1 Page Thesis on the Best Liquid Token Opportunity Under $500M FDV
Introduction – Why Investors Pay For
In today’s digital world, many users exchange their data and attention for free access to products and services. Leveraged investing stands out as a service that investors are willing to pay for.
GMX is an innovative decentralized exchange (DEX) for spot and leveraged trading, offering perpetual contracts with a simplified design.
Within crypto markets, perpetual futures dominate trading volume, surpassing even spot trading on centralized exchanges. Compared to traditional futures, perpetual contracts offer greater price parity with spot markets and enable capital efficiency through leverage and 100% control.
GMX: A Simplified Approach to Leveraged Trading
GMX stands out as an innovative decentralized exchange (DEX) for both spot and leveraged trading, offering perpetual contracts with a simplified design. With a current market capitalization of $481 million, GMX is a unique and undervalued investment opportunity with market leadership and massive growth potential ahead as more investors convert to 24/7/365 access in DeFi over CeFi.
Competitive Advantages and Market Leadership
The derivatives ecosystem caters to various traders and entities seeking leverage and hedging opportunities. GMX caters to a diverse user base, ranging from emotional day traders to institutional players and DeFi protocols seeking risk hedging solutions which has resulted in $176B in total trading. Compared to its main competitor, dYdX (market cap: $3.16 billion), which relies on a centralized order book and matching engine, GMX’s on-chain design, tokenomics, and financial performance highlight its competitive edge.
Financials and Investment Potential
GMX boasts a strong financial position. Currently, $618 million is locked up by liquidity providers (LPs) who earn 70% of exchange profits by renting their spot exposure to traders. The remaining 30% goes to staked GMX holders, who can further increase their returns by compounding ETH or AVAX rewards on the exchange. Notably, GMX’s P/S ratio of 13.4 (as of February 12th) is significantly lower compared to dYdX’s P/S of 86.4*. Additionally, GMX offers unique advantages like hourly payouts in hard assets like ETH or AVAX and the ability to increase their dividends 200% through compounding their rewards, taking the dividend up to 12% ETH APY at the time of writing.
Innovation and Future Outlook
Despite its strong performance, GMX remains relatively undiscovered due to its anonymous founders and investor focus on news-driven narratives rather than fundamental analysis. However, GMX has established itself as a leader in the profitable perpetual exchange market and continues to innovate with features like 1-click trading, BSC ecosystem integration, and upcoming asset listings. This commitment to innovation positions GMX to maintain its market leadership within the perpetual ecosystem.
On top of the technology is a unique NFT community, the GMX Blueberry Club. This club has its own multi-million dollar treasury, an onboarding education product, and a monthly cash trading competition for NFT holders. Learn more here.
Conclusion
GMX presents a compelling investment opportunity in the growing DeFi leverage trading space. Its innovative design, strong financials, and focus on user experience position it for continued success. Decentralized derivative volume has grown 400% since July 2023. Despite this, the sector is still in its infancy, capturing only 2% of the total cryptocurrency futures volume. As the market matures and investors seek value beyond the hype, GMX has the lead today as the dominant player in the crypto derivatives landscape, compelling financials and continued growth of its user base, solidifying GMX as the best liquid token opportunity under $500M FDV today.
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Disclaimer: This article has been prepared for informational purposes only. This article is not an offer to sell or a solicitation of an offer to buy any security. DYOR. This article was also written on February 20, 2024, and originally posted here.