GMX

About GMX Case Study

TL;DR

• Oracle Frontrunning => Oracle Update Monetization
• Eliminated negative externalities of OEV
• New source of protocol revenue via OEV
• No hard service dependency on Rook RPC

What is GMX?

GMX is the largest perpetual futures exchange by volume. Trading is supported by a unique multi-asset pool that earns liquidity providers fees from market making, swap fees and leverage trading. They settle on Arbitrum and Avalanche. Wildly successful, but they have a problem.

The Problem

Oracle frontrunning.

GMX uses oracles to dynamically price its futures contracts using an aggregate of prices from leading volume exchanges. The arrival of an oracle update can allow atomic arbitrage which negatively affects GMX liquidity providers. This is classic application-layer MEV.

It’s an old problem, Synthetix faced it as did many others. Only now, we can solve it.

The Solution

By sending the oracle update to Rook RPC, GMX is effectively putting it up for sale to the highest bidder. The sale transfers the MEV from the arbitrageur, back to GMX, where they distribute it to LPs, as if it never left.

How about that?

And it’s dependable. It’s reliable. It’s transparent – they can see what’s going on! So can everybody else. That’s the difference.