A high volume of Transactions: Liquidations on GMX & WBTC
The high volume of transactions taking place. According to parsec, ETH prices are jumping from $1405 to $1410, and BTC prices are rising from $19,700 to over $20,000. ETH and BTC long positions worth approximately $15 million and $14 million were placed on decentralized exchanges such as GMX and WBTC. Unfortunately, the high volume of transactions has led to liquidations of these positions, resulting in a loss of funds for traders.
GMX, short for decentralized perpetual exchange, is a decentralized exchange that allows users to trade a range of assets, including Bitcoin, Ethereum, Ripple, and other cryptocurrencies, in a secure and trustless manner. To create a single order book, the exchange works by aggregating data from various external and internal sources, such as price feeds, liquidity providers, and major exchanges. This order book allows traders to place orders and execute trades on GMX with minimal fees.
Arbitrum-Based GMX Surpasses Ethereum Blockchain in Transaction High Volume
Recently, GMX logged fees of over $5 million in 24 hours, making it one of the most active decentralized exchanges on the market. Arbitrum enabled this high activity – a Layer 2 scaling solution for Ethereum – which enabled GMX to process more transactions than the Ethereum blockchain alone can support. In addition to providing faster and cheaper transactions, Arbitrum helps keep positions safe from temporary wicks, as an aggregate of high-quality price feeds determine when liquidations occur.
Liquidations on GMX and WBTC Markets
The high volume of transactions on GMX and WBTC has resulted in liquidations of ETH and BTC long positions worth approximately $15 million and $14 million, respectively. A liquidation occurs when the position can no longer cover its margin costs. When this happens, the position is automatically closed out, and any remaining funds are returned to the trader. In some cases, however, the liquidation can result in a loss of funds if the position cannot cover its margin costs.
The recent liquidations of ETH and BTC long positions on GMX and WBTC demonstrate that high-volume trading can lead to significant losses for traders. The use of Arbitrum to scale transactions on GMX has enabled the exchange to process more transactions than the Ethereum blockchain can support. However, it increases the risk of liquidations for traders who cannot cover their margin costs. Risk management should be at the forefront of every trader’s mind when placing large long positions on decentralized exchanges.
