Is DeFi back? GMX rallies toward all-time high and LOOKS price gains 30%

Published at: Dec. 13, 2022

In a recent blog post, cryptocurrency legend and former BitMEX CEO Arthur Hayes mentioned he holds sizable bags of GMX and LOOKS tokens. According to Hayes, his main reasoning for investing in both tokens was their platform revenue and the potential of both assets to outperform standard treasury bills. 

Let’s take a brief look at on-chain data and compare GMX and LOOKS to competitors to determine whether Arthur’s assumption will work out. 

GMX usage cooling after a strong November

The week prior to Nov. 16 provided decentralized Finance (DeFi) with a significant influx in fees after the centralized exchange (CEX) exodus triggered by FTX’s bankruptcy. The temporary high inflows to DeFi propelled GMX to outperform Uniswap in protocol fees.

On Nov. 28, GMX earned about $1.15 million in daily trading fees, which surpassed Uniswap’s $1.06 million in trading fees on the same day.

While usage of GMX may be decreasing, the token is outperforming the industry. The GMX token is only 8% away from an all-time high after gaining 59% in the past 30-days.

Since Uniswap is the closest competitor to GMX, comparing the two protocols can show which users prefer to use for trading. Aside from Nov. 28 where the fee flip is noticed, Uniswap continues to outperform GMX in terms of fee revenue and daily active users. Unlike Uniswap, GMX distributes fees to stakers of various GMX and GLP tokens.

The 90-day peak for Uniswap fees is $5.9 million whereas GMX’s high in daily fees is only $1.4 million. The major difference in peak fees may show that GMX has reached capacity when it comes to platform usage.

The fees that GMX accrues are split 30% to GMX token holders and 70% to GLP holders. The current homepage for GMX cites the estimated APY on the GMX tokens is around 10% and for GLP tokens, 20%. While GLP would fit Hayes’ 20% annual yield goal, liquidity providers are susceptible to impairment loss and price declines making it difficult to ensure success against the conservative treasury bill strategy.

OpenSea usage continues to dominate LooksRare

LooksRare, which is also the home of the LOOKS token, was also mentioned by Hayes due to the fees the NFT protocol earns. To date, NFT marketplaces, including Coinbase, have struggled to chip away at OpenSea’s market dominance.

While OpenSea seems to have a natural flow of daily active users between 35,000 and 50,000, LooksRare has a small range of 350 to 500 users. Using this metric, OpenSea is 100 times bigger than LooksRare and the trend does not seem to change over a 90-day timeframe.

Further difference between the two protocols is that OpenSea does not have a token that emits rewards through staking and inflationary minting. The rewards emission may hit Hayes’ 20% goal, but it should also be noted that LooksRare is notorious for wash trading. The primary objective of these wash trader is to gain more LOOKS tokens, but this could have the effect of diluting the price.

The recently announced UniSwap NFT aggregator could help propel LooksRare to gain more “authentic” transactions since users can purchase LooksRare NFTs without ever visiting the site.

The current fee distribution is heavily concentrated toward OpenSea. Over the past 90-days, OpenSea reached a peak of $2.5 million in daily fees, whereas during the same period LooksRare only earned over $200,000 in daily fees once.

Investigating the protocol fundamentals mentioned by Hayes are an important first step when considering investing in DeFi and altcoin. Looking at the competitive landscape for both LooksRare and GMX, it would take much more adoption for either protocol to overtake the current leaders. Furthermore, the 20% goal Hayes sets out might be a stretch when analyzing inflated emissions and token prices.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Tags
Dex
Related Posts
A sharp drop in TVL and DApp use preceded Avalanche’s (AVAX) 16% correction
After an impressive 73% rally between July 13 and Aug. 13, Avalanche (AVAX) has faced a 16% rejection from the $30.30 resistance level. Some analysts will try to pin the correction as a "technical adjustment," but the network’s deposits and decentralized applications reflect worsening conditions. To date, Avalanche remains 83% below its November 2021 all-time high at $148. More data than technical analysis can be analyzed to explain the 16% price drop, so let’s take a look at the network’s use in terms of deposits and users. The decentralized application (DApp) platform is still a top-15 contender with a $7.2 …
Blockchain / Aug. 18, 2022
3 reasons why Telos (TLOS) price hit a new all-time high
It seems crypto winter is upon us and during times like these, projects that continue to forge ahead by focusing on development and expansion are often rewarded by traders who are looking to set up long positions where strong fundamentals trump the absence of short-term gains. One project that has weathered the storm in the crypto markets to establish a new all-time high is Telos (TLOS), a blockchain network created with the EOSIO software that aims to bring speed and scalability to smart contracts for decentralized finance (DeFi), nonfungible tokens (NFTs), gaming and social media. Data from Cointelegraph Markets Pro …
Adoption / Feb. 4, 2022
Altcoin Roundup: JunoSwap, Solidly and VVS Finance give DeFi a much-needed refresh
Decentralized finance (DeFi) was the talk of the town in early 2021, but it has since taken a back seat to more appealing sectors like nonfungible tokens (NFTs), memecoins and blockchain gaming. Now that cross-chain bridges and interoperability have allowed for the easier migration of assets to competing chains, a new class of DeFi protocols is arising to challenge those left from 2021. Here’s a look at three DeFi projects that have launched on some of the up-and-coming layer-1 blockchain networks, catching the eye of the crypto community. VVS Finance VVS Finance is the largest DeFi protocol on the Cronos …
Markets / March 4, 2022
REN price gains 65% after Catalog launch brings a cross-chain DEX to its blockchain
Decentralized finance projects like Ren pumped in 2021, only to finish the year right back when they started as high fees on Ethereum (ETH) led to decreased activity for many protocols and DeFi took a backseat to more popular sectors like nonfungible tokens (NFTs). Now, it appears as though that downtrend is in the process of reversing course after recent global events highlighted the benefits of DeFi and holding assets outside the traditional financial system. This week REN price climbed 69% from a low of $0.247 on Feb. 24 to a daily high of $0.418 on March 3. Three reasons …
Blockchain / March 4, 2022
Polygon’s focus on building L2 infrastructure outweighs MATIC’s 50% drop from ATH
After a devastating 50% correction between Dec. 25 and Jan. 25, Polygon (MATIC) has been struggling to sustain the $1.40 support. While some argue this top-15 coin has merely adjusted after a 16,200% gain in 2021, others point to competing scaling solutions growth. Either way, Polygon (MATIC) remains 50.8% below its all-time high at an $11 billion market capitalization. Currently, the market cap of Terra (LUNA) stands at $37 billion, Solana (SOL) is above $26 billion, and Avalanche (AVAX) is at a $19 billion market value. A positive note is that Polygon raised $450 million on Feb. 7, and the …
Decentralization / March 10, 2022