Crypto Traders Flock to DeFi After FTX Implosion
Crypto Briefing | Nov 16, 2022 03:13AM ET
GMX is one of several DeFi protocols to receive a boost as trust in centralized exchanges is called into question following FTX's meltdown. GMX trading volume has hit an all-time daily high of $1.17 billion in the wake of FTX’s collapse. Crypto traders are turning to DeFi following FTX’s implosion.
The decentralized futures trading platform GMX has soared in popularity over the past week due in no small part to the loss of trust in centralized exchanges. The DeFi protocol facilitates trustless leveraged trading using smart contracts rather than taking custody of users’ assets.
Over the past week, trading volume on GMX CoinGecko data .
The GMX protocol’s governance token has reacted positively to the increase in use. It’s up over 67% since the market crashed on November 10. Despite the current weakness in the crypto market, GMX is only 28% off its all-time high of $62.10 recorded in January. Bitcoin, meanwhile, is down 75% from its peak.
In addition to the surge in users and trading volume, GMX’s revenues have also soared. According to Crypto Fees data , the protocol has averaged $1.04 million in daily revenue over the past seven days. It’s currently the third most profitable crypto project behind Ethereum and Uniswap.
GMX lets users open long or short positions on Bitcoin, Ethereum, Chainlink, and Uniswap with up to 30 times leverage. Positions are collateralized by liquidity providers who earn trading and liquidation fees from traders. The protocol lives on the Ethereum Layer 2 network Arbitrum and Avalanche.
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GMX is one of many decentralized trading platforms to see an increase in popularity since the FTX collapse. Gains Network, a decentralized leveraged trading platform on Polygon, has also seen its daily users and trading volumes soar . Gains Network’s GNS token has subsequently received a boost, jumping 50% from its weekly low.
Last week’s FTX implosion has once again highlighted the risk of trusting centralized entities to custody crypto assets. Given the option, it appears that many traders are migrating over to decentralized alternatives—moreso as fears that other centralized exchanges such as Crypto.com and Gate.io may also be facing liquidity issues do the rounds in crypto circles. Only time will tell if decentralized trading can win in the long run. But for the time being, protocols like GMX are enjoying the limelight.
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