0 Price Impact Trading: A Comparison of GMX and Integral SIZE

None of the information contained here constitutes an offer (or solicitation of an offer) to buy or sell any currency, product or financial instrument, to make any investment, or to participate in any particular trading strategy.

GMX is a DeFi liquidity platform that allows users to take leveraged trades on various cryptocurrency assets like Ethereum and Bitcoin with no price slippage. It is currently deployed on Arbitrum and Avalanche, with the majority of its activity focused on the former. With millions of dollars in volume, GMX is one of the largest protocols in terms of Total Value Locked (TVL) on Arbitrum and is driving the real yield narrative in the DeFi space.

GMX offers a DeFi exchange with a number of unique features, allowing large swaps with no slippage. At first glance, this may look similar to Integral SIZE, however the mechanisms couldn’t be more different. Here we compare some of the main features for traders and how each protocol accomplishes them.

How does GMX Offer No-Slippage Trades?

One of the key innovations in GMX is to allow traders to take highly leveraged trades with no slippage and no price impact.

In traditional exchanges, slippage can occur when the price of an asset changes between the time a trade is placed and the time it is executed. This can result in a less favorable price for the trader, leading to losses.

[ Read our Post: Understanding Slippage on Arbitrum ]

GMX solves this problem by using an oracle to provide real-time price feeds. This ensures that traders can execute trades at the current market price, without any deviation.

With Integral SIZE, trades are executed at the oracle price of the 30-minute TWAP. This lets SIZE provide traders with no slippage swaps.

How does the GMX oracle system work?

The GMX oracle system is one of the most important parts of the protocol, as it provides the price data that drives all trades. Currently, GMX uses a centralized fast price oracle that takes prices from multiple exchanges and updates the data regularly on-chain. In addition, there is a Chainlink oracle circuit breaker in place to prevent trades with large price deviations from executing.

The fast price oracle is updated using a keeper system run by the GMX team. The oracle aggregates price feeds from a number of exchanges and then provides a mid-point price that is regularly updated on chain.

In Integral SIZE, the oracle is a 30-minute TWAP calculated on chain from a trustless oracle like Uniswap.

How does GMX avoid LPs getting arbitraged?

One of the key risks of providing liquidity as a counterparty for swaps on chain is that informed traders can come and arbitrage the on-chain pricing from an off-chain venue. This “toxic flow” is key to keeping prices in DeFI protocols like Uniswap up to date, but is also quite impactful on the profits for LPs.

GMX avoids this issue in a few ways. One is the custom oracle set up described above. Another is by adding on a spread and high fees to all swaps. This discourages or completely eliminates toxic flow arbitrage by making it unprofitable.

In Integral SIZE, LPs do not worry about getting arbitraged since the 30-minute TWAP delay makes direct atomic arbitrage unprofitable.

What’s Next?

While the goals of protocols like GMX and Integral SIZE is to give venues for great execution on chain, the way that we address these challenges proves to be very different. GMX allows for leverage and large trades by utilizing a centralized oracle and keeper system. Meanwhile, Integral uses a very different type of oracle. Yet both protocols manage to offer zero price impact for large trades.

Further experimentation with these mechanisms will continue to bring new innovation to DeFi and let even more traders take advantage of its unique benefits.

Tags

Integral Insights

Business

April 1st, 2024

Integral Insights March ‘24

We achieved several important milestones, including a new all-time-high daily volume for Arbitrum and the addition of four new pools on the Ethereum mainnet.

Updates

March 4th, 2024

Integral Insights February ‘24

Another milestone was reached on February 21st when Integral processed over $2 billion in cumulative volume.

Updates

February 1st, 2024

Integral Insights: January ‘24

Our initial launch with the ETH-RPL pool was a success, quickly elevating us to the second most utilized liquidity pool for this pair’s trading.

Research

January 17th, 2024

Is Liquidity Fragmentation Really That Bad?

When the token evolves into a store of value, it attracts outside traders, focusing on trading costs and slippage. This is when concentrated liquidity truly shines.

Updates

January 2nd, 2024

2023 Review

At Integral, our focus remains on developing a sustainable product for on-chain trading, serving both traders and liquidity providers.

Updates

December 12th, 2023

Integral Now Rewards Liquidity Providers with Trading Fees on Ethereum Mainnet

This enhancement enables liquidity providers (LPs) to directly receive a portion or all trading fees from Integral pools.

Updates

December 6th, 2023

Integral Insights: November ‘23

During November, Integral processed an average of approximately 6 million in volume with around 1.5 million in TVL. The system’s overall capital utilization sits at around 350%. It is the 10th most used DEX on Ethereum.

Updates

November 28th, 2023

Integral Now Rewards Liquidity Providers with Trading Fees

This enhancement enables liquidity providers (LPs) to directly receive a portion or all trading fees from Integral pools.

Research

November 15th, 2023

How Do University Blockchain Societies Gain So Many Votes?

Explore how university blockchain societies like FranklinDAO and Michigan Blockchain have grown into influential players in DAO governance, utilizing delegated votes and strategic partnerships to shape the future of DeFi protocols like Uniswap, Compound, and Aave.

Updates

November 6th, 2023

Integral Insight: October ‘23

We give an update for our work in October and highlight a profitable LP position from a long-term user.

Research

October 26th, 2023

Understanding the Stakes in Lido’s Growing Share of Staked ETH

The community is arguing whether a protocol may have too much control over the Ethereum network. Lido controls a large percentage of staked ETH, which could have consequences for the network’s future security and neutrality.

News

October 14th, 2023

Changes to Staking and Farming

Looking back at our progress so far and to the future with new updates to staking and farming.

Updates

October 11th, 2023

Integral Insight: September ‘23

We give an update for our work in September with utilization going up on higher volume for our new pools.

Research

October 11th, 2023

The Hottest Narratives of the Summer

What were the hottest narratives of the summer? Our DeFi research team delves into the growth of trading bots, RFV traders and more in this overview.

Research

October 2nd, 2023

Uniswap Governance: A Deep Dive

Governance is considered a critical component for the decentralization and community-driven development of DeFi protocols. We take a look at one of the largest goverance ecostystems in DeFi, Uniswap. In this blog post, we'll discuss the landscape of Uniswap's governance, pulling data from empirical research to dissect the system's delegates and proposals, revealing some interesting findings.

Research

September 19th, 2023

What is the DAI Savings Rate (DSR)?

Our research team takes a look at the DAI Savings Rate and its influence on various yield dynamics in DeFi.

Updates

September 15th, 2023

Integral Insight: August ‘23

We give an update for our work in August with cheaper gas fees and the launch of the Integral Relayer on Arbitrum!

Product

September 7th, 2023

Integral Relayer Launches on Arbitrum

We are excited to announce the launch of the Atomic Relayer on Arbitrum. This will bring the efficient and tested system for atomic trades to the Arbitrum Layer 2 network!

Research

August 26th, 2023

How CRV Got Sold OTC

In this post we cover how the Curve founder sold large amounts of CRV in over-the-counter trades in order to prevent a potentially catastrophic liquidation event in DeFi.

News

August 18th, 2023

Integral Insight: July '23

Sharing our progress in July: preparations for atomic swaps on Arbitrum, trading SIZE with lower gas fees and more.