by the dApp or on the blockchain are indicators of significant activity. Despite the tendency for users to choose protocols that offer near-zero fees, the decentralized nature of blockchains means that verifiers or entities securing the infrastructure must be compensated.
In decentralized finance dApps like Uniswap and GMX, trading fees generated from exchange activities are distributed among liquidity providers (LPs). There are also governance tokens that are distributed. Anyone can be an LP.
In September 2020, Uniswap distributed UNI to users who, in one way or another, used the protocol to exchange the token before the airdrop distribution date. Currently, UNI trades at $6.1.
Interestingly for GMX, the 1-day trading fee of $589,000 posted on January 19 is higher than the total average amount collected in the previous trading week of $565,682. The same trend can be seen in the top 5 most active platforms. Expanding on this could indicate renewed interest from consumers and merchants using the protocol in some way.
In GMX, this may mean more traders posting trades, with the aim of clipping the market and turning profits. Coincidentally, an increase in trading fees is recorded when the cryptocurrency market appears to be coming down after a loss. At least, that was the trend in 2022.
Featured image from GMX, charts from TradingView.com
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