In a current weblog publish, cryptocurrency legend and former BitMEX CEO Arthur Hayes mentioned he holds sizable luggage 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 property to outperform normal treasury payments.
Let’s take a quick have a look at on-chain information and evaluate GMX and LOOKS to rivals 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 supplied decentralized Finance (DeFi) with a big inflow in charges after the centralized change (CEX) exodus triggered by FTX’s chapter. The momentary excessive inflows to DeFi propelled GMX to outperform Uniswap in protocol charges.
On Nov. 28, GMX earned about $1.15 million in every 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 reducing, the token is outperforming the business. The GMX token is barely 8% away from an all-time excessive after gaining 59% prior to now 30-days.
Since Uniswap is the closest competitor to GMX, evaluating the 2 protocols can present which customers choose to make use of for buying and selling. Except for Nov. 28 the place the charge flip is observed, Uniswap continues to outperform GMX by way of charge income and every day lively customers. Not like Uniswap, GMX distributes charges to stakers of assorted GMX and GLP tokens.
The 90-day peak for Uniswap charges is $5.9 million whereas GMX’s excessive in every day charges is barely $1.4 million. The key distinction in peak charges could present that GMX has reached capability relating to platform utilization.
The charges that GMX accrues are break 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 objective, liquidity suppliers are vulnerable to impairment loss and worth declines making it tough to make sure success towards the conservative treasury invoice technique.
OpenSea utilization continues to dominate LooksRare
LooksRare, which can be the house of the LOOKS token, was additionally talked about by Hayes because of the charges the NFT protocol earns. So far, NFT marketplaces, together with Coinbase, have struggled to chip away at OpenSea’s market dominance.
Whereas OpenSea appears to have a pure stream of every 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 instances larger 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 could hit Hayes’ 20% objective, nevertheless it must also be famous that LooksRare is infamous for wash buying and selling. The first goal of those wash dealer is to realize extra LOOKS tokens, however this might have the impact of diluting the worth.
The lately introduced UniSwap NFT aggregator might assist propel LooksRare to realize extra “genuine” transactions since customers should buy LooksRare NFTs with out ever visiting the positioning.
The present charge distribution is closely concentrated towards OpenSea. Over the previous 90-days, OpenSea reached a peak of $2.5 million in every day charges, whereas throughout the identical interval LooksRare solely earned over $200,000 in every day charges as soon as.
Investigating the protocol fundamentals talked about by Hayes are an necessary first step when contemplating investing in DeFi and altcoin. Wanting on the aggressive panorama for each LooksRare and GMX, it might take way more adoption for both protocol to overhaul the present leaders. Moreover, the 20% objective Hayes units out could be a stretch when analyzing inflated emissions and token costs.
The views, ideas and opinions expressed listed below are the authors’ alone and don’t essentially replicate or characterize the views and opinions of Cointelegraph.