What are the specific changes in the new version of GMX? What other features worth our attention?
Despite the emergence of numerous decentralized exchanges, GMX still holds a leading position. In early August, GMX’s V2 version was launched, supporting more trading pairs and a better oracle environment.
So, what are the specific changes in the new version of GMX? What other features worth our attention?
In a recent blocmates podcast, the host invited Coinflip, a core contributor to GMX, to discuss the advantages of GMX V2 compared to V1, as well as the expectations of traders, limited partners, and investors for the new product release.
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Read the podcast notes in 5 minutes and save 60 minutes of your time.
The following is the main content of the conversation, translated and organized by DeepWave, and the main points are output:
Host: Grant, blocmates podcast
Speaker: Coinflip (@coinflipcanada)
Program affiliation: blocmates podcast
Original title: “GMX V2 Explained | Fees, LPs, Rewards, Incentives, New Tokens & More”
Link: Link
Date: August 22nd
Market fluctuations, transparent on-chain transactions, and open ecosystem collaboration
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Coinflip said that in the past 18 months, GMX has experienced multiple market fluctuations, including not only price fluctuations but also technological development, user growth, and ecosystem expansion. Despite facing market uncertainties, GMX’s products and protocols have matured and gained more attention during this time. This maturity is reflected not only in technology but also in user experience and market acceptance.
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Coinflip emphasized that on the GMX platform, users can engage in various transactions, including long-term and short-term trading, and all transactions are conducted on-chain. Most importantly, users can verify and audit transaction records at any time and fully understand the assets and verifiability of the protocol when conducting transactions. This is a key advantage of GMX compared to other DeFi platforms, providing users with higher transparency and trust.
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Coinflip mentioned that GMX has integrated and collaborated with many partners in the ecosystem, including not only other DeFi platforms but also oracles, risk managers, and other technology providers.
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When multiple platforms and protocols collaborate, they can jointly respond to market changes and challenges, providing users with more stable and reliable services and enhancing the robustness of the entire ecosystem. For example, through integration with other platforms, GMX can provide its users with more trading and investment options while bringing more users and trading volume to its partners.
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The host mentioned that many products and projects are built on the basis of GMX or GLP products. How are these collaborations managed?
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Coinflip emphasized the flat management of GMX, without strict hierarchical structures, but encouraging community members to participate in decision-making and project development. He also mentioned the potential of DAO, which provides a platform for the community to participate in decision-making and governance.
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GMX always encourages open and permissionless protocols, where anyone can build on GMX without specific permission or approval. This openness encourages innovation and diversity, enabling many different products and projects to be quickly launched and developed on the basis of GMX.
Differences Between V2 and V1
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Coinflip emphasizes that the architecture of GMX V2 has been carefully considered, and traders, liquidity providers, developers, and other participants can benefit from the features and services of GMX V2. To ensure broad support, GMX V2 adopts a modular design that allows the platform to easily add, modify, or remove specific features or services to meet the changing needs of the ecosystem.
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Coinflip introduces GMX’s GLP, which is an algorithm-managed liquidity product. Unlike traditional liquidity pools, GLP uses algorithms to automatically adjust its parameters to ensure market efficiency and liquidity, enabling the creation of markets for new or small assets quickly. A key feature of GLP is that it allows for the creation of efficient markets for assets even with a small amount of capital.
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The host asks what Coinflip has learned from V1 and what improvements or enhancements they plan to make in V2.
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Coinflip responds by going back to the original intention of GMX, which is to create on-chain markets. They want to ensure that all transactions and assets are conducted and stored on the blockchain to ensure maximum transparency and security.
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Coinflip mentions how GLP helps address the problem of fragmented liquidity. By using GLP, GMX ensures the creation of efficient markets even with a small amount of capital. GLP uses algorithms to automatically adjust its parameters to ensure market liquidity and efficiency.
Deep Tide Note: Liquidity fragmentation refers to liquidity being dispersed across multiple different markets or platforms, which can lead to increased transaction costs and reduced market efficiency.
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Coinflip mentions the collaboration with Chainlink, a well-known decentralized oracle solution that provides critical price and data feeds for many DeFi projects.
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Through the collaboration with Chainlink, GMX has developed new oracles that provide more powerful and low-latency data, ensuring that transactions and contracts can be based on accurate and timely market information. This collaboration not only enhances GMX’s data capabilities but also provides users with higher trust, as they know that the data used by GMX is reliable and timely.
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Coinflip discusses how V2 changes liquidity provision. In V2, liquidity providers can more precisely target their liquidity. For example, they can choose to provide liquidity only for specific markets, such as the ETH and USDC markets, instead of providing liquidity for all markets.
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In addition, liquidity providers in V2 can be better compensated for the risks they take. If a liquidity provider chooses to provide liquidity for a high-risk market, they can expect higher returns.
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Coinflip compares the process of creating GMX V2 markets with other markets. Coinflip mentions that the creation process of GMX V2 markets is more complex, which may be related to the multi-asset support, new liquidity provision strategies, or other technological innovations in V2 markets.
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The host asks how traders can trade in GMX V2 and what new features or advantages V2 provides for traders.
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Coinflip explains that traders in GMX V2 can choose which of the two supported tokens they want to hold as collateral. This provides traders with greater flexibility, allowing them to choose the collateral asset that best suits their strategies and market views. In addition to choosing collateral assets, traders can also maintain exposure to the underlying assets. Even if they choose a certain token as collateral, they can still invest or trade in other assets, thus gaining more market opportunities.
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The host expresses interest in the listing process for new assets in GMX V2 and asks if this process is entirely governed by the governance mechanism.
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Coinflip explains that theoretically, any asset can be listed on the GMX platform without permission as long as it has appropriate oracles, as long as it meets certain technical and security requirements.
GMX Reward Mechanism
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Coinflip mentioned that the goal of GMX is to create a reward mechanism for all participants.
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For traders, the reward mechanism encourages them to conduct more transactions on GMX, thereby increasing market liquidity and activity.
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For liquidity providers, the reward mechanism encourages them to provide more capital, thereby increasing market depth.
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For market makers, the reward mechanism encourages them to provide better quotes on GMX, thereby increasing market competitiveness.
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Coinflip emphasized that this reward mechanism is not just for short-term incentives, but also to ensure the long-term success and health of GMX’s ecosystem. By providing rewards to all participants, GMX hopes to attract and retain more users and ensure the continued activity and health of the market.
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The host asked if there is a mechanism that allows users to gain exposure to all GMX pools by depositing a certain asset, simplifying the investment process for users.
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Coinflip responded that they have seen many protocols partnering with GMX to create such products. Through collaboration with other protocols, GMX may provide a simplified way to allow users to gain exposure to multiple pools through a single investment.
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Although V2 provides more liquidity controls, allowing liquidity providers to more accurately target their liquidity, not everyone needs this level of fine control. Coinflip expects that there will be products in the ecosystem to help people manage this liquidity, providing simplified solutions for users who do not want or need fine liquidity management.
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Liquidity providers always bear a certain level of risk, as market fluctuations may affect the value of the capital they provide. Liquidity providers can choose the markets they are most comfortable with, select which markets to provide liquidity for based on their risk tolerance, and decide where to provide liquidity based on market trading volume to ensure their capital is allocated to the most active and potentially rewarding markets.
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Coinflip mentioned that GMX encourages and supports external partners to conduct audits, which aim to ensure the safety and reliability of GMX’s code, protocols, and other technical implementations. In addition to audits, GMX also supports other external expenses.
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Coinflip mentioned that the current market structure allows for more targeted growth, where the market can adjust and optimize based on its own needs and the behavior of traders, rather than relying entirely on external decisions.
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In the past, adjustments to certain market parameters, especially changes in asset weights, may have required a vote by GMX’s DAO. However, this situation has changed, and the market itself has more autonomy to make these adjustments. With changes in the trading behavior and preferences of market participants, the market can automatically adjust its parameters to better meet the needs of traders.
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