Data Insights 6 Key Metrics Comparison of On-Chain Derivatives Protocols

Comparison of Key Metrics for On-Chain Derivatives Protocols

The field of on-chain derivatives is the most competitive area in DeFi, with dozens of protocols already launched and many new projects on the horizon. This article will focus on the key indicators of 6 major on-chain derivatives protocols.

Author: @DeFi_Made_Here, Analyst at Alphabeth Capital

Translation: Jordan

The field of on-chain derivatives is the most competitive area in DeFi, with dozens of protocols already launched and many new projects on the horizon. This article will focus on the key indicators of 6 major on-chain derivatives protocols.

While the raw data may suggest that a protocol appears to be a good investment, understanding the background is still very important, especially the protocol design and revenue sharing model.

(Note: The data in the table is as of July 24, 2023)

1. GMX

GMX is a perpetual synthetic decentralized exchange, and its most well-known feature is zero slippage trading. Based on metrics such as lock-up volume, trading volume, fees, and revenue, GMX should be the largest derivatives protocol currently in terms of scale. They share 70% of fee revenue with liquidity providers and 30% with GMX stakers, making GMX very popular and attractive to investors. Its P/E ratio (revenue minus token incentives) is 31.16, which means GMX is “relatively expensive,” but investors may consider GMX v2 pricing. GMX V2, which will be launched in a few weeks, has the following features:

  • Chainlink low-latency oracle provides better real-time market data

  • Support for more assets (not just cryptocurrencies)

  • Lower transaction fees

  • Slippage will coexist in GMX v1 and v2

As competition intensifies, GMX’s market share is gradually decreasing. If v2 cannot bring more trading volume and fees to the platform, GMX’s fair price may fall to the $40 range, with a P/E ratio of approximately 20.

2. Synthetix

Synthetix allows users to mint synthetic assets based on its native token SNX. Other projects, such as Kwenta, can use Synthetix to build their own frontends to enable traders to access perpetual DEX trading. In terms of market capitalization and revenue, Synthetix is the largest among the six major derivatives protocols. They distribute 100% of fee revenue to SNX token stakers, who are also liquidity providers themselves.

To incentivize liquidity provision, Synthetix rewards stakers by unlocking SNX tokens. Currently, over $100 million worth of SNX has been paid out as incentives to stakers. However, the protocol only has $36 million in fee revenue with a negative P/E ratio, indicating that they are operating at a loss.

Based on the current valuation, fees, and token supply, SNX seems to be a very expensive token. Without additional incentives, future trading volume may decline.

Three, Gain Network

Gains Network is a comprehensive derivative platform that allows for leveraged trading of cryptocurrencies, forex, and commodities. The platform currently shares about 33% of fee revenue with GNS token stakers and about 17% with liquidity providers. However, starting from September this year, the proportion of fee revenue shared with GNS token stakers will increase to 61%, which could increase its valuation.

Gains Network has the lowest P/E ratio among the six derivative protocols, at only 10, and a price/revenue ratio of 8.7. However, the trading volume/locked value ratio is relatively high at 568 without incentives. From key indicators, product development, and future updates, GNS may be an undervalued project.

Four, Perpetual Protocol

Perpetual Protocol is built on top of the Uniswap v3 smart contract, with 80% of fee revenue currently allocated to liquidity providers and about 14% allocated to PERP token stakers. Perpetual Protocol has an annual revenue of $1.4 million, while the value of unlocked tokens is $2.8 million, indicating a negative annual return. Overall, Perpetual Protocol seems unattractive to investors and faces tough competition from Kwenta (Synthetix) on Optimism.

Five, Level Finance

Due to the extensive trading incentives using LVL tokens, Level Finance protocol garnered significant market attention in its early days. Currently, the protocol’s trading volume has been maintained at billions of dollars. However, due to the decrease in token supply and price, some key indicators are trending downward.

Considering that Level Finance has a similar design to GMX, a trading volume/locked value ratio of 1000 seems a bit too high (possibly due to artificial factors). It is worth noting that despite generating a significant amount of fee revenue, the protocol’s earnings are negative, meaning that more tokens are distributed than the ones generating fees.

Level Finance allocates 45% of fee revenue to liquidity providers, 10% to LVL token stakers, and 10% to LGO stakers (note: LGO is the second token launched in the Level ecosystem and has governance and financial rights). Some key indicators of Level, such as trading volume, seem inflated due to early incentive stages, but its earnings are negative, making it seem unattractive as an investment choice.

VI. MUX Protocol

MUX Protocol is both a trading protocol and an aggregator. The protocol distributes 70% of the fee revenue to liquidity providers who provide ETH and MUX token stakers. As MUX is deployed on multiple widely adopted ecosystems, such as perpetual trading platforms, options platforms, and betting platforms, there are different types of protocol combinations. Although MUX Protocol has a lower market value, it demonstrates good scalability and reliability, making MUX an “interesting” investment opportunity.


The competition among on-chain derivative protocols is becoming increasingly fierce, and it is difficult to identify the most promising protocol or predict which protocol will succeed over time. This article does not provide any financial advice.

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