The on-chain derivatives sector is one of the most competitive areas in DeFi, with dozens of protocols already launched and many new projects on the horizon. This article provides a detailed comparison of 6 major on-chain derivatives protocols, analyzing their key metrics, design philosophies, and revenue-sharing models.
1. GMX
GMX is a perpetual synthetic decentralized exchange renowned for its zero-slippage trading. Based on metrics like Total Value Locked (TVL), trading volume, fees, and revenue, GMX stands as the largest derivatives protocol currently.
Revenue Sharing:
- 70% to liquidity providers
- 30% to GMX stakers
- Price-to-Earnings (P/E) Ratio: 31.16, indicating a premium valuation.
GMX v2 Upcoming Features
- Chainlink Low-Latency Oracles for improved market data.
- Support for more assets beyond cryptocurrencies.
- Lower transaction fees.
- Coexistence of v1 and v2 liquidity pools.
👉 Explore GMX’s advanced trading features
With rising competition, GMX’s market share is gradually declining. If v2 fails to boost trading volume, its valuation could drop to a P/E of ~20.
2. Synthetix
Synthetix enables users to mint synthetic assets backed by its native token, SNX. Projects like Kwenta leverage Synthetix to build perpetual DEX frontends.
- Revenue Sharing: 100% to SNX stakers (who also act as liquidity providers).
Current Issues:
- Negative earnings ($36M fees vs. $100M+ token incentives).
- Declining trading volume without additional incentives.
SNX appears overvalued given its financials and high token emissions.
3. Gains Network
Gains Network offers leveraged trading for crypto, forex, and commodities.
Revenue Sharing:
- 33% to GNS stakers (increasing to 61% in September).
- 17% to liquidity providers.
Key Metrics:
- P/E Ratio: 10 (lowest among competitors).
- High trading volume/TVL ratio (568).
GNS appears undervalued and could be a promising investment.
👉 Learn more about Gains Network’s revenue model
4. Perpetual Protocol
Built on Uniswap v3, Perpetual Protocol distributes:
- 80% of fees to LPs.
- 14% to PERP stakers.
However, with $1.4M annual revenue vs. $2.8M token unlocks, it’s unprofitable and struggles to compete with Kwenta (Synthetix).
5. Level Finance
Early hype driven by LVL token incentives, but key metrics are declining:
Revenue Sharing:
- 45% to LPs.
- 10% to LVL stakers.
- 10% to LGO stakers (governance token).
Despite high fees, earnings are negative due to excessive token emissions.
6. MUX Protocol
A trading protocol + aggregator, MUX shares 70% of fees with ETH LPs and MUX stakers.
Strengths:
- Multi-chain deployment (perps, options, betting platforms).
- Low market cap but high scalability.
MUX presents an intriguing speculative opportunity.
Conclusion
The on-chain derivatives space is highly competitive, making it difficult to identify long-term winners. While some protocols like GMX and Gains Network show promise, others face sustainability challenges.
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FAQ Section
Q1: Which protocol has the lowest P/E ratio?
A: Gains Network (P/E = 10), making it potentially undervalued.
Q2: Why is Synthetix’s earnings negative?
A: High token incentives ($100M+) outweigh fee revenue ($36M).
Q3: Is GMX v2 a game-changer?
A: If adoption lags, GMX’s valuation may drop further.
Q4: Which protocol is best for liquidity providers?
A: GMX (70% fee share) and MUX (70% fee share).
Q5: Why is Level Finance struggling?
A: Over-reliance on token incentives led to declining metrics.