Welcome back to the Ambire DeFi Bull Camp! After delving into token swaps last week, we're excited to partner with GMX for our second episode, where we'll demystify perpetual swaps and offer you a chance to win big! GMX, a pioneer since its inception in September 2021, revolutionizes DeFi trading with its decentralized perpetual swap contracts and up to 50X leverage.
Operating on Arbitrum One and Avalanche, GMX stands out for its low fees and deep liquidity, enhancing your trading experience. Join us as we explore GMX's world of transparent, blockchain-powered trading and discover how you can be a part of DeFi Bull Camp, episode II, with a chance to win from a $1K crypto prize pool.
Trade on GMX for a total prize pool of $1,000
In this week’s episode of the Ambire DeFi Bull Camp, running from today, Monday, Feb 5th, 2024, to Sunday, Feb 11th, 2024, you can win a share of the weekly prize pool of $1,000. Read on to learn how!
- Only transactions executed on GMX V2 are deemed valid for this competition.
- Valid Transactions: Both trades on GMX via Ambire's dАpp catalog and via GMX's official website will be counted as valid. Only opened longs and shorts count as eligible volume - closing shorts and longs are not considered as volume.
- Eligible Networks: Participating perpetual swaps must be on the Avalanche and Arbitrum networks.
- Token Criteria: You can open long or short positions with all available tokens on GMX.
- Volume Measurement: The swap volume will be measured in USD based on the prices on Monday, Feb 12th, 2024, not at the transaction's broadcast time. The top 10 users, ranked by the highest created volume, will receive rewards according to the specified structure.
For completing any kind of transaction, GMX sets aside a portion of the chain's native token (ETH on Arbitrum and AVAX on Avalanche) to secure ample gas funds, preventing transaction failures and ensuring a smooth user experience. These gas funds are then reimbursed after the successful completion of the transaction.
Rewards and distribution
The top 10 users with the highest swap volume will share a total prize pool of the equivalent of $1,000, paid in DAI or WALLET tokens. The winners will be awarded the prizes, and the winning addresses will be disclosed by Wednesday, Feb 14th, 2024.
We will distribute the weekly prize pool of $1,000 as follows:
1st place: $300 in DAI
2nd place: $200 in DAI
3rd place: $150 in DAI
4th place: $100 in WALLET
5th place: $75 in WALLET
6th-10th places: $35 in WALLET
DAI rewards will be paid out on the Optimism network. WALLET rewards will be distributed on Ethereum in the Ambire WALLET token distribution module (here’s how to claim).
Keep scrolling to see the winners.
Perpetual swaps episode winners 🏆
Another week has passed, and with it, the second episode of the DeFi Bull Camp came to an end. We have now identified the top addresses which achieved the highest trade volume on GMX. Please note that only 5 addresses were active, so we are giving away prizes just to them.
- 1st place: $300 in DAI - 0xc6…CE00
- 2nd place: $200 in DAI - 0x3c…2b0b
- 3rd place: $150 in DAI - 0xdd…79bf
- 4th place: $100 in WALLET - 0x4c…5b6d
- 5th place: $75 in WALLET - 0xaD…A18f
Congrats to the winners - the prizes await you at your addresses! 👏
The perpetual swap competition may be over, but the DeFi Bull Camp is in full swing with episode III, delving into liquid staking. You still have time to participate and compete for the equivalent of $1,000 in crypto rewards.
What you need to know before you start
Understanding leverage and margin
Leverage in trading is similar to using a lever to amplify force. In financial terms, it's using borrowed capital to increase the potential return on an investment. For example, with leverage of 20x, a $500 investment controls a $10,000 position. However, this increases the risk significantly. You could lose your entire investment if the market moves against your position by just 5%.
Margin is the amount of capital required to open a leveraged position, serving as collateral against the borrowed funds. When a position is liquidated in trading with leverage, the margin used to open that position is typically lost. For example, if you use $500 as a margin to open a 20x leveraged position (controlling $10,000), and the market moves against your position by 5%, the value of your position drops to $9,500. Since this is below the required margin to maintain the position, it gets liquidated, and your $500 margin is lost to cover the shortfall.
In the context of perpetual swaps, these concepts take on significant importance due to the high volatility of the crypto market. Leveraging in perpetual swaps can lead to substantial gains but also poses a risk of equally substantial losses. Therefore, it's crucial to understand and judiciously use leverage and margin to manage the heightened risks inherent in trading perpetual swaps.
Effective risk management is essential in the highly volatile world of perpetual swaps. This involves limiting the amount of capital risked per trade, diversifying across different assets, and not over-leveraging your positions. It's essential to be aware of market conditions and adjust your strategies accordingly. Implementing tools like stop-loss orders can help mitigate losses, but the key lies in a disciplined approach to trading, recognizing when to take profits and when to cut losses.
Developing a trading plan and discipline
Creating a trading plan for perpetual swaps involves setting clear objectives and strategies. This plan should outline your financial goals, the level of risk you are willing to take, and the strategy for entering and exiting trades. Discipline is essential, and it requires adhering strictly to your plan and avoiding impulsive decisions influenced by market hype or emotions. Consistently following your trading plan helps you make rational decisions, improving the chances of successful trading outcomes.
Know the fees
GMX charges a fee of 0.05% or 0.07% for opening and closing positions based on the trade's effect on the pool's balance. The collateral for long positions varies with the asset; for short positions, it's USDC. Swap fees range from 0.05% to 0.07% for tokens and 0.005% to 0.02% for USDC. Additionally, GMX ensures smooth transactions by setting aside native tokens (ETH on Arbitrum and AVAX on Avalanche) to cover gas costs, which are reimbursed post-transaction.
In GMX leveraged trading, the "Borrow Fee" is determined by the balance of long and short positions. If long positions outweigh shorts, then traders holding longs pay the fee. Conversely, short position holders incur the borrowing fee if shorts are more prevalent. This hourly charge is related to the ratio of the borrowed amount to the total pool assets, adjusting based on the current demand and balance of trading positions.
To manage and minimize fees, consider the frequency and timing of trades and the necessity of swaps. Efficient planning can help align trading actions with lower fee periods, optimizing overall trading costs.
What are perpetual swaps?
Perpetual swaps, or perpetual swap contracts, are financial instruments used for speculating on assets’ prices. These contracts allow traders to speculate on the price of a cryptocurrency without an expiry date, differentiating them from traditional futures contracts. Since perpetual contracts lack expiration dates, profits and losses can continue accumulating until traders decide to close their positions or face liquidation in cases of significant, unrecoverable losses.
GMX, a notable player in decentralized finance, offers a seamless platform for trading these perpetual swap contracts. It provides a user-friendly interface and a robust system, making it an ideal choice for navigating the complexities and volatility of crypto markets in perpetual swap trading.
How do perpetual swaps work?
The operation of perpetual swaps hinges on a funding rate mechanism, ensuring the contract price mirrors the underlying asset's market price. This mechanism involves periodic payments between traders based on the difference between the contract's price and the average spot price (Index price). If the contract's price is higher, long-position holders pay short-position holders, and vice versa. This system of payments helps align the perpetual swap price with current market conditions, making it suitable for both speculation and hedging.
How to trade perpetual swaps on GMX using Ambire Wallet
The following step-by-step will guide you through opening and closing a position on GMX with Ambire Walle on the Arbitrum network. Ensure you have an active and funded crypto account. When using GMX on Arbitrum, you must have some disposable Ethereum for gas. Conversely, you need some AVAX tokens when trading on the Avalanche network. To save on gas fees, top-up your Gas Tank and enable it. It allows you to pay for gas cross-chain, using funds deposited on one network to pay for gas on another. You can use stablecoins and other ERC-20 tokens for transfer fees.
As a disclaimer, perpetual swaps involve higher risks than regular swaps. Proceed with caution and limit your exposure to mitigate any substantial losses.
Opening a position on GMX
Step 1. Access GMX in Ambire Wallet
- Go to Ambire's web wallet.
- Navigate to the "dApps" tab and select GMX. Your Ambire account will be automatically connected to GMX. This integration ensures that you are interacting with the legitimate GMX platform.
Step 2. Choose a trading pair and open a position
- On the left-hand side, you'll find a chart and a list of available token pairs on GMX. Choose the pair you want to trade—for example, Bitcoin (BTC)/USD.
- On the right-hand side, you'll see the trading module. Decide whether you want to go long (expecting the asset's price to rise) or short (expecting the asset's price to fall).
- Select "Market," "Limit," or TP/SL (Take Profit/Stop Loss) order based on your preference.
- Choose the collateral token, for example, the ARB token, and specify the token amount.
- Adjust the slider to your desired exposure if you want to use leverage.
- Confirm your position by selecting the ‘Long’ or ‘Short’ buttons.
Step 3. Review the position details and confirm it
- In the confirmation modal, check the transaction details before confirming ‘Long’ or ‘Short’ by clicking the respective button.
Step 4. Sign and send the transaction
- Review the transaction details.
- Pick the fee currency and transaction speed, then select ‘Sign and Send.’
Closing a position on GMX
Step 1. Navigate to the positions list
- Go to GMX’s dashboard. You will see the position list beneath the chart on the left-hand side. You should be able to see any open positions.
- To close a position, select ‘Close’ at the end of the row.
Step 2. Close the position
- In the modal window, select the order amount, e.g., half of the amount of the position.
- Review the information, and select ‘Close.’
Step 3. Sign and send the transaction
- Review the transaction details.
- Pick the fee currency and transaction speed, then select ‘Sign and Send.’
Here’s a short video tutorial showing how to use GMX inside Ambire Wallet:
This article explores the dynamics of perpetual swaps and their role in DeFi, highlighting their functionality and benefits. We've also introduced GMX, a key player in decentralized perpetual contract trading. The DeFi Bull Camp campaign offers a practical opportunity to engage with this innovative trading tool, inviting beginners and experienced traders to participate in a trading competition. We encourage you to deepen your understanding of perpetual swaps and DeFi in general and join the vibrant communities of GMX and Ambire Wallet.
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