Perpetual DEX Development: Insights and Strategies from GMX

Rock'n'Block
6 min readMay 21, 2024
Perpetual DEX Development: Insights and Strategies from GMX

Introduction to Perpetual DEX Development

Perpetual DEX development is transforming the financial landscape, offering innovative ways to facilitate secure and efficient trading. Unlike traditional exchanges, decentralized exchanges eliminate intermediaries, providing a more transparent and resilient trading environment.

Perpetual DEXs, in particular, are gaining traction due to their ability to offer perpetual contracts — futures contracts with no expiration date. This lets traders hold positions indefinitely and leverage trades without the need to constantly roll over contracts. As more businesses turn to blockchain technology, perpetual DEX development can offer significant advantages, including enhanced security, lower costs, and trading flexibility.

Benefits of Perpetual DEX Development for Businesses:

  • Continuous Trading
  • Leverage and Margin Trading
  • Automated Liquidation Mechanisms
  • Access to Derivative Trading
  • Funding Mechanism

Understanding GMX: A Leading Perpetual DEX

GMX is a decentralized exchange that empowers users to trade BTC, ETH, AVAX and other top cryptocurrencies directly from their crypto wallets. GMX enables users to perform spot swaps and trade perpetual futures with up to 50x leverage. According to GMX’s data, by 21 May 2024, its Total Trading Volume is $202B with total users amount more than 540,000.

GMX combines the benefits of DEX platforms with the high-performance features typically found in centralized exchanges. This makes GMX a prime example of how perpetual DEX development can revolutionize the trading experience for both individual traders and business owners looking to create a DEX solution that is secure, cost-effective, and globally accessible.

As businesses look to create a DEX like GMX, understanding its core functionalities is essential.

Tokenomics Development

Tokenomics is the economic system of a cryptocurrency token, covering its creation, distribution, incentives, and utility within a blockchain ecosystem. It’s vital for DEX development, ensuring sustainability, security, and user engagement. Effective strategies encourage liquidity, user participation, governance, and fair value distribution, enhancing functionality and appeal for long-term success.

The tokenomics of GMX is structured around four main tokens:

  1. GLP Token: The liquidity provider token
  2. GMX Token: The platform’s utility and governance token
  3. esGMX Token: A synthetic premium token
  4. Multiplier Points: A synthetic reward mechanism

These tokens are integral to the platform’s functionality and are supported by various tokenomics mechanisms, including the GLP pool, staking, reward claims, compound rewards, and vesting.

Staking in DEX Development

In perpetual DEX development, staking is a vital component that enhances user engagement and platform stability. On GMX, staking GMX or GLP tokens generates staked GMX or staked GLP tokens, respectively. Users can either claim their staking rewards immediately or reinvest them to compound their returns. Here’s a detailed look at the rewards for staking each token:

  • GMX: When staked, GMX tokens earn AVAX, esGMX, and Multiplier Points.
  • esGMX: These tokens, when staked, also generate AVAX, esGMX, and Points.
  • Multiplier Points: Staking these points boosts the APRs for AVAX.
  • GLP: Staking GLP tokens automatically earns AVAX and esGMX.

Thirty percent of the commissions earned from swaps and leveraged trading on GMX are converted into AVAX and allocated to staked GMX holders. These commissions are calculated after deducting referral fees and network costs of the keeper, which are typically around 1% of the total fees.

Vesting in DEX Development

Vesting development refers to the gradual release of tokens over time for project contributors like founders, advisors, and investors. It acts like a commitment mechanism. Overall, vesting acts as a safeguard for DEX development, preventing immediate token dumps and ensuring parties stay invested in the project’s long-term success.

esGMX tokens can be vested over a year to yield regular GMX tokens. During vesting, the GMX or GLP used is reserved. For example, staking 1000 GMX tokens to earn 100 esGMX tokens reserves those 1000 GMX tokens. While esGMX is vested, it doesn’t earn rewards, but the staked tokens do. Conversion to GMX happens continuously over 365 days, and users can claim converted GMX anytime.

Referral Programs in DEX Development

In DEX development, referral programs leverage the power of network effects to attract new users. By incentivizing existing users to share the platform with their network, DEXs can expand their reach organically. GMX’s referral program allows users to earn additional rewards and receive discounts. By creating a referral code and link, users can benefit from their referrals’ trading activity. The referral program has three tiers:

  • Tier 1: 5% discount for traders, 5% rebates to referrers in esGMX.
  • Tier 2: 10% discount for traders, 10% rebates to referrers in esGMX (requires at least 15 active users and $5 million in weekly volume).
  • Tier 3: 10% discount for traders, 15% rebates to referrers in AVAX, 5% in esGMX (requires at least 30 active users and $25 million in weekly volume).

Trading Mechanisms in DEX Development

GMX’s trading mechanisms make GMX a prime example of advanced decentralized exchange development, appealing to businesses looking to create a DEX and succeed in the dynamic DeFi market. The four main components integral to trading on GMX — Order Managers, Vault, Price Feeds, and Keepers — ensure streamlined trading. Users submit orders to Order Managers, which work with the Vault and Price Feeds for efficient execution. Keepers update prices and trigger trades when conditions are met. This setup appeals to businesses aiming for success in the dynamic DeFi market.

🔹 Market and Limit Orders

Market orders execute immediately at the current market price, while limit orders wait until a specified price or better is reached before executing, providing traders with precise entry points and control over their trades in decentralized exchanges.

🔹 Stop-Loss and Take-Profit Orders

Stop-loss and take-profit orders are crucial for managing risk in perpetual DEX development, automatically closing positions at set price levels. A stop-loss order triggers a market order when the price falls below a specified level, limiting losses, while a take-profit order triggers a market order when the price rises above a specified level, securing profits.

Governance Mechanisms in DEX Development

Governance mechanisms are the lifeblood of DEX development. GMX governance is a dedicated platform for the GMX community, fostering engagement and participation. This platform allows users to create topics, pose questions, and make suggestions, encouraging community-driven development. The platform is not related to web3 social media. Registration on the platform is done via email.

Statistics Implementation in DEX Development

In DEX development, integrating statistical data is vital for user engagement and informed decision-making. GMX Stats provides essential insights into trading and financial metrics, fostering transparency and trust. Key statistics include total volume, fees collected, GLP pool size, total users, and open interest. Charts and graphs offer detailed breakdowns of daily trading volume, fees, GLP pool dynamics, pool composition, GLP performance, traders’ PnL, open interest, borrowing rates, user activity, and swap sources, enabling users to gauge platform performance and make data-driven choices.

🚀 Create a Perpetual DEX with Rock’n’Block

Perpetual DEX development like GMX requires a deep understanding of various critical components, including staking mechanisms, advanced trading functionalities, tokenomics, and automated systems for liquidation and pricing. Each feature contributes significantly to the platform’s overall efficiency, security, and user experience.

Here is a step-by-step overview of the perpetual DEX development with Rock’n’Block.

Step 1: Initial Consultation and Requirement Gathering

We conduct a thorough consultation to grasp your vision, goals, and specific needs for perpetual DEX development. Our team analyzes this information to define technical specifications, desired features, and project scope.

Step 2: Conceptualization and Planning

Based on the consultation, we conceptualize the DEX framework, incorporating functionalities like continuous trading and leverage mechanisms. A detailed technical blueprint, including architecture design and development milestones, is created.

Step 3: Tokenomics Development and White Paper Creation

We craft detailed tokenomics outlining utility, distribution, and staking mechanisms, accompanied by a comprehensive white paper explaining the DEX’s vision and features.

Step 4: Front-End Development

Our design team creates intuitive interfaces for seamless trading experiences across devices, ensuring responsiveness and accessibility.

Step 5: Back-End Development

We develop smart contracts for order management and liquidity provision, alongside a scalable server infrastructure for data storage and transaction processing, prioritizing performance and reliability.

Step 6: Testing and Quality Assurance

Our QA experts verify all features and conduct security testing to identify and mitigate vulnerabilities.

Step 7: Deployment and Launch

After thorough testing, we deploy your perpetual DEX securely on the chosen blockchain network, making it available to the public.

Step 8: Post-Launch Optimization and Maintenance

We monitor performance, optimize speed and reliability, update security measures, and incorporate user feedback and market trends to enhance your DEX’s functionality and stay ahead of the curve.

At Rock’n’Block, we understand the complexities and challenges involved in developing a high-performing perpetual DEX. With over 300 expert blockchain solutions delivered, more than 15 years of custom blockchain development experience, and 50+ innovative Web3 technology services, our team of blockchain experts is equipped to assist you in every stage of your project. Whether you are looking to integrate advanced trading features, create tokenomics, or ensure robust automated systems, our expertise in decentralized exchange development, including perpetual DEX development, makes us your ideal partner.

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