In a latest weblog publish, cryptocurrency legend and former BitMEX CEO Arthur Hayes mentioned he holds sizable baggage of GMX and LOOKS tokens. In accordance with Hayes, his essential reasoning for investing in each tokens was their platform income and the potential of each belongings to outperform commonplace treasury payments.
Let’s take a quick have a look at on-chain knowledge and evaluate GMX and LOOKS to opponents to find out whether or not Arthur’s assumption will work out.
GMX utilization cooling after a powerful November
The week previous to Nov. 16 offered decentralized Finance (DeFi) with a major influx in fees after the centralized alternate (CEX) exodus triggered by FTX’s chapter. The momentary excessive inflows to DeFi propelled GMX to outperform Uniswap in protocol fees.
On Nov. 28, GMX earned about $1.15 million in each day buying and selling charges, which surpassed Uniswap’s $1.06 million in buying and selling charges on the identical day.
Whereas utilization of GMX could also be lowering, the token is outperforming the business. The GMX token is just 8% away from an all-time excessive after gaining 59% previously 30-days.
Since Uniswap is the closest competitor to GMX, evaluating the 2 protocols can present which customers favor to make use of for buying and selling. Other than Nov. 28 the place the payment flip is observed, Uniswap continues to outperform GMX by way of payment income and each day lively customers. Not like Uniswap, GMX distributes charges to stakers of varied GMX and GLP tokens.
The 90-day peak for Uniswap charges is $5.9 million whereas GMX’s excessive in each day charges is just $1.4 million. The foremost distinction in peak charges might present that GMX has reached capability relating to platform utilization.
The charges that GMX accrues are cut up 30% to GMX token holders and 70% to GLP holders. The present homepage for GMX cites the estimated APY on the GMX tokens is round 10% and for GLP tokens, 20%. Whereas GLP would match Hayes’ 20% annual yield purpose, liquidity suppliers are susceptible to impairment loss and worth declines making it troublesome to make sure success in opposition to the conservative treasury invoice technique.
OpenSea utilization continues to dominate LooksRare
LooksRare, which can also be the house of the LOOKS token, was additionally talked about by Hayes as a result of charges the NFT protocol earns. So far, NFT marketplaces, including Coinbase, have struggled to chip away at OpenSea’s market dominance.
Whereas OpenSea appears to have a pure movement of each day lively customers between 35,000 and 50,000, LooksRare has a small vary of 350 to 500 customers. Utilizing this metric, OpenSea is 100 occasions greater than LooksRare and the development doesn’t appear to vary over a 90-day timeframe.
Additional distinction between the 2 protocols is that OpenSea doesn’t have a token that emits rewards by staking and inflationary minting. The rewards emission might hit Hayes’ 20% purpose, nevertheless it must also be famous that LooksRare is notorious for wash trading. The first goal of those wash dealer is to achieve extra LOOKS tokens, however this might have the impact of diluting the worth.
The recently announced UniSwap NFT aggregator might assist propel LooksRare to achieve extra “genuine” transactions since customers should purchase LooksRare NFTs with out ever visiting the location.
The present payment distribution is closely concentrated towards OpenSea. Over the previous 90-days, OpenSea reached a peak of $2.5 million in each day charges, whereas throughout the identical interval LooksRare solely earned over $200,000 in each day charges as soon as.
Investigating the protocol fundamentals talked about by Hayes are an essential first step when contemplating investing in DeFi and altcoin. Trying on the aggressive panorama for each LooksRare and GMX, it might take rather more adoption for both protocol to overhaul the present leaders. Moreover, the 20% purpose Hayes units out may be a stretch when analyzing inflated emissions and token costs.
The views, ideas and opinions expressed listed here are the authors’ alone and don’t essentially mirror or characterize the views and opinions of Cointelegraph.
