Thread by @DeFi_Made_Here

1/🧵 On-chain Derivatives sector is the most competitive in DeFi with dozens of protocols live and many new projects about to launch.

Follow this thread for the Key Metrics analysis on $GMX $SNX $GNS $PERP $LVL $MUX and more

2/ While perp DEX volume is only 2% of CEX trading volume, decentralized exchanges are making billions in daily volume combined.

This might not sound like a lot, but perp DEX space was pioneered by @dydx only 2 years back.

@dYdX 3/ While raw data might indicate that one or another protocol looks like a good investment,

It's important to understand the context, especially the design and revenue share model.

* - incentivized trading

@dYdX 4/ @GMX_IO

GMX is a synthetic perp DEX with its most famous feature - Zero Slippage trades.

It is the biggest protocol from this list by TVL, Volume, Fees, and Earnings.

@dYdX @GMX_IO 5/ GMX shares 70% of the fees with liquidity providers and 30% with $GMX stakers.

This made GMX very popular and attractive to investors.

Price/Earnings (Revenue minus Token Incentives) ratio is 31.16 which makes $GMX rather expensive but investors might be pricing in GMX v2.

@dYdX @GMX_IO 6/ GMX V2 will be introduced in a matter of weeks with the following features:

• Chainlink low-latency oracles for better real-time market data

• More assets (not only crypto)

• Lower trading fees

• Slippage

GMX v1 and v2 will coexist.

@dYdX @GMX_IO 7/ With the increased competition, GMX is losing its market share, and if v2 will not bring more volume and fees to the platform,

$GMX fair price might be $40 at ~ 20 P/E

@dYdX @GMX_IO 8/ @synthetix_io

Synthetix allows users to mint synthetic assets against its native token $SNX.

Other projects like @Kwenta_io can build their own front end to allow traders to access perp trading.

@dYdX @GMX_IO @synthetix_io @Kwenta_io 9/ Synthetix is the biggest protocol by MC and Revenue with 100% of fees distributed to $SNX stakers.

The problem is that $SNX stakers are the liquidity providers as well.

@dYdX @GMX_IO @synthetix_io @Kwenta_io 10/ To stimulate users to provide liquidity, Synthetix incentivizes stakers with $SNX emissions.

More than $100M in $SNX incentives were paid out to stakers while only $36M in fees were generated.

It brings Synthetix to negative P/E - they are losing money.

@dYdX @GMX_IO @synthetix_io @Kwenta_io 11/ It is also worth mentioning that trading on Synthetix is heavily incentivized with $OP rewards and they are not accounted for expenses.

Without extra incentives, trading volume might fall in the future.

@dYdX @GMX_IO @synthetix_io @Kwenta_io 12/ At current valuation, fees, and emissions $SNX seems like a very expensive token.

However, investors might be pricing in future v3 updates and protocol adoption.

At the moment Key metrics are growing day by day.

@dYdX @GMX_IO @synthetix_io @Kwenta_io 13/ @GainsNetwork_io

Gains is a synthetic platform that allows Crypto, Forex, and Commodities leveraged trading.

Gains shares ~33% fees with $gns stakers and ~17% fees with liquidity providers.

@dYdX @GMX_IO @synthetix_io @Kwenta_io @GainsNetwork_io 14/ However, from the 1st of September Gains will be sharing ~61% fees with $GNS stakers which could increase its valuation.

@dYdX @GMX_IO @synthetix_io @Kwenta_io @GainsNetwork_io 15/ Gains has the lowest P/E ratio of 10, a low Price/Revenue ratio of 8.7, and the highest Volume/TVL ratio (unincentivized) of 568.

These Key metrics, product development, and future updates make $GNS the most undervalued project on the list.

@dYdX @GMX_IO @synthetix_io @Kwenta_io @GainsNetwork_io 16/ @perpprotocol

Perp is built on top of Uniswap v3 smart contracts and it is the smallest protocol on the list.

80% of the fees are distributed to the LPs and ~14% to $perp stakers.

@dYdX @GMX_IO @synthetix_io @Kwenta_io @GainsNetwork_io @perpprotocol 17/ Perp annual revenue is $1.4m while there are $2.8m of emissions which brings it to -$1.4m Earnings.

Overall Perp metrics do not indicate that the protocol can be attractive for investors and can be difficult for it to compete with Kwenta (Synthetix) on Optimism.

@dYdX @GMX_IO @synthetix_io @Kwenta_io @GainsNetwork_io @perpprotocol 18/ @Level__Finance

Level got a lot of traction during its early days due to heavily incentivized trading with its own $LVL token.

Level has been doing billions in volume but since the emissions and price of the token went down, Level Key metrics are in a downtrend.

@dYdX @GMX_IO @synthetix_io @Kwenta_io @GainsNetwork_io @perpprotocol @Level__Finance 19/ Volume/TVL ratio of 1000 looks artificially high taking into account that Level has a similar to GMX design.

Despite a lot of fees generated, Earnings are negative - the protocol is giving away more tokens than it generates fees.

@dYdX @GMX_IO @synthetix_io @Kwenta_io @GainsNetwork_io @perpprotocol @Level__Finance 20/ Level distributes 45% of the fees to LPs, 10% to $LVL stakers, and 10% to $LGO stakers.

LGO is the second token in the Level ecosystem, that has governance and treasury rights.

@dYdX @GMX_IO @synthetix_io @Kwenta_io @GainsNetwork_io @perpprotocol @Level__Finance 21/ Level metrics seem to be inflated by the volume generated during the early incentivized trading phase, its earnings are negative, and metrics are heading downwards.

$LVL does not seem to be an attractive option for the investment.

@dYdX @GMX_IO @synthetix_io @Kwenta_io @GainsNetwork_io @perpprotocol @Level__Finance 22/ @muxprotocol

MUX is both a trading protocol and an aggregator. Trades are routed against muxLP or other protocols (GMX, Gains) depending on where the costs will be the lowest for the traders.

70% of the protocol income is distributed to LPs and $MUX stakers in ETH.

@dYdX @GMX_IO @synthetix_io @Kwenta_io @GainsNetwork_io @perpprotocol @Level__Finance @muxprotocol 23/ As MUX is deployed on 5 widely-adopted ecosystems, there are endless opportunities for MUX to composite with different types of protocols:

• Other perp platforms
• Options platforms
• Betting platforms, etc

@dYdX @GMX_IO @synthetix_io @Kwenta_io @GainsNetwork_io @perpprotocol @Level__Finance @muxprotocol 24/ With its relatively low MC, scaling capabilities, and solid Key metrics,

MUX can be considered an interesting investment opportunity.

@dYdX @GMX_IO @synthetix_io @Kwenta_io @GainsNetwork_io @perpprotocol @Level__Finance @muxprotocol 25/ Conclusion

Perp DEXes become more competitive every day and it is difficult to spot the most promising protocols as well as to predict which one will succeed over time.

@dYdX @GMX_IO @synthetix_io @Kwenta_io @GainsNetwork_io @perpprotocol @Level__Finance @muxprotocol 26/ Overall perp DEX sector can become one of the biggest when more volume from CEXes starts flowing to DeFi.

Nothing in this thread is financial advice.

@dYdX @GMX_IO @synthetix_io @Kwenta_io @GainsNetwork_io @perpprotocol @Level__Finance @muxprotocol 27/ Things to note:

@dydx is by far the biggest protocol with ~$350b trading volume over the past year that will be moving to its own app chain.

$dydx token does not have a revenue share and will not have it in the future.

@dYdX @GMX_IO @synthetix_io @Kwenta_io @GainsNetwork_io @perpprotocol @Level__Finance @muxprotocol 28/ Protocols to monitor:

@vertex recently launched with token incentives for traders and great UI. Surprisingly it has ~25% market share same as GMX and Kwenta.
Btw @wintermute_t is providing liquidity on Vertex.

@ThenaFi_ RFQ-based trading platform.

@dYdX @GMX_IO @synthetix_io @Kwenta_io @GainsNetwork_io @perpprotocol @Level__Finance @muxprotocol @vertex @wintermute_t @ThenaFi_ 29/ Here's the list of other perp DEXes you can take a look at:

30/ Thanks for reading!

If you enjoyed this thread:

1. Follow @DeFi_Made_Here for more helpful threads
2. RT the tweet below to share this thread with your audience



Thank You and stay safe!

31/ ah, and I forgot to mention that the data source is @tokenterminal