Why Onchain Derivatives?
After FTX and other CEX collapses, traders learned the value of self-custody. Onchain derivatives let you trade perpetuals and leverage without trusting a centralized exchange.
Onchain vs CEX Comparison
Onchain Advantages
- • Self-custody (your keys)
- • Transparent (all on-chain)
- • Composable with DeFi
- • No KYC/permissionless
- • LP yield opportunities
CEX Advantages
- • Higher liquidity
- • Lower latency
- • More trading pairs
- • Fiat on/off ramps
- • Customer support
Protocol Comparison
| Protocol | Model | Max Leverage | Chain |
|---|---|---|---|
| GMX | Pool (GLP) | 50x | Arbitrum |
| dYdX | Orderbook | 20x | dYdX Chain |
| Synthetix | Synths | 25x | Optimism |
| Gains | Synthetic | 150x | Polygon |
GMX Deep Dive
GMX Key Features
Zero Slippage: Trade against GLP pool at oracle prices. No orderbook slippage.
GLP Yield: Liquidity providers earn 70% of protocol fees. Real yield from trading.
Simple UX: Swap and leverage in one click. Beginner-friendly.
dYdX Deep Dive
dYdX Key Features
Orderbook: Professional trading with limit orders, stop-losses. CEX-like experience.
Own Chain: dYdX v4 runs on dedicated Cosmos chain for speed and decentralization.
Portfolio Margin: Cross-margined positions for capital efficiency.
Synthetix & Others
Synthetix
Pioneer of synthetic assets. Trade sUSD, sETH, sBTC and more. Infinite liquidity through debt pool. SNX stakers earn fees.
Gains Network
Synthetic perps with up to 150x leverage. Unique architecture using gDAI vault. Popular for forex and commodities.
Risk Warning
High leverage trading is extremely risky. Most leveraged traders lose money. Only trade with funds you can afford to lose entirely. Start with low leverage (2-5x) until experienced.
Interactive Protocol Comparison
Compare onchain derivatives protocols:
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Frequently Asked Questions
Onchain derivatives offer: self-custody (no exchange risk), transparency (all trades on-chain), composability (integrate with DeFi), permissionless access (no KYC), and often better rates for LPs. Trade-offs: usually lower liquidity and higher latency than CEXs.
GMX uses a liquidity pool model (GLP) with zero slippage on supported assets. dYdX uses a traditional orderbook (now on its own chain). GMX is simpler; dYdX offers more professional trading features. GMX fees go to LPs; dYdX has token staking rewards.
Synthetics (like Synthetix's sUSD, sETH) track asset prices without holding the underlying. Created by staking collateral. Benefits: trade any asset 24/7, no custody of underlying. Risks: oracle dependencies, collateralization risks.
Varies by protocol: GMX offers up to 50x, dYdX up to 20x, Gains Network up to 150x on some pairs. Higher leverage = higher liquidation risk. Most traders should use 5x or less. Leverage is a tool, not a strategy.
Smart contract risk exists on all protocols. Use audited, battle-tested protocols. GMX has handled billions without major exploits. dYdX has strong track record. Newer protocols may offer better rates but higher risk. Start small.