The Tie Research
GMX: Comparative Valuation of DeFi Perp Trading
By Jack Melnick
April 18, 2023
- Low liquidity
- Unfair pricing – for buyers and/or writers
- Lack of composability
- Lack of user adoption
- Lack of protocol adoption
- Arbitrage opportunities during times of high volatility
- Bots front-running user trades (that’s why there’s protection built into GLP)
- Difficulty of maintaining the dollar peg of USDG
- Providing farm tokens, without any use cases or incentives other than accumulating or selling
- Given its fee pass-through, GMX behaves very differently than governance tokens like dYdX. We selected TradFi companies including CME, CBOE, and Nasdaq as comps for the business. The mean multiple for these businesses is ~21x EV/Forward EBITDA, which we then take as a projected multiple for GMX.
- Trading Volume and Fee Volume have been averaging 15-20% growth week/week over the past 31 weeks. We used a much more conservative assumption of 5-6% average growth w/w over the next 1-2 years.
- Team Execution on stated roadmap
- Continued growth of Partnerships
- Sustained growth at 5-6% w/w for the next year
- Oracle Exploit Risk
- Market realization of mispricing relative to TradFi and DeFi peers
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Jack Melnick
Jack Melnick, Author at The Tie
VP of Research