DeFi speculators awaiting Arbitrum tokens are flocking to GMX

Arbitrum, one of the most popular Ethereum Layer 2 scaling solutions, successfully launched its Nitro upgrade last week. While the release brought many significant improvements, a native Arbitrum token was not one of them.

As investors wait for Arbitrum to launch its own token, perpetual futures exchange GMX — one of the few domestic projects built on top of Arbitrum — has now emerged as a popular DeFi trading exchange.

Arbitrum is based on what is known as “optimistic rollup,” a type of data compression technique that combines many blockchain transactions into a single transaction to save on processing time and fees.

The Nitro upgrade improves the user experience for application developers, reduces network fees and increases transaction speeds. The upgrade could reduce the protocol’s fees by up to 27% as it compresses data sent to the Ethereum mainnet for validation.

The future is brighter, faster, and cheaper now that Arbitrum One has been fully upgraded to the Nitro stack. 💙x🚀

This includes… 🧵https://t.co/oIQOnv6pMm

— Arbitrum (@arbitrum) August 31, 2022

In addition, application developers can now compile code using standard languages ​​instead of using the previous custom software.

Arbitrum still faces stiff competition versus optimism in the alternative Ethereum Layer 2 solution. Optimism has a native token, while Arbitrum instead relies on log usage for revenue.

As a result, investors interested in gaining exposure to Arbitrum have turned to perpetual futures exchange GMX, a permissionless decentralized exchange.

The Arbitrum network is available again after the Nitro upgrade. Trading and swaps can now be carried out as usual.

Note that the https://t.co/GaEGMSkhIx explorer and alternative RPC providers like Alchemy are not secured yet. $GMX $GLP

— GMX 🫐 (@GMX_IO) August 31, 2022

GMX allows users to leverage trades up to 30x and has seen significant transaction volume over the past few months. In terms of daily fee income, GMX is only behind some of the largest crypto protocols such as Uniswap, Aave and Synthetix.

GMX runs on both Arbitrum and Avalanche, a multi-chain smart contract platform designed for launching decentralized apps (dApps).

The GMX exchange works with two separate tokens: GMX and GLP. The GMX token is used for governance purposes as holders earn 30% of network fees; GLP accrues 70% of network fees and is a liquidity provider token. Users can only mint GLP on the GMX network by depositing liquidity into pools. However, this makes the performance of GLP dependent on the proportion of an asset in a liquidity pool.

GMX should see a token appreciation in value correlating with Arbitrum’s network growth. With over 2.5 billion total value locked, Arbitrum has quickly become the leading Layer 2 volume on Ethereum as more users seek faster transactions and lower network fees.

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