What is GMX crypto and how does the GMX exchange work?

GMX crypto refers to GMX, a decentralized exchange where people swap tokens and trade leveraged perpetual futures directly from their own wallets, plus its GMX token. Instead of matching buyers with sellers in an order book, GMX lets traders open positions against pools of assets supplied by liquidity providers. It runs on Arbitrum, an Ethereum layer 2, and on Avalanche.

What is the GMX exchange used for?

GMX is mainly used for perpetual futures, contracts that let traders bet on a price going up (long) or down (short) with leverage. The general risks of these products are covered in what crypto futures and leverage are. GMX also supports swaps between tokens, similar to other DEXs.

The counterparty for traders is a liquidity pool. The first version, GMX V1, launched in 2021 and used one multi-asset pool called GLP. The current version, GMX V2, uses separate GM pools, each tied to one market and a pair of collateral assets such as WETH and USDC. Since September 2024, GMX has also offered GMX Liquidity Vaults (GLV), which hold several GM pools and shift liquidity between them based on demand.

How do GMX liquidity pools earn fees?

Liquidity providers deposit assets into a GM pool or GLV vault and receive tokens representing their share. GMX says they earn fees from leverage trading, borrowing and swaps. They also take on risk. When traders profit, the pool pays them, and when traders lose, the pool gains. Providers are also exposed to price moves in the assets they deposit.

What is the GMX token?

GMX is the protocol's token. Holders can stake it to receive a share of protocol rewards. Since late October 2024, those rewards are paid only in GMX tokens. A smart contract uses 30% of V1 fees and 27% of V2 fees to buy GMX on the market and distribute it to stakers. Before that change, stakers were paid in ETH or AVAX. As of October 2026 these percentages are set by GMX governance and can change.

What happened in the GMX exploit in July 2025?

On July 9, 2025, an attacker drained roughly $40 million from the GMX V1 GLP pool on Arbitrum. GMX said the attack manipulated how V1 calculated the average price of short positions. The team paused V1 trading and stopped GLP minting and redeeming on both Arbitrum and Avalanche, and offered a 10% white-hat bounty.

Within days, the attacker returned about $40.5 million and kept roughly $5 million, which Decrypt described as the bounty. In August 2025 GMX completed a compensation plan worth about $44 million for affected GLP holders, paid in GLV tokens, and said GMX V2 was not affected. The case is a reminder that smart contract bugs can hit even long-running DeFi protocols.