GMX Explained: The Complete Guide

What is GMX?

GMX (GMX is a decentralized perpetual-futures exchange on Arbitrum and Avalanche where traders trade against a community liquidity pool priced by an oracle) is a decentralized perpetual-futures exchange on Arbitrum and Avalanche. Traders open leveraged longs and shorts against a community liquidity pool priced by an oracle — not an order book. In GMX V2 that liquidity sits in isolated GM pools (one per market), and liquidity providers earn 63% of trading and funding fees for taking the other side of traders' positions. Last verified: 2026-05-27.

GMX pioneered the pool-based perp model. Instead of matching buyers and sellers in an order book, it lets traders trade against a shared liquidity pool priced by an oracle. The upside: zero price impact at the oracle price and deep, reliable liquidity. The catch: liquidity providers effectively become the house — they collect fees and profit when traders net lose, but they're exposed when traders net win. That two-sided design is the key to understanding both why GMX pays LPs so well and what risk they take.

The GMX short answer

1. Traders trade against a pool, not each other. An oracle sets the price; LPs are the counterparty.
2. Zero price impact at the oracle price. Your fill doesn't move the market — but you pay position and borrowing fees.
3. LPs are the house. GM-pool providers earn 63% of fees and absorb traders' net PnL.
4. V2 isolated GM pools. One pool per market, covering crypto, gold, silver, oil, and gas — you pick which markets to back.
5. GMX accrues via buybacks. 27% of fees buy back GMX; staking distributions are paused until GMX hits $90.

🔴 Live: Incentives & Current State

Last updated 2026-05-27 — we refresh this section as campaigns change. Confirm live mechanics in the GMX rewards docs and the GMX Substack.

GMX has been live for years, so there's no airdrop. The 2026 story is threefold: a new buyback-and-staking-power reward model, the aftermath of the July 2025 V1 exploit, and a major expansion into real-world asset (RWA) perp markets.

What's live right now

• Buyback model. Exactly 27% of protocol fees (from leverage trading, liquidations, borrowing fees, and swaps) buy back GMX on the open market via DAO-approved mechanism. The remaining split: 63% to GM-pool LPs and 10% to the protocol treasury.
• Paused distributions, accumulating. Bought-back GMX accumulates in the treasury and will be distributed to stakers once GMX reaches $90. As of 31 May 2026, GMX trades near $6.73 — well below the trigger; no distribution is imminent.
• Staking power. Accrues continuously as stake amount × duration (accrual began 4 March 2026). Loyalty tracking began 25 March 2026: if your staked balance falls below 80% of its peak, all accumulated power resets to zero permanently.
• GM pool fees. LPs in isolated GM pools earn 63% of their market's fees, auto-compounding — a live yield independent of the buyback.
• RWA perps launched. April 2026: gold (XAU/USD), silver (XAG/USD), WTI crude (WTIOIL/USD), Brent crude (BRENTOIL/USD), and natural gas (NATGAS/USD) now trade 24/7 on Arbitrum via Chainlink Data Streams. Oil max leverage: 100x during CME hours / 25x off-hours. Natural gas: 40x / 20x. Fees from 1–2 bps during CME hours.
• V1 status. V1 GLP on Arbitrum resumed normal operation after the July 2025 exploit and subsequent $44M compensation payout (see Security section below). V2 was never affected.

How to participate, step by step

1. Trade perps or LP a GM pool to earn fees (LPs take the other side of traders).
2. Stake GMX to accrue staking power toward future buyback distributions.
3. Hold your stake steady — dropping below 80% of your peak wipes accumulated power permanently.

Caveat: GMX staking distributions are paused pending the $90 trigger. GM-pool fees are the live, recurring earnings for participants today.

For yield mechanics generally, see our DeFi yield farming guide.

How the pool-based perp model works

Traders trade against a shared liquidity pool priced by an oracle, getting zero price impact at the oracle price; LPs provide that liquidity and act as the counterparty, earning 63% of fees but taking on traders' net PnL. Last verified: 2026-05-27.

When you open a leveraged position on GMX, you're not matched with another trader — you're trading against the pool. An oracle supplies the price, so your fill has no price impact at that price (unlike an AMM or order book). Instead of slippage, GMX charges:

• a position fee to open/close,
• a borrowing fee that accrues while the position is held, and
• a funding component depending on the market's long/short skew.

The pool earns those fees. The flip side: if traders as a group win, the pool pays them; if they lose, the pool keeps it. LPs are underwriting traders. This is why GMX LP yields can be high — and why they're not riskless "interest."

Worked example: being a GM liquidity provider

Suppose you deposit $10,000 into an ETH GM pool:

• Fee income: the pool earns trading and borrowing fees; your 63% LP share on an active market can yield a healthy double-digit base APY in fees — paid continuously and auto-compounding into your GM token's value.
• The PnL swing: you're the counterparty. If ETH traders on that market net lose $X over a period, that flows to LPs (you gain on top of fees). If they net win $X — say a sharp ETH rally where longs profit — the pool pays them, and your GM value dips.
• Net over time: historically, fees plus traders' aggregate losses have tended to favor LPs, which is why GM pools attract liquidity. But it is not guaranteed for any given period — a run of well-timed, winning traders is a real drawdown.

The mental model: a GM pool is like running a small casino. The house edge (fees + traders mostly losing) is in your favor long-run, but you can have losing weeks when the players win.

GM pools vs GLP (V1 vs V2)

V1's GLP was a single basket of assets backing all markets; V2's GM pools isolate liquidity per market, earning 63% of that market's fees and auto-compounding — containing risk and letting you choose your exposure. Last verified: 2026-05-27.

V2's GM design is the meaningful upgrade: instead of one basket exposing every LP to every asset, each market has its own pool. You decide which markets' trader flow you want to underwrite. GLP still operates for V1, paying LPs in ETH or AVAX. The practical choice: GM lets you avoid markets you don't want exposure to (e.g. skip a volatile small-cap pool, back only ETH/BTC) and now extends to RWA instruments.

The buyback model and staking power

GMX rewards moved from direct ETH/AVAX payouts to buybacks (27% of fees buy GMX); staking distributions are paused, accumulating in the treasury until GMX hits $90, allocated by "staking power" that resets if you trim your stake below 80% of peak. Last verified: 2026-05-27.

This is the 2026 change to understand if you hold GMX:

• Buybacks, not distributions. Exactly 27% of protocol fees buy GMX on the open market. Value accrues through reduced supply rather than a yield paid to your wallet.
• Distributions paused until $90. Bought-back GMX accumulates in the treasury; it will be distributed to stakers once GMX reaches $90. At ~$6.73 (May 2026), that target is distant.
• Staking power formula: power = staked amount × time. Accrual began 4 March 2026 (when the last direct GMX distribution ended). Your share of treasury rewards = your cumulative power / total network power.
• Loyalty tracking. Began 25 March 2026: the system started tracking each address's peak staked balance. If your staked balance drops below 80% of that peak, all accumulated power resets to zero permanently — you restart from your new balance. Don't stake GMX you might need to trim.

The takeaway: GMX is a buyback-and-accumulate story with a loyalty mechanic. The live, paid-now yield is in GM-pool fees, not GMX staking.

The July 2025 V1 exploit and aftermath

On 9 July 2025, GMX V1's GLP pool on Arbitrum was hit by a $42M reentrancy exploit; the attacker returned ~$37.5M keeping a $5M bounty, and GMX paid $44M total compensation to affected GLP holders — V2 was entirely unaffected. Last verified: 2026-05-27.

This is the protocol's most significant security event and materially relevant to any risk assessment.

What happened: The attacker exploited a reentrancy vulnerability in V1's executeDecreaseOrder function. The function accepted an attacker-controlled contract address as input; when control transferred to that address during a refund step, the attacker re-entered the system. This left the global average short price stale while updating the short-position list, artificially inflating AUM calculations and therefore GLP token value. The attacker then drained approximately $42M through GLP redemptions. Only V1 on Arbitrum was affected; V2 was not.

Recovery: GMX halted GLP minting and redemption, then negotiated a white-hat arrangement. The attacker returned approximately $37.5M to the GMX multi-sig wallet within 48 hours, keeping a $5M bounty (≈10% of stolen funds, per the white-hat offer).

Compensation: Via a community Snapshot vote, GMX finalized a $44M compensation plan for affected GLP holders, completed by 13 August 2025. Affected holders received GLV tokens (25% WBTC / 25% ETH / 50% stablecoins, mirroring pre-exploit GLP composition). Funding came from the ~$37.5M returned by the attacker, ~$2M from the DAO treasury, and GLP tokens held by the white-hat were burned to restore proportional value. The DAO also allocated $500K in retention incentives for holders who maintained GLV for three months.

Ongoing implications: V1 GLP on Arbitrum resumed. The exploit demonstrated that V2's isolated GM pools provide a meaningful security boundary — a vulnerability in one part of V1 could not propagate to V2 markets.

How to trade or provide liquidity

Connect a wallet on Arbitrum or Avalanche, trade perps with low leverage at the oracle price, or LP a GM pool to earn fees as the counterparty — and stake GMX if you want staking power. Last verified: 2026-05-27.

1. Connect a wallet at app.gmx.io on Arbitrum or Avalanche.
2. Trade perps with low leverage and a stop-loss — fills have zero price impact at the oracle price, but you pay position and borrowing fees.
3. Or LP a GM pool to earn 63% of a market's fees, accepting counterparty risk. Pick markets whose risk you understand. RWA perps (gold, silver, oil, gas) are now available for LPs as well.
4. Stake GMX to accrue staking power, keeping your balance above 80% of its peak.

For how GMX ranks among perp venues, see our best perpetual DEXs guide and our Hyperliquid guide for the order-book alternative.

GMX vs Hyperliquid vs dYdX

GMX uses oracle-priced pools (zero price impact, LPs as the house); Hyperliquid and dYdX run on-chain order books. GMX suits zero-slippage fills and fee-earning LPs; the order books dominate on volume and active-trader UX. Last verified: 2026-05-27.

Sources: DefiLlama, May 2026. Hyperliquid leads on every volume and fee metric by a wide margin. GMX's differentiation is the oracle-pool model, zero-slippage fills, and the ability to LP as the house.

Use GMX if you value zero-slippage execution and the option to earn as a liquidity provider; Hyperliquid for the deepest order-book liquidity and best active-trading UX (see our Hyperliquid guide); dYdX for its sustainable, fee-funded model (see our dYdX guide).

Risks and what to avoid

Traders face leverage and liquidation risk; LPs face "house" exposure to traders' net wins; both face oracle dependency and smart-contract risk; the July 2025 V1 exploit is a concrete example of the latter. Last verified: 2026-05-27.

• Trader leverage. Leveraged perps liquidate fast on a normal move. Keep leverage low and use stops (see our Hyperliquid guide for the leverage/liquidation math, which applies here too).
• LP counterparty risk. As a GM/GLP provider you take the other side of traders — a stretch of winning traders is a drawdown for you, even with fees coming in.
• Oracle dependency. GMX prices off oracles; oracle failure or manipulation is a tail risk (and the reason GMX restricts which assets it lists, using Chainlink Data Streams for RWA markets).
• Smart-contract risk. The July 2025 V1 exploit proves this is non-zero even on long-running audited code. V2 was unaffected, and the per-market isolation limits blast radius, but risk is real.
• Staking-power reset. Trimming staked GMX below 80% of peak (from 25 March 2026 baseline) wipes your accumulated reward share permanently.
• $90 trigger distance. GMX at ~$6.73 (May 2026) is approximately 93% below the $90 distribution trigger. Staking today is a long-duration bet.

GMX rewards both traders and LPs well precisely because both are taking real risk. Treat LP yield as compensation for underwriting, not as a savings rate.

Safety checklist

1. As a trader, keep leverage low and set a stop-loss; check the borrowing fee for held positions.
2. As an LP, pick GM markets whose trader flow and assets you understand — you're the counterparty.
3. Expect LP drawdowns in strong trending markets where traders win; size accordingly.
4. Don't stake GMX you might trim — dropping below 80% of peak (25 March 2026 baseline) resets staking power permanently.
5. Remember staking yield is paused until the $90 trigger — GM-pool fees are the live earnings today.
6. Verify the URL is app.gmx.io and you're on the right chain (Arbitrum/Avalanche).

Glossary

• Pool-based perp — perps where traders trade against a liquidity pool, not an order book.
• Oracle price — externally-fed price (via Chainlink Data Streams) GMX fills at, giving zero price impact.
• GM pool — V2 isolated per-market liquidity pool; LPs earn 63% of fees.
• GLP — V1's single shared liquidity basket; pays LPs in ETH/AVAX.
• Borrowing/funding fee — ongoing cost traders pay while a position is open.
• Buyback model — 27% of fees buy GMX on the market (value via supply reduction).
• Staking power — your share of accumulated buyback rewards (stake amount × time); resets below 80% of peak.
• Counterparty/house risk — LPs absorb traders' net PnL.
• RWA perps — synthetic perpetuals on real-world assets (gold, silver, WTI, Brent, natural gas) priced via Chainlink Data Streams.

Looking ahead

GMX's central 2026 tension is whether its pool-based model holds share against order-book venues. By volume, it doesn't: Hyperliquid's ~$5.9B daily perps volume dwarfs GMX's ~$93M (DefiLlama, May 2026). GMX's case rests on differentiated UX (zero-slippage fills, LP-as-house), the RWA perp expansion (gold, silver, oil, gas via Chainlink, launched April 2026), and any multichain growth from the Solana-side protocol (GMTrade, formerly GMXSOL, relaunched March 2025 and rebranded November 2025). Three signals to watch: GM-pool TVL and fee generation, whether the $90 buyback-distribution trigger is ever reached, and whether RWA perp volume builds meaningfully against TradFi competitors.

For context, see our Hyperliquid guide, dYdX guide, and best perpetual DEXs.