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Sep 1 β€’ 12 tweets β€’ 5 min read
GMX and dYdX appear to be the dominant destinations for traders seeking leverage in DeFi, but how do they stack up against each other?

@MattFiebach and @swmartin19 break it down for you πŸ§΅πŸ‘‡
1/ The derivatives market for crypto is absolutely huge.

Of the ~$100B of futures volume traded on FTX, Binance, BTCEX, dYdX, and GMX on Aug 31, dYdX and GMX captured less than 2% of the volume.

This makes us optimistic that both dapps have a long runway for growth.
2/ dYdX operates similarly to its CEX counterparts by charging traders a funding rate to keep the perp price in line with the spot price:

Positive funding rate = longs pay shorts
Negative funding rate = shorts pay longs

dYdX has seen nearly $700B of historical trading volume.
3/ GMX, on the other hand, operates more similarly to a decentralized margin trading account.

It does have a funding rate, but does not use it to balance long and short positions like dYdX.

It instead calculates the funding rate based on GLP asset utilization.
4/ This is where dYdX has an advantage.

If you can get paid to go short on dYdX, what is the point of going short on GMX?

Despite this, GLP has performed extremely well when compared to other popular LP positions after baking in its 70% allocation of trading fee revenue.
5/ GLP acts as the counterparty to traders.

Long positions use the asset being longed as collateral and short positions use stablecoins as collateral.

If traders wins big on GMX going short, GLP LPs take the loss in stables while dollar-denominated AUM gets crushed.
6/ However, despite that being one of the primary risks associated with GMX's design, the house (GLP LPs) normally wins.

There have been over 80k traders attempt to beat GLP LPs, and they are now down over $40M since GMX launched last year.
7/ Not only have traders consistently been slaughtered, but they pay fees to do so - 70% to GLP LPs and 30% to GMX single-sided stakers.

This has resulted in ~$77M of revenue paid out to token holders.

GLP AUM continues to grow, which creates more volume and protocol revenue.
8/ dYdX's $700B of volume dwarfs GMX's $45B, but all of the revenue is flowing back to the company.

Additionally, volume is likely inflated from dYdX token incentives.

While the incentives are tempting, users are essentially trading USDC fees for an inflationary token.
9/ dYdX v4 will be on its own app-specific Cosmos chain which will provide more opportunities for token value accrual and improve decentralization.

But it doesnt come w/o challenges:

- Increased security cost
- MEV problems
- No gasless trading
- Less optimal for performance
10/ dYdX is the king for now, but GMX is catching up quickly with their zero price impact trades and revenue share model with token holders.

Only time will tell if GMX can oust dYdX as the dominant player, but we have no doubt DEXs will continue to eat CEX marketshare.
11/ For a deeper dive into these two protocols, check out our most recent report and stay tuned for part 2 where we dive into the small caps.

Also be sure to follow @blockworksres if you enjoyed this thread.…

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More from @blockworksres

Aug 31
How you can extract the alpha you need from Etherscan

🧡 by @smyyguy
2/ Block Explorers

Ethereum is a series of "blocks" in a "chain" that are filled with transactions, and these transactions are a public record of how value flows throughout the network.

Etherscan is a block explorer that gives users visibility into the data stored on Ethereum.
3/ Landing Page

We first see some basic stats about ETH and two columns for the latest blocks and transactions (txns).

Each block is numerically ordered, beginning with block 0 which was mined on July 30, 2015.

Each txn has a unique "hash" or 64 hexadecimal character ID.
Read 16 tweets
Aug 29
We got an alpha leak πŸ‘€

crvUSD could launch as soon as next month.

@smyyguy breaks down the implications for Curve 🧡

Last week we signaled it was bullish announcement season with three major catalysts on the horizon.

Today, we received news that crvUSD is nearing mainnet launch.

We are still without the whitepaper, but there are some clues worth piecing together.

Protocol specific stablecoins.

This narrative is gaining traction as it allows a protocol to build a customized asset that drives value back to the native governance token.

An easy example: A lending protocol launches a native stable.
Read 13 tweets
Aug 26
Finding alpha in crypto requires using the right tools.

Here are 10 FREE tools that you can use to improve your research by @WestieCapital 🧡
1/ Etherscan (

This first one is obvious, but if you can master etherscan you can really find anything. Get familiar with contracts, token balances, unique transaction details, wallet tagging, and more, they have great tutorials Image
2/ DeFi Llama (

This continues to be the greatest source of data on value metrics on-chain. They are known for TVL across blockchains and protocols, but have recently added support for other great metrics such as liquidations and stablecoins. Image
Read 12 tweets
Aug 25
(1/17) SUUUDDOOO SWAAAP has received a lot of hype lately... but is it really that big of a deal?

Why not just use OpenSea as a collector or NFTX as a DeFi degen?

@swmartin19 breaks it down πŸ§΅πŸ‘‡
(2/17) OpenSea has dominated secondary sales volume with its off-chain orderbook model

LooksRare & X2Y2 have similar models, but redistribute fee revenue to token stakers

P&E games are creating their own marketplaces where fees accrue to community-owned treasuries Image
(3/17) Off-chain orderbooks have many advantages over on-chain orderbooks:

β€’ Gas payment only required for the execution of sales
β€’ Creator royalties easily supported
β€’ Optimal for NFTs with important metadata
β€’ Provide users with a more personal experience
Read 17 tweets
Aug 24
Announcements of innovative protocol updates are usually big catalysts for adoption and attention.

Here are three exciting announcements from large protocols that we expect to go live very soon by @WestieCapital (yes, this is alpha) 🧡
1. Curve: crvUSD

Curve recently teased their new stablecoin, crvUSD. While details of the model have yet to be released, what we do know so far is that it is overcollateralized with CRV and LP tokens (likely Convex) as collateral and will feature a novel liquidation mechanism.
On August 19, Michael Egorov, the founder of Curve, said we should expect crvUSD much earlier than the end of the year, implying launch is sooner rather than later. Image
Read 9 tweets
Aug 23
Sushi governance is expected to vote on The Meiji Restoration in the next week or two.

Sushi Meiji would make two key changes to the protocol: an on-chain DAO and vote escrow (ve) tokenomics.

🧡 1/13 Image
The proposal aims to:
-Decentralize and streamline governance
-Overhaul SUSHI's tokenomics
-Drive deeper liquidity pools and remove liquid SUSHI tokens from circulation
Vote escrowed oSUSHI will be similar to the vote escrowed veCRV model with one key difference: the separation of protocol governance from price speculators.
Read 13 tweets

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