- GMX reportedly is not the first to go the route of using Chainlink’s low latency oracles.
- Chainlink will receive a percentage of the fees from GMX’s use of their Oracle.
- GMX will see a strengthened security system with the use of the low latency oracles.
An executive at Chainlink has claimed that the firm is in discussions with GMX to help increase security by providing a better level of tamper resistance while settling user trades. GMX is a competitor of Chainlink.
Following the approval of a request by the exchange’s governance to merge the decentralized exchange with Chainlink’s low latency oracles to provide GMX v2 with a finer-grained real-time market, the decentralized exchange was joined.
On April 25 at midnight UTC, holders of GMX tokens cast their votes in favor of the proposal by a margin of 96%. Shortly afterward, with the assistance of GMX’s core contributors, the new Chainlink oracles were implemented to improve the platform’s perpetual DEXs and the price-sensitive trading on the forum.
According to Johann Eid, the head of integration at Chainlink labs, low-latency oracles are known to increase security, further decentralize the protocol, and improve the user experience.
Johann further notes that the new Oracles will be capable of extracting data more frequently than is customary, all while retaining the capability to use the same Oracle node operators and data aggregations procedure as the existing Chainlink reference feed.
The new Chainlink low latency oracles will also utilize the same set of oracle node operators and their multi-layered data aggregation mechanisms currently deployed in the now-existing Chainlink reference feeds. Still, they will operate via a pull-based mechanism to eventually meet the speed requirements of DeFi derivatives.
The head of integration at Chainlink labs, Johann Eid, added an explanation of the strengthened security coming from the low latency oracles that provide a substantial degree of temper-resistance when settling under user trades, and a Twitter commentator added to his followers of 62,000 on April 8 that the integration would help in reducing exposure to stale prices execution and also value extraction for GMX derivative traders.
A beta version of the GMX-tailed low latency oracle feeds that have been in the works since 2022 are now available on the Arbitrum testnets. In return for the service, GMX will give Chainlink labs a 1.2% on the returns from the protocol fees they generate from the low latency oracles on the GMX protocol.
The protocol fees include the fees paid by users from margin trading and the standard borrow and swap fees. Chainlink would also be expected to continue to refine its oracle services to GMX as the protocol develops, evolves, and expands.
Conclusion
GMX is not the first perpetual DEX to decide to operate with the new type of oracles, with the On-chain derivatives platform Synthetix being the first to integrate the solution.
