Glossary · G
GMX
A decentralised perpetual swap and spot trading protocol operating on Arbitrum and Avalanche. GMX uses a multi-asset liquidity pool (GLP) as the counterparty to all trades, rather than an order book. GLP providers earn trading fees and borrowing fees but bear the risk of trader profits.
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How GMX works in practice
GMX offers perpetual futures priced from an oracle rather than an order book, with trades executed against a shared liquidity pool. Liquidity providers take the other side of every trade, so their return is fees minus traders' net profit.
Worked example
A trader opens a leveraged long against the pool. If they profit, the pool pays. Liquidity providers earn a share of trading and borrowing fees, which historically exceeds trader profits over time — but not in every period.
Figures are illustrative and chosen to be checkable, not live market data.
The mistake that costs people money
Providing liquidity here means being the counterparty. In a strong trend where most traders are positioned correctly, the pool loses, and that risk is not diversified away by the fee income.
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GMX: common questions
- What is GMX?
- A decentralised perpetual swap and spot trading protocol operating on Arbitrum and Avalanche. GMX uses a multi-asset liquidity pool (GLP) as the counterparty to all trades, rather than an order book. GLP providers earn trading fees and borrowing fees but bear the risk of trader profits.
- How does GMX work in practice?
- GMX offers perpetual futures priced from an oracle rather than an order book, with trades executed against a shared liquidity pool. Liquidity providers take the other side of every trade, so their return is fees minus traders' net profit.
- Can you give an example of GMX?
- A trader opens a leveraged long against the pool. If they profit, the pool pays. Liquidity providers earn a share of trading and borrowing fees, which historically exceeds trader profits over time — but not in every period.
- What do people get wrong about GMX?
- Providing liquidity here means being the counterparty. In a strong trend where most traders are positioned correctly, the pool loses, and that risk is not diversified away by the fee income.
- Where can I learn more about GMX?
- Our full guide, What Are Perps?, covers GMX in depth with worked scenarios and the risks involved. This glossary entry is the short definition.