GMX, a decentralized perpetual exchange, made its debut in the DeFi community in September 2021. Its launch on Arbitrum, an Ethereum Layer 2 scaling solution, marked a major milestone in the world of decentralized finance. GMX gained significant attention for being the first DEX and perpetual market on the Arbitrum ecosystem. One of its standout features was the shared liquidity pool system, which minimized price impact on trades of all sizes without affecting the market price. Within a month of its launch, GMX achieved a Total Value Locked (TVL) of over $30 million, with an average daily trading volume of approximately $1.4 million. As of now, GMX has transformed into a comprehensive DeFi platform, offering liquidity mining, an NFT marketplace, and yield farming. Its impressive growth has propelled its TVL to over $450 million, with a 24-hour trading volume of $1 million. This growth has also been reflected in the value of the GMX token, which has experienced substantial price appreciation, exceeding 200% since its launch.
The success of GMX on Arbitrum can be attributed to several factors. By offering perpetual swaps without expiry, GMX attracted a diverse range of traders, both experienced and novice, to the ecosystem. As a result, the liquidity and activity within the Arbitrum ecosystem increased significantly. The non-expiring nature of GMX’s perpetual contracts allowed traders to adjust their positions without being constrained by contract end dates. This heightened activity not only enhanced the overall liquidity of Arbitrum but also incentivized more users to onboard and engage with the ecosystem. The introduction of a perpetual market and shared liquidity pool system had a profound impact on Arbitrum’s growth, leading to increased demand for these features.
Kinetix Finance, a cutting-edge v3 perpetual DEX, is poised to replicate the flywheel effect experienced by GMX on Arbitrum. Building upon the success of Quickswap, the largest DEX on Polygon, the Kinetix team has chosen to leverage the capabilities of Kava Chain. Kava Chain combines the speed and interoperability of Cosmos with the developer power of Ethereum, making it an ideal ecosystem for Kinetix’s ambitions. Kinetix aims to become a comprehensive DeFi hub, offering a shared liquidity system through its v3 DEX, similar to Uniswap v3. In addition, Kinetix will introduce a perpetual swaps market based on QuickPerps, a GMX fork, enabling leveraged trading for advanced users.
Kinetix’s perpetual market will provide advanced traders with access to powerful trading strategies and benefits. Some of these include margin trading with up to 50x leverage, the ability to copy the trades of other traders, and hedging to reduce risk through offsetting positions in different assets. Kinetix also offers safer liquidations, improved price execution, and no hidden spreads, ensuring a seamless trading experience. The platform supports cross-usable assets, intuitive user interfaces, reduced liquidation risks, and built-in impermanent loss protection. Additionally, Kinetix’s perpetual market will contribute to improved price discovery for underlying assets, leading to better liquidity and more accurate pricing. At launch, Kinetix will support trading pairs such as $KAVA and $USDT, with plans to add more assets like $wBTC and $wETH in the near future.
Kinetix brings a wealth of experience from the success of Quickswap and QuickPerps, which gives them invaluable insights into what contributed to their achievements. Building on this knowledge, Kinetix is launching as the first shared liquidity DEX and perpetual swap market on the Kava Chain and Cosmos ecosystems. Similar to GMX’s impact on Arbitrum, it remains to be seen whether Kinetix’s launch will yield comparable outcomes. However, the combination of Kinetix’s innovative features and the team’s previous successes positions them for a potential success story in the world of decentralized finance.
The growth and adoption of platforms like GMX and Kinetix represent a paradigm shift in the global financial landscape. Traditional financial systems have long held a firm grip on people’s savings and investments. The trust and familiarity associated with traditional institutions have made it challenging for decentralized finance to gain mainstream traction. However, the risk-takers and innovators in the DeFi community are committed to transforming the traditional financial infrastructure. By building and utilizing state-of-the-art DeFi protocols, they are introducing the world to a new era of financial inclusion, transparency, and innovation. While there are risks involved, the potential rewards and the sheer volume of activity and liquidity flowing into DeFi demonstrate the immense value it brings to the global community.
GMX’s success on Arbitrum and the rise of Kinetix on Kava Chain signify a pivotal moment in the DeFi ecosystem. These platforms have harnessed the power of innovative features like perpetual swaps and shared liquidity pools, driving growth and adoption within their respective ecosystems. As the DeFi movement continues to gain momentum, it is only a matter of time before traditional financial systems are truly transformed, ushering in a new era of financial freedom and opportunity. Tracking the progress of platforms like GMX and Kinetix will undoubtedly provide valuable insights into the future of decentralized finance.