What is GMX?
GMX is a decentralized exchange for perpetual futures, contracts that let you take leveraged long or short positions on assets like BTC and ETH without an expiry date. It runs mainly on Arbitrum, with a deployment on Avalanche. Most perp exchanges match buyers against sellers. GMX instead has traders trade against pools of liquidity supplied by users, with prices taken from oracles. GMX is also the name of the protocol’s governance token, which has a forecast maximum supply of 13.25 million and receives value from a share of trading fees through buybacks.
For the bigger picture, see the DeFi hub: it compares the options and points to the next guide to read.
- Model: pool-based. Liquidity providers (LPs) act as the counterparty to traders and earn most of the fees, but they lose when traders win on net.
- Versions: V1 used a single shared pool called GLP. V2 (2023) uses isolated per-market pools called GM, bundled into vaults called GLV.
- Biggest incident: a July 2025 exploit drained roughly $42M from the V1 GLP pool. Most of it was returned, and V1 was then wound down. V2 was not affected.
- Token: GMX is for governance and staking. A portion of protocol fees is used to buy GMX on the open market rather than paid out directly.
History: from Gambit to one of Arbitrum’s anchor protocols
GMX grew out of an earlier project, Gambit Financial, a leveraged trading and stablecoin experiment on BNB Chain. The pseudonymous team led by a developer known as “X” relaunched the design as GMX on Arbitrum in September 2021, only weeks after Arbitrum opened to the public. The timing mattered. Arbitrum was new, gas fees were far lower than on Ethereum mainnet, and there were few native protocols. GMX quickly became one of the network’s largest applications by deposits and fees.
In January 2022 GMX expanded to Avalanche. Through 2022 its GLP pool became a popular “real yield” product. Unlike many DeFi pools that paid holders in newly printed tokens, GLP paid out in ETH or AVAX that came from actual trading fees. That label helped GMX stand out during the 2022 bear market, when inflationary farm yields collapsed.
The model had growing pains. In September 2022 a trader manipulated the thinly traded AVAX market on GMX’s Avalanche deployment, using GMX’s zero-price-impact execution to profit at GLP holders’ expense. The team responded by tightening open-interest caps on smaller markets. The episode showed the core weakness of oracle-priced, zero-slippage trading: when an oracle can be pushed on outside markets, the pool pays the bill.
GMX V2 launched in 2023 to address this. It replaced the single shared pool with isolated markets, each with its own liquidity, and added price impact and funding fees so large trades bear more of their own cost. V2 also made it possible to list more assets, including synthetic markets for coins that aren’t natively on Arbitrum, without exposing every LP to every market. GMX later added GMX Liquidity Vaults (GLV) to bundle several GM pools into a single deposit.
The most serious incident came on July 9, 2025. An attacker exploited a reentrancy flaw in GMX V1’s contracts on Arbitrum. Through a sequence of calls, they distorted how the GLP pool calculated its assets under management, making GLP appear more valuable and redeeming it for about $42 million. GMX offered a 10% white-hat bounty on chain. The attacker accepted and returned the bulk of the funds within days. GMX then compensated affected GLP holders with roughly $44 million in GLV tokens, including some treasury funds, and moved to retire V1. Security firms that analyzed the exploit found the bug was specific to V1 code. V2 contracts were not affected.
How GMX works
Trading against a pool, not an order book
When you open a 10x long on ETH on GMX, no other trader takes the short side. Your position is backed by liquidity in the relevant GM pool. Entry and exit prices come from oracles (GMX V2 primarily uses Chainlink Data Streams), not from an on-chain order book. That gives traders predictable execution close to the reference price. In return, GMX charges:
To put this into practice, our guide on how to use GMX covers opening and closing leveraged trades and depositing into GM pools step by step.
- Open and close fees on position size.
- Price impact, which grows when a trade worsens the imbalance between longs and shorts, and is reduced or rebated when a trade improves it.
- Borrowing fees paid by the side using more of the pool’s liquidity.
- Funding fees that shift between longs and shorts to push open interest toward balance.
Maximum leverage varies by market and changes with governance and risk settings. Major markets have offered up to roughly 100x, and smaller ones have much lower caps. Higher leverage means a smaller price move liquidates you. Our leverage trading explainer shows how quickly that happens.
GM pools and GLV vaults: the liquidity side
Each GM pool holds a “long token” and a “short token”. For the ETH/USD market, that is ETH and USDC. LPs deposit and receive GM tokens. The pool earns trading, borrowing and swap fees, and it gains when traders lose and loses when traders win. Its value also moves with the price of the assets inside it. GLV vaults hold several GM pools that share the same backing tokens and rebalance between them, which makes liquidity provision more passive.
This is the trade-off every GMX LP accepts: fee income in exchange for being the house against traders who are sometimes right. In trending markets with a crowded winning side, LP returns can turn negative for a period. Funding and borrowing fees are designed to compensate, but they do not guarantee it.
Using GMX
GMX is non-custodial. You connect a self-custody wallet such as MetaMask (see our MetaMask guide), hold ETH on Arbitrum for gas and USDC or ETH as collateral, and trade through the GMX interface. If your funds are on Ethereum mainnet or an exchange, our guide on bridging to Arbitrum covers the move. GMX has also added features such as one-click trading and gasless order options to reduce wallet pop-ups. Check the current interface for availability.
GMX tokenomics and supply
GMX’s documentation forecasts a maximum supply of 13.25 million GMX. Minting beyond that requires a governance vote by token holders, so treat the cap as a governance commitment rather than an immutable code limit. Most of that supply is already in circulation. Check a reputable data aggregator for the current circulating figure.
Fee distribution has changed several times, which is why older articles disagree:
- V1 era: roughly 70% of fees went to GLP holders and 30% to GMX stakers, paid in ETH or AVAX.
- V2 split: about 63% of fees to GM liquidity providers, 27% for GMX token holders and 10% to the treasury, according to the docs and DefiLlama at the time of writing.
- Buyback shift: the GMX DAO redirected the 27% holder share from direct ETH payouts to open-market GMX buybacks. Under a 2026 governance overhaul, bought-back tokens accumulate in the treasury, and docs state that distribution to stakers is held back until conditions such as a $90 GMX price are met. Read the current docs before staking on the assumption of a set yield.
Escrowed GMX (esGMX), a vesting reward token, has historically been used for staking and referral incentives. Its current role is described on the GMX rewards page.
How to buy GMX
GMX trades on several large centralized exchanges and on Arbitrum DEXs such as Uniswap. On an exchange the process is the usual: verify, deposit, buy. Listings vary by country, so confirm the exchange supports GMX where you live. On-chain, you need ETH on Arbitrum for gas, and you should confirm the GMX contract address from the official site or docs before swapping, since copycat tokens exist. If you plan to stake, you’ll need the tokens in a self-custody wallet on Arbitrum.
Staking and earning with GMX
There are two quite different ways to earn:
- Staking GMX gives governance weight and a claim on the buyback program described above, subject to its current conditions. It is exposure to the protocol’s fee generation and to GMX’s price.
- Providing liquidity through GM pools or GLV earns the larger share of fees but makes you the counterparty to traders, exposes you to the pooled assets’ price moves, and carries smart contract risk.
Rates on both vary constantly with trading volume and market conditions. The GMX app displays current estimated APRs. Treat them as backward-looking, not promises. For context on other protocols on the same network, see our roundup of Arbitrum DeFi projects.
Risks and is GMX a good investment?
GMX has a long operating history by DeFi standards and a real fee-generating business. That is the bull case: if decentralized perps keep taking share from centralized exchanges, a protocol with deep liquidity and a buyback mechanism benefits. But several risks deserve equal weight:
- Competition: order-book perp DEXs, especially Hyperliquid, now handle far more volume than pool-based designs. GMX’s share of on-chain perps volume has fallen as a result. (For background on how Hyperliquid built its user base, see what Hyperliquid points were.)
- Smart contract risk: the 2025 V1 exploit happened years after launch, in code that had been audited. Age and audits reduce risk but do not remove it.
- Oracle and market-manipulation risk: pool-based designs depend on oracle prices that can be pushed on thin outside markets.
- LP drawdowns: LPs can lose money during strong trends when traders are mostly right.
- Governance risk: fee splits and staking rules have changed repeatedly and can change again by DAO vote.
A reasonable framing: GMX is a bet on one design of decentralized derivatives exchange holding its niche, not a broad market index. Size any position accordingly.
FAQ
Is GMX safe to use?
GMX V2 has operated since 2023 and its contracts have been audited, but no DeFi protocol is risk-free. The July 2025 exploit of V1 shows that mature code can still fail. Risks include contract bugs, oracle issues and, for leveraged traders, liquidation. Start small, use a wallet you control, and only use the official app URL.
What is the difference between GLP and GM?
GLP was GMX V1’s single liquidity token, backed by a basket of assets and exposed to every V1 market at once. GM tokens are V2’s per-market liquidity tokens, so risk in one market stays mostly isolated from others. GLV vaults bundle several GM pools. After the July 2025 exploit, GLP holders were compensated in GLV, and V1 was wound down.
Who founded GMX?
GMX was created by a largely pseudonymous team. Its lead developer is publicly known only by the handle “X”. The project evolved from Gambit Financial on BNB Chain and launched as GMX on Arbitrum in September 2021. Governance now runs through the GMX DAO, where token holders vote on parameters such as fee distribution.
How is GMX different from Hyperliquid?
Hyperliquid runs a full on-chain order book on its own layer 1 blockchain, so traders are matched with other traders and market makers. GMX runs on Arbitrum and Avalanche, and traders trade against liquidity pools at oracle prices. In GMX’s model, LPs take the other side of trades. In Hyperliquid’s, a protocol vault is only one market maker among many.
Crypto is volatile and risky; this is education, not financial advice. Do your own research.
