#gmx

1. Brief introduction to the derivatives track

The perpetual contract market is currently the derivative with the highest trading volume in cryptocurrencies. Binance's main profit comes from contract fees. The contract trading volume in 2021 has exceeded 600 billion US dollars, far exceeding the spot trading volume, with a gap of more than 3 times. Currently, 15% of the spot trading volume is completed through decentralized exchanges DEX, while DEX transactions of perpetual contracts only account for 2% of the overall market, which leaves a huge space for improvement.

Assuming that the contract trading volume reaches 100 billion within 5 years, DEX accounts for 10%, which is about 100 billion trading volume. The current overall annual trading volume of DEX contracts is 600 billion, with a 5-year compound annual growth rate of 75~80%.

We firmly believe that the decentralized market will gradually expand the overall transaction share. (Avoiding issues such as opaque transactions, unplugging cables, plugging in pins, and misappropriation of user deposits)

Currently, the representative contract exchanges in DEX are DYDX, GMX, and Perpetual. GMX occupies more than 20% of the market share of contract dex transactions, and its growth momentum exceeds that of its competitors. (DYDX protocol revenue is separated from tokens, and the perp market share is relatively small.)

2. Brief description of fundamentals

In the past 12 months, GMX has maintained rapid growth despite the bear market. In the past 30 days, the protocol revenue ranked fifth among DAPPs, and 30% of the protocol revenue was used to distribute dividends to GMX tokens, similar to the dividends or repurchases of exchange platform coins. The token value is fully captured, not through the issuance of additional tokens, but through the real fee income to distribute dividends to pledgers. Compared with the top four tokens in terms of revenue, there is no actual empowerment of governance tokens.

In the past 30 days, the company has generated a total revenue of 15 million US dollars, an average daily revenue of 500,000 US dollars, and an average daily trading volume of 300 million US dollars. In Q3 of 2022, the company achieved a 40% growth, a trading volume of 92 billion US dollars, and generated 12 million US dollars in revenue. There are 27,000 active traders per month.

3. Project evaluation:

Token model: total token amount is 13.25w, circulating supply is 8.28w, of which 85% of tokens are pledged and locked, and the remaining nearly 5 million tokens belong to the project treasury and community. Current price is $54, circulating market value is 440 million, FDV is 700 million, net profit in 30 days is 4.5 million, and dynamic price-earnings ratio PE=7.3.

When the bull market comes, the overall trading volume will surge, and GMX will capture more value accordingly. The estimated trading volume of $10 trillion in 5 years x 20% share = $2 trillion of GMX trading volume. With $2.6 billion in revenue, calculated at a rate of 0.13%, GMX captures $780 million. If the valuation level remains unchanged, there is still 14 times of room, and the valuation increase will lead to a Davis double-click.

Project Benefits:

1. Continue to grow the DEFI track, a super early decentralized derivatives market.

2. The fundamentals continue to grow rapidly in a bear market and are recognized by the market.

3. Continuous product innovation and liquidity growth continue to attract more transactions, creating a flywheel effect. (Currently accounting for 40% of the ARB locked volume)

Finally, what is truly important about the WEB3 protocol is the real value capture for users and stakeholders. GMX has high liquidity utilization, crazy protocol revenue, mechanism design that benefits stakeholders and LPs, and token economics without VC and unlocking and selling. It is a truly decentralized project.

L2 high-speed development:

The number of users of Ethereum's second-layer ARB public chain is growing rapidly, and the ecological token has not yet been released. Its popularity will become higher and higher in the future.

Future benefits: multi-chain deployment, recent launch of Ploygan, 50x contract, future X4 protocol launch to support more currencies, free liquidity, richer liquidity value capture for GMX tokens.

Risk warning: GLP scale limitations, rival competition, harsh market environment, contract loopholes, and the need to continue to pay attention to the basic data of the project in the long term.

Popular concepts: second layer L2, DEFI leader, derivatives, public chain head DEX, real returns.

Related boards:

Arbitrum market data: https://dune.com/sixdegree/arbitrum-overview

GMX complete data dashboard: https://dune.com/gmxtrader/gmx-dashboard-insights

Revenue ranking of each protocol: https://tokenterminal.com/terminal?panel=fees