There are some special keywords when talking about GMX's operating model:
- Liquidity pool with 0 slippage.
- Index tokens.
- Rebalance Portfolio.
GMX does not apply an order-book model like dYdX, nor does it use AMM pools like Perpetual. GMX has its own liquidity pools and prices will be traded based on Oracle prices.
For example, if you want to swap ETH to DAI on GMX, the way it works will be as follows (fig 1):
- Your ETH will be transferred to ETH Pools.
- After confirming the ETH has been transferred, GMX will transfer DAI from DAI pools to your account.
- Price will be calculated based on Oracle provided by Chainlink, using TWAPs from major DEXs.
Conclusion, pros: It can be seen that with this quite special liquidity pool model, GMX brings many benefits to Traders. First of all there is no funding fee. In addition, GMX is an exchange with 2 sessions on Arbitrum and Avax. They are all platforms with low transaction fees, so trading on GMX has a smoother experience and less cost.
Besides, because trading according to Oracle prices, you can trade in large volumes, up to millions of USD without fear of slippage. In this regard, the GMX model is similar to the Synthetix (SNX) model.
Trading on GMX is zero-slippage, similar to that on Synthetix.
And here is some highlight for cons:
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The number of trading pairs is quite small. In addition to stablecoins, it only allows the trading of 4 tokens: BTC, ETH, UNI, LINK. Compared to other DEX Perpetual exchanges, it is much less: dYdX has nearly 20 pairs, Drift Protocol has more than 10 pairs,...
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Using the liquidity pool model, the trading volume on GMX is limited by the liquidity in the pool itself, meaning users cannot trade with higher volumes.
I believe they can resolve these in the near future, so 4 stars from me Show Less
