Deep Analysis of On-chain Derivatives Part 1: Perpetual Contract

On-chain derivatives have been one of the few verticals in the cryptocurrency space that have shown significant appeal in recent years. Cryptocurrency researcher Ali has written an in-depth study on on-chain perpetual contracts, including basic information, project principles, catalysts, advantages and disadvantages of projects such as GMX, dYdX, Synthetix/Kwenta, as well as some rough predictions for the on-chain perpetual contract race.

1) GMX: Pros: Highly customizable GLP, excellent execution for retail traders, excellent performance records; Cons: Not suitable for large-scale traders, reduced returns, limited asset pool, high fees. If you want reliable returns (GLP), or only trade BTC or ETH, you can choose GMX. 2) dYdX: Pros: Exciting v4, fast, cheap, simple, massive trading pairs, minimal friction for ETH mainnet deposits, incentivized trading; Cons: Transition to v4 may face some difficulties, weak token value support, large unlock coming soon. If you want to trade specific assets with low fees and avoid the hassle of bridging from the mainnet, you can choose dYdX. 3) Kwenta: Pros: Best trading rewards, diversified assets, easy to add new assets, low fees; Cons: Low capital efficiency, only supports Optimism, bad debt risk. If you want the most direct trading incentives and a universal solution for various assets, you can choose Kwenta.

4) Level: Pros: Fixed fees relative to trading volume, high LP annualized returns; Cons: High token emissions, high fees, potential wash trading. Considering the current indicators and the upcoming launch of Arbitrum, Level is worth paying attention to. 5) gTrade: Pros: Best asset provision, high leverage, sustainable annual interest rate, GNS NFT is highly attractive to large traders; Cons: Minimum position size, low APR, significant regulatory issues. If you need to trade commodities/forex/stocks with extremely deep leverage on-chain, you can choose gTrade. 6) Drift: Pros: New methods with different support, stable execution despite low liquidity and trading volume; Cons: No rewards, only supports Solana, almost no earning opportunities.

Rough prediction: dYdX will continue to maintain its position as the top dex in terms of trading volume until 2024. GMX is the only dex that remains in the top three, everything else is shaken up. The GLP model (currently in existence) is outdated. Derivatives trading volume will continue to rise compared to spot trading volume. Compared to centralized exchanges, the trading volume of decentralized exchanges continues to rise. Given the regulatory pressure faced by centralized exchanges, the trading volume of decentralized exchanges is more active. Fees will continue to become more competitive and approach 0, regardless of whether there are incentive measures. Newer protocols aim to incentivize their high-level users rather than equally incentivizing everyone. We will see more sustainable token models to incentivize activity and income distribution.


Like what you're reading? Subscribe to our top stories.

We will continue to update Gambling Chain; if you have any questions or suggestions, please contact us!

Follow us on Twitter, Facebook, YouTube, and TikTok.


Was this article helpful?

93 out of 132 found this helpful

Gambling Chain Logo
Digital Asset Investment
Real world, Metaverse and Network.
Build Daos that bring Decentralized finance to more and more persons Who love Web3.
Website and other Media Daos

Products used

GC Wallet

Send targeted currencies to the right people at the right time.