• Home
• Get Started
• What Is Gmx

GMX: The Decentralised Perpetual Exchange Protocol

GMX is a decentralised exchange protocol for spot swaps and perpetual futures, powered by oracle-based pricing and market-specific liquidity across Arbitrum and Avalanche.

If you’re interacting with cryptocurrency - trading, staking, or providing liquidity - the Bitcoin.com Wallet gives you a secure, self-custodial way to manage assets and connect to DeFi protocols like GMX.

GMX is a decentralised exchange protocol that supports spot swaps and perpetual futures trading through a modular, oracle-driven liquidity framework known as GMX V2.

Overview

GMX is a decentralised exchange (DEX) that enables users to trade spot assets and perpetual futures directly from their wallet. It is designed for on-chain execution, low slippage, and transparent pricing, with liquidity sourced from market-specific pools rather than centralised market makers.

Launched in 2021, GMX initially operated through a single multi-asset pool known as GLP. In 2025, the protocol transitioned fully to GMX V2, a redesigned architecture that uses isolated markets, stronger oracle protections, and GM liquidity tokens. Today, V2 is the active and supported version of GMX across Arbitrum and Avalanche.

How GMX Works (V2)

GMX V2 is built around isolated liquidity markets and oracle-verified pricing. Each market operates independently, with its own collateral and risk settings. Traders interact with these markets to open spot swaps or leveraged long/short perpetual positions.

Liquidity and GM Tokens

Liquidity is provided on a market-by-market basis. When users deposit assets into a specific market, they receive a GM token representing their share of that market’s liquidity.
GM tokens accrue fees generated within that market, giving LPs more control over their risk exposure compared to older pooled models.

This isolated structure prevents losses in one market from spilling into others, improves capital efficiency, and supports a wider range of assets - including synthetics.

Trade Execution and Pricing

GMX uses aggregated oracle data (e.g., Chainlink) to determine fair price ranges for execution. Trades can only be executed if oracle prices fall within predefined safety bands.
This approach reduces slippage and mitigates the risk of price manipulation, especially during large trades or volatile market conditions.

Perpetual positions use collateral deposited by the trader, with leverage determined by market parameters. Liquidations occur automatically based on oracle prices when a position can no longer be safely collateralised.

Fees and Incentives

Each market determines its own fee structure, which can include:

• swap fees
• position open/close fees
• borrowing (funding-like) fees
• dynamic utilisation-based adjustments

Fees are shared between GM liquidity providers and GMX stakers.

Perpetual Futures Trading on GMX

Perpetual futures are the core of GMX’s trading ecosystem. GMX V2 enables traders to open long or short positions with leverage while maintaining full custody of their assets. Perpetual trades execute against market-specific liquidity, with each market’s collateral and risk parameters set independently.

Opening Long and Short Positions

Traders deposit collateral into a chosen market to open a leveraged position.

• Long positions benefit from price increases.
• Short positions benefit from price decreases.

Available leverage depends on market liquidity, utilisation, and risk settings, with major assets supporting the highest leverage.

Execution Model

Entry and exit prices for perpetual positions are determined by the same validated oracle pricing used across GMX V2.
The key difference is that perpetual trades incorporate additional checks around collateral, market utilisation, and price bands to ensure the position can be opened safely at the requested size.

Because trades execute against liquidity pools rather than order books:

• slippage is minimal
• large positions do not shift market price
• execution cannot be front-run by MEV bots
• traders avoid maker/taker fees

Borrowing Fees

GMX perpetuals do not use a traditional funding rate.
Instead, traders pay borrowing fees that accrue while their position is open. These fees compensate liquidity providers for the capital backing the position and adjust dynamically based on market utilisation.

Liquidation Logic

Liquidations occur when a position’s collateral is insufficient to cover its losses plus required maintenance margin.
Liquidation thresholds and penalties vary by market, but the logic is consistent:

• oracle prices determine when a position becomes unsafe
• positions are closed automatically to protect market liquidity
• remaining collateral (if any) is returned to the trader after fees

Supported Perpetual Markets

GMX V2 supports perpetual futures on:

• BTC
• ETH
• AVAX
• ARB
• SOL
• Additional synthetic markets depending on liquidity and oracle availability

Why Traders Use GMX for Perps

GMX’s perpetual markets offer:

• self-custodial, on-chain trading
• deep liquidity through isolated pools
• minimal slippage due to pool-based execution
• transparent liquidation logic
• high leverage on major assets
• no order-book dependency or maker/taker spreads

This makes GMX V2 one of the most reliable and accessible on-chain perpetual futures platforms.

Key Features

• Spot and Perp Trading: Users can perform spot swaps or open perpetual futures positions directly from their wallet.
• Isolated Liquidity Markets: Liquidity is segmented, giving LPs targeted exposure and reduced systemic risk.
• GM Liquidity Tokens: Market-specific liquidity tokens that replace GMX’s legacy pooled model.
• Oracle-Based Execution: Multiple price references and safety checks ensure accurate pricing and fair execution.
• Synthetic Market Support: Markets can list assets without requiring deep native token liquidity.
• Multi-Chain Deployment: GMX operates on Arbitrum and Avalanche, with designed extensibility for other EVM networks.

Token Model

GMX Token

The GMX token is used for protocol governance and staking. GMX stakers receive a share of protocol revenue in ETH or AVAX, along with potential escrowed GMX (esGMX) based on incentives.
Governance decisions include market listings, fee parameters, and updates to oracle configurations.

GM Liquidity Tokens

GM tokens are V2 liquidity tokens. Each GM token corresponds to a specific market and reflects the value of the assets deposited by liquidity providers.
LPs earn fees generated by that market alone, giving them greater transparency and control over their exposure.

Historical Note: The GLP Era

From 2021 to mid-2025, GMX used a single multi-asset pool called GLP to back all markets.
While GLP was instrumental in GMX’s early growth, it has since been fully deprecated.
Users now rely exclusively on GM tokens for providing liquidity.

Evolution of GMX

GMX’s evolution can be summarised in three phases:

1. GMX V1 (2021–2025):

   • Multi-asset GLP pool
   • Shared liquidity across all markets
   • Early decentralised perpetuals success

2. V1 Wind-Down (2025):

   • V1 trading phased out
   • GLP liquidity migrated
   • Finalisation after a mid-2025 security incident affecting the V1 contracts

3. GMX V2 (Current):

   • Market-specific liquidity
   • GM tokens
   • Improved oracle engine
   • Synthetic asset support
   • Modular risk parameters

V2 is now considered the GMX protocol.

Security

GMX V2 has been audited and incorporates multiple layers of price and execution protection. These include:

• multi-oracle price feeds
• price bands limiting execution outside safe ranges
• circuit-breaker-style guards
• isolated market risk

The security incident that occurred in mid-2025 affected only V1 contracts, which have since been deprecated.
GMX V2 was architected with additional safeguards to reduce systemic exposure and improve oracle robustness.

Strengths and Risks

Strengths

• Non-custodial spot and perp trading
• Isolated liquidity design that reduces contagion
• Targeted yields through GM tokens
• Strong oracle protections and synthetic market support
• Active governance through the GMX token
• Fully upgraded architecture replacing legacy systems

Risks

• Perpetual futures carry leverage and liquidation risk
• Oracle systems are critical points of dependency
• Market liquidity varies by asset
• All DeFi protocols carry smart contract risk

Conclusion: GMX’s Role in DeFi

GMX has matured from a pooled-liquidity perpetual exchange into a modular, market-specific protocol built around GMX V2. With isolated markets, oracle-driven execution, synthetic asset support, and transparent incentives for both traders and liquidity providers, GMX remains a leading option for on-chain perpetual and spot trading.

Its V2 architecture represents a comprehensive upgrade designed for resilience, flexibility, and long-term sustainability within the decentralised trading ecosystem.

FAQ

Is GMX V1 still active?
No. GMX V1 has been fully deprecated. All trading now uses GMX V2.

What are GM tokens?
GM tokens represent liquidity deposited into specific GMX V2 markets. LPs earn fees from the market they support.

What happened to GLP?
GLP was the V1 liquidity token. It is now legacy-only and no longer used.

What can I trade on GMX?
Spot swaps and perpetual futures across supported assets and markets, including synthetics.

What leverage does GMX offer?
Leverage depends on the market but can reach high levels for major assets.

How does GMX ensure fair prices?
Trades execute based on oracle-fed pricing with multiple safety checks and protective bands.

Which chains does GMX run on?
GMX is live on Arbitrum and Avalanche.