GMX, a decentralized perpetual exchange, burst onto the scene in September 2021, capturing the attention of the DeFi community. What set GMX apart was its launch on Arbitrum, which marked a significant milestone for the DeFi space. The platform’s unique features, such as being the first DEX and perpetual market on the Arbitrum ecosystem, along with its shared liquidity pool system, propelled its growth. Within a month of its launch, GMX amassed a Total Value Locked (TVL) of over $30 million, with daily trade volumes averaging around $1.4 million. GMX has since expanded to include a liquidity mining program, NFT marketplace, and yield farming platform. Its exponential growth has resulted in a TVL of over $450 million and a 24-hour trading volume of $1 million. The success of GMX has also elevated the value of its native token, GMX, experiencing over 200% price appreciation since its launch.
GMX’s introduction of perpetual swaps without an expiry on the Arbitrum ecosystem attracted both seasoned and novice traders. The absence of contract end dates allowed traders to adjust their positions freely, fostering higher trading volumes. This surge in activity contributed to increased liquidity within the Arbitrum ecosystem and incentivized more participants to join. As a result, capital allocation within the ecosystem rose, leading to an expansion of the TVL. GMX’s perpetual market and shared liquidity pool system played a crucial role in driving Arbitrum’s growth.
Drawing from their success with Quickswap, the largest DEX on Polygon, the Kinetix team is poised to replicate the flywheel effect on the Kava Chain. Kinetix aims to become a comprehensive DeFi hub on Kava Chain, which combines the speed and interoperability of Cosmos with Ethereum’s developer capabilities. The platform will feature a v3 DEX, similar to Uniswap v3, and a perpetual swaps market based on QuickPerps (a GMX fork) for leverage trading. Kinetix offers advanced trading strategies and benefits, including margin trading with up to 50x leverage, copy trading, and safer liquidations.
The launch of a DEX and perpetual market protocol on an ecosystem triggers positive market sentiment, accelerating liquidity growth and user activity. Kinetix’s shared liquidity system and perpetual swaps market have the potential to replicate GMX’s flywheel effect on the Kava Chain. By introducing these innovative features, Kinetix intends to attract users, generate liquidity, and enhance the ecosystem. The Kinetix team’s previous experience with Quickswap and QuickPerps further bolsters their ability to drive success on the Kava Chain.
DeFi’s ultimate goal is to revolutionize traditional financial systems, offering financial inclusion, transparency, and innovation to the world. However, challenging the stronghold of central banks, commercial banks, and stock exchanges is no small feat. Traditional financial institutions command trust and familiarity, making it difficult for individuals to break away from established norms. Despite the risks associated with building and using DeFi protocols early on, many pioneers are embracing the potential rewards. These risk-takers showcase the possibilities and benefits of transitioning from traditional finance to DeFi, enticing others to explore this new frontier.
GMX’s meteoric rise on Arbitrum demonstrated the impact of a decentralized perpetual market and shared liquidity pool system. Kinetix Finance, building on the success of Quickswap, aims to replicate this success on the Kava Chain. By introducing a shared liquidity DEX and perpetual swaps market, Kinetix seeks to attract users, bolster liquidity, and showcase the potential of the Kava Chain ecosystem. The world of DeFi offers a path towards transforming traditional finance, providing individuals with greater financial control and expanding opportunities for wealth creation. As the DeFi space continues to evolve, platforms like GMX and Kinetix are pioneering the way towards a decentralized and inclusive financial future.
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