The on-chain derivatives sector is one of the most dynamic and competitive segments within decentralized finance (DeFi). With dozens of protocols already live and many more on the horizon, evaluating performance through key metrics has become essential for investors and users alike. This analysis focuses on six leading on-chain derivatives platforms—GMX, Synthetix, Gains Network, Perpetual Protocol, Level Finance, and MUX Protocol—comparing critical data points such as total value locked (TVL), trading volume, fee distribution, and valuation ratios.
By examining these protocols through a data-driven lens, we aim to uncover not only current market standings but also long-term sustainability and investment potential—all while avoiding promotional language or financial advice.
GMX: Market Leader with High Valuation
GMX stands out as the largest perpetual decentralized exchange in the DeFi space, known for its zero-slippage trading model. It dominates across multiple metrics including TVL, trading volume, and fee generation. The protocol distributes 70% of its fees to liquidity providers and 30% to GMX token stakers, creating a strong incentive structure that has driven widespread adoption.
Despite generating solid revenue, GMX trades at a price-to-earnings (P/E) ratio of 31.16—considered relatively high in the crypto context. This suggests the asset may be “expensive” based on current earnings, especially when factoring out token incentives. However, upcoming developments could justify this premium.
👉 Discover how next-gen DeFi platforms are redefining yield opportunities
GMX v2, expected to launch in the coming weeks, introduces several key upgrades:
- Integration with Chainlink’s low-latency oracles for real-time price feeds
- Expansion beyond crypto assets to include forex and commodities
- Reduced trading fees
- Coexistence of v1 and v2 versions during transition
While GMX remains dominant, its market share has been gradually declining amid rising competition. If v2 fails to attract significant new volume and revenue, analysts suggest a potential valuation correction toward the $40 range—with a more sustainable P/E ratio around 20.
Synthetix: High Revenue, Negative Earnings
Synthetix powers a broad ecosystem of synthetic asset trading and serves as infrastructure for other protocols like Kwenta. Users can mint synthetic assets backed by SNX collateral, enabling exposure to crypto, forex, equities, and more.
In terms of scale, Synthetix leads among the six protocols in both market cap and gross revenue. It channels 100% of fees directly to SNX stakers, who also function as liquidity providers. This full-reward model strengthens alignment but comes at a cost.
Over $100 million worth of SNX tokens have been distributed as staking incentives, far exceeding the protocol’s $36 million in fee income. As a result, net earnings are negative, and the P/E ratio reflects this loss-making status.
While Synthetix maintains strong developer activity and ecosystem growth, continued reliance on token emissions raises sustainability concerns. Without additional organic revenue streams or reduced inflation, trading activity may decline post-incentive periods.
Gains Network: Undervalued Potential?
Gains Network (formerly Gains Network v1) operates as a multi-asset derivatives platform supporting leveraged trading in crypto, forex, and commodities. It currently shares approximately 33% of fees with GNS stakers and 17% with liquidity providers.
Starting in September, the protocol plans to increase the staker share to 61%, which could significantly boost investor appeal and token utility.
What makes Gains Network particularly interesting is its low valuation multiples:
- P/E ratio: 10
- Price-to-revenue ratio: 8.7
Additionally, it boasts a high volume-to-TVL ratio of 568x, indicating efficient capital usage without heavy reliance on artificial incentives.
👉 Explore platforms combining high efficiency with sustainable yields
With consistent product development and upcoming upgrades—including improved risk engines and cross-margin functionality—GNS appears to be one of the more fundamentally sound projects in the space. Its current metrics suggest it may be undervalued relative to peers.
Perpetual Protocol: Struggling to Compete
Built atop Uniswap v3’s concentrated liquidity model, Perpetual Protocol enables permissionless perpetual futures trading. It allocates 80% of fees to liquidity providers and about 14% to PERP stakers.
However, financial performance tells a concerning story:
- Annual protocol revenue: $1.4 million
- Annual token unlock value: $2.8 million
This results in negative net earnings, meaning the protocol is effectively subsidizing operations through inflation. Combined with increasing competition—especially from Kwenta on Optimism—Perpetual Protocol faces an uphill battle.
Its user base remains relatively small, and innovation velocity has slowed compared to rivals launching multi-chain expansions and advanced order types.
Unless significant changes occur—such as new incentive programs or deeper integrations—Perpetual Protocol may continue losing relevance in the fast-evolving derivatives landscape.
Level Finance: Incentive-Fueled Growth with Structural Risks
Level Finance gained early traction through aggressive trading incentives denominated in its native LVL token. While it maintains high reported trading volumes—often reaching billions monthly—several red flags emerge upon deeper inspection.
The protocol’s design resembles GMX’s, yet it shows an unusually high volume-to-TVL ratio of 1,000x, suggesting possible manipulation or incentive-driven wash trading. More critically, net earnings are negative: the value of distributed tokens exceeds fees generated.
Revenue distribution is split as follows:
- 45% to liquidity providers
- 10% to LVL stakers
- 10% to LGO stakers (a secondary governance token)
Despite generating substantial fee revenue on paper, ongoing token dilution undermines long-term viability. With falling token prices and reduced incentive budgets, key metrics have trended downward since the peak.
Level Finance exemplifies how short-term growth fueled by token rewards can mask underlying economic weaknesses.
MUX Protocol: A Multi-Chain Aggregator with Promise
MUX Protocol functions both as a standalone trading platform and a derivatives aggregator across multiple chains and verticals—including perpetuals, options, and prediction markets.
It allocates 70% of fees to ETH liquidity providers and MUX stakers, creating aligned incentives across stakeholders. Deployed across widely adopted ecosystems like Arbitrum and Avalanche, MUX benefits from broad accessibility and interoperability.
Though it has a lower market cap compared to leaders like GMX or Synthetix, MUX demonstrates strong technical reliability and scalability. Its modular architecture allows integration with various DeFi primitives, positioning it well for future expansion.
Given its flexible design and efficient capital use, MUX represents an intriguing opportunity for investors seeking exposure to next-generation derivatives infrastructure.
Frequently Asked Questions (FAQ)
Q: Which on-chain derivatives protocol has the highest trading volume?
A: As of mid-2023, GMX leads in trading volume due to its established position, zero-slippage model, and strong liquidity incentives.
Q: What does a negative P/E ratio mean for a DeFi protocol?
A: A negative P/E indicates the protocol is spending more (via token emissions) than it earns in fees—common during growth phases but unsustainable long-term without revenue improvements.
Q: Why is the volume-to-TVL ratio important?
A: This ratio measures how efficiently a protocol uses locked capital to generate trading activity. Higher ratios suggest better capital efficiency but can be inflated by incentives.
Q: How do fee-sharing models affect investor returns?
A: Protocols that share higher percentages of fees with stakers (like Gains Network or Synthetix) tend to offer stronger passive income potential, assuming positive net earnings.
Q: Are on-chain derivatives safer than centralized alternatives?
A: While decentralized protocols reduce counterparty risk and offer transparency, they still carry smart contract risks and may lack insurance mechanisms found in traditional platforms.
Q: Can token incentives distort performance metrics?
A: Yes—high trading volumes or TVL driven by short-term rewards often decline once incentives end, making it crucial to assess organic usage trends.
Final Thoughts
The on-chain derivatives landscape is rapidly evolving, with each protocol adopting distinct approaches to liquidity, product design, and tokenomics. While GMX and Synthetix lead in scale, projects like Gains Network and MUX show promise through efficient operations and forward-looking architectures.
Investors should look beyond surface-level metrics and evaluate sustainable revenue models, real user demand, and long-term incentive alignment. As innovation accelerates, the protocols best positioned to endure will be those balancing growth with economic soundness.
👉 Stay ahead in DeFi with real-time insights from leading blockchain platforms