Chainlink, a decentralized oracle network, will integrate its low-latency oracles with the GMX decentralized exchange following a successful governance proposal that received over 96% of the participating GMX tokenholders’ votes. GMX sought to provide more granular, real-time market data to its v2 perpetual DEXs and price-sensitive trading.
According to Johann Eid, the Head of Integration at Chainlink Labs, these new low-latency oracles utilize the same oracle node operators and data aggregation mechanisms used in existing Chainlink reference feeds, but they extract data at a higher frequency. This feature will enhance both the security and user experience of the GMX derivatives protocol.
The new oracles are deployed via a pull-based mechanism to meet the speed requirements of DeFi derivatives, providing a strong degree of tamper-resistance when settling user trades. The low-latency oracles are said to strengthen security and further decentralize the protocol.
Chainlink is set to receive 1.2% of protocol fees generated by the low-latency oracles from the GMX protocol in return for the service. Protocol fees include margin trading fees, standard borrow fees, and swap fees. Eid stated that Chainlink would refine its oracle services to GMX as the protocol continues to expand and evolve.
Matt Losquadro, a former ambassador of on-chain derivatives platform Synthetix, observed that GMX isn’t the first perpetual DEX to integrate with Chainlink’s new type of oracle. He explained that Synthetix Perps had off-chain oracles for four months.
Chainlink oracles were launched on Arbitrum, the largest Ethereum layer 2 network by total value locked (TVL), in August 2021. The GMX perpetual DEX is native to Arbitrum, a high-speed, low-cost Ethereum scaling solution.
USD Coin (USDC), wrapped Ether (wETH), and wrapped Bitcoin (wBTC) are the three largest tokens held on GMX, with shares of 43.6%, 23.2%, and 16%, respectively. The GMX decentralized exchange currently has a combined TVL of $669 million on the Avalanche and Arbitrum networks, according to data from DeFiLlama.