Liquidity providers deposit funds into GMX and receive trading fees from traders (supply-side fees).

GMX is a non-custodial exchange for spot and perpetual contracts, live on Arbitrum, Avalanche, MegaETH and Solana. GMX was founded by an anonymous team and launched in 2021.

GMX token holders own and govern the protocol. On the EVM deployments they take a cut of the total trading fees paid by traders (revenue), split between GMX buybacks and the treasury. On Solana the protocol's share accrues to that deployment's treasury rather than to GMX token holders.

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# GMX Earnings Methodology

## 1. Overview

Earnings is calculated as the net value GMX retains after subtracting all expenses from its revenue. For GMX, revenue is generated from a portion of trading fees (including margin fees, swap fees, and borrowing fees) collected across GMX V1 and GMX V2. Expenses are comprised of asset incentives, which include vested esGMX claims and Short-Term Incentive Proposal (STIP) ARB distributions. This metric is used to evaluate the on-chain profitability of the GMX protocol.

## 2. Data sources

- **Blockchain events**: `CollectMarginFees` and `CollectSwapFees` events from `Vault` contracts, `EventLog1` and `EventLog2` events from `EventEmitter` contracts, `BatchSend` events from `BatchSender` contracts, ERC-20 `Transfer` events from vesting contracts, and `TradeEvent` instructions from the `GMSol` program, covering Arbitrum, Avalanche, Solana, and MegaETH
- **External data**: End-of-day price feeds for supported assets

## 3. Step-by-step calculation

### Component A: GMX V1 fee collection and revenue allocation

- **Purpose**: Calculate the protocol revenue generated from GMX V1 trading activities.
- **Logic**: Margin fees and spot fees are extracted from GMX contracts. Margin fees are parsed from `CollectMarginFees` events from `Vault` contracts, and spot fees are parsed from `CollectSwapFees` events from `Vault` contracts. Collected fee amounts are normalized by decimal precision and converted to USD using end-of-day price feeds. Protocol revenue is calculated by applying a historical revenue split percentage to the total fees, which is set at 50% from August 31, 2021, and adjusted to 30% from November 1, 2021, onwards.

### Component B: GMX V2 fee collection and revenue allocation

- **Purpose**: Calculate the protocol revenue generated from GMX V2 trading activities.
- **Logic**: Perpetual trading fees, swap fees, and price impact fees are extracted from GMX contracts. Perpetual trading fees are parsed from `EventLog1` and `EventLog2` events from `EventEmitter` contracts, where the total fee is calculated as the sum of borrowing fees, position fees, and liquidation fees, with asset amounts multiplied by the mean of the minimum and maximum execution prices. Swap fees are parsed from `EventLog1` events from `EventEmitter` contracts, where the receiver fee and pool fee amounts are summed and multiplied by the asset price. Price impact fees are parsed from `EventLog1` events from `EventEmitter` contracts but are excluded from protocol revenue. Protocol revenue is calculated by applying a 37% revenue split percentage to the perpetual and swap fees.

### Component C: Solana deployment fee collection and revenue allocation

- **Purpose**: Calculate the protocol revenue generated from the GMX Solana deployment.
- **Logic**: Fees are extracted from the `GMSol` program on Solana. Order fees, borrowing fees, and liquidation fees are parsed from `TradeEvent` instructions. Funding fees and position impact pool distributions are excluded. Protocol revenue is calculated as the sum of the receiver portions of the order fees, borrowing fees, and liquidation fees, normalized by decimal precision and converted to USD.

### Component D: Asset incentives and expenses tracking

- **Purpose**: Calculate the total protocol expenses from asset distributions.
- **Logic**: Expenses are defined as the total value of asset incentives distributed by the protocol. Vested esGMX claims are tracked via ERC-20 `Transfer` events from GMX vesting contracts to the null address, and Short-Term Incentive Proposal (STIP) ARB distributions are tracked via `BatchSend` events from `BatchSender` contracts. All incentive amounts are normalized by decimal precision and converted to USD using end-of-day price feeds.

### Component E: Earnings aggregation

- **Purpose**: Calculate the final net earnings of the GMX protocol.
- **Logic**: Total protocol revenue is calculated by summing the revenue components from GMX V1, GMX V2, and the Solana deployment. Total expenses are calculated from the aggregated asset incentives. Net earnings are calculated daily by subtracting total expenses from total protocol revenue.

*This methodology was automatically generated by Token Terminal's methodology analyzer.*

Net profit (also profits, net income, profitability) — revenue remaining after subtracting expenses.

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