The central theses
- Arbitrum’s Nitro upgrade has resulted in increased activity on the Ethereum Layer 2 solution.
- While Arbitrum doesn’t yet have its own token, two of its native protocols can serve as surrogates for traders looking for exposure.
- GMX is a decentralized futures exchange and Dopex is a decentralized options exchange. Your governance tokens from both incur charges generated by the protocols.
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GMX and Dopex, two of the top protocols on Arbitrum, may offer traders the opportunity to gain access to the Layer 2 solution while waiting for it to drop their native token.
Nitro upgrade successful
Arbitrum’s Nitro launch was a success, as suggested by on-chain metrics. Have daily transactions flooded to new all-time highs (breaking September 2021 and July 2022 records and 318,777 transactions yesterday) become new addresses created about three times faster than before the upgrade, and the layer 2 solution is stamp in about twice as much in daily fees as its competitor Optimism.
Arbitrum currently has no native token. However, market players can pursue two avenues to participate in the growth of the network: GMX and Dopex.
GMX
GMX is a decentralized perpetual futures exchange which allows its users to trade with up to 30x leverage without permission. The platform comes from Arbitrum and already is Create around $400,000 in daily fees on average, making it one of the highest-earning crypto protocols behind Ethereum, Binance Smart Chain, Aave, Uniswap, and Synthetix.
The protocol has two tokens, GMX and GLP. GMX is the exchange’s utility and governance token, and GLP is its liquidity delivery token. GMX accrues 30% of the fees generated by the protocol. The token price has reached a new high of about $50.2 since Arbitrum’s Nitro upgrade; It had previously bottomed out at around $12.3 in early June.
GLP, on the other hand, receives 70% of the fees generated by the trading protocol and is currently priced at $0.91. GLP is automatically deployed upon purchase, meaning it is only available through the GMX protocol itself. While the token offers higher rewards than GMX, GLP holders act as a counterparty to the leveraged traders on the exchange; Therefore, the performance of the GLP token depends on market conditions and trader execution.
Since the GMX exchange is one of the largest native applications on Arbitrum itself, the GMX and GLP tokens can serve as proxies for the growth of the Arbitrum network. The GMX token in particular has proven vulnerable to previous Arbitrum updates. On the day of Nitro launch, the coin climbed from $44 to $51 – but on Arbitrum’s Odyssey it was temporary postponedit fell from $18.7 to $15.2.
dopex
Dopex is a decentralized options exchange. Like GMX, the protocol uses liquidity pools to allow traders to buy or sell options contracts on digital assets without permission. And just like GMX, Dopex has two tokens: DPX and rDPX.
DPX is the protocol’s utility and governance token. It has a fixed total supply of 500,000 tokens, of which around 60% are already in circulation and issuance is scheduled to end in early 2026. DPX is currently estimated at around $419; it bottomed out at around $113 in June. It is still 89.7% down from its previous all-time high of $4,222.
DPX also incurs fees from Dopex. Fees are generated from option purchases, swaps and exercises; 70% of that goes to Dopex liquidity providers and 15% to DPX stakers. rDPX is a multi-purpose token that can be used to increase fee-generated rewards.
Data from DeFiLlama shows that Dopex has shrunk to around $29 million from a protocol-assigned $154 million, while GMX is at more than 369 million US dollars and counting. The metric can often be unreliable, but in this case it shows that Dopex is not currently enjoying the same momentum as the futures exchange. The DPX token also doesn’t appear to be as sensitive to changes in the Arbitrum ecosystem as GMX – for example, it didn’t respond to the Nitro upgrade.
Waiting for arbitration
GMX and Dopex aren’t the only projects native to Arbitrum (stablecoin issuer Vesta Finance has also adopted Layer 2 as its primary home some others). But they are the biggest, most famous and most innovative of the group: this makes their token prices likely to keep rising should Arbitrum’s growth continue.
It’s worth noting that Arbitrum’s competitor, Optimism, only dropped its native token months after making its platform available for testing. Optimism’s airdrop was notable in that it heavily rewarded users who interacted with multiple facets of the ecosystem, such as by using bridges or donating to Gitcoin. If Arbitrum does something similar with its own token, there might be advantages in learning about the top Layer 2 protocols.
Disclosure: At the time of writing, the author of this article owned ETH and several other cryptocurrencies. The information contained in this article is for educational purposes only and does not constitute financial advice.
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