# Dopex Essentials: GMX and Perpetual Contracts

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# Perpetuals

###### Perpetual contracts are financial instruments that allow users to deposit collateral to take leveraged exposure on the price of a specified asset. There are a few key parameters that are chosen when taking such a position:
• Collateral: Tokens (e.g. USDC, ETH, wBTC) that the trader deposits into GMX to trade against.
• Target Asset: This is the token the user receives price exposure to.
• Directionality: Profit occurs when the price goes up (“long” position) or down (“short” position). Loss occurs if price moves in the other direction.
• Leverage: The amount of price exposure you get to the Target Asset.
• Liquidation Price: The price that the target asset can reach before the user’s collateral is fully lost and their position is closed; the higher the leverage the smaller the difference between current price and liquidation price meaning smaller price changes can trigger a liquidation.
###### Let’s look at a quick example to see how this works using our brilliant CEO as an example. Here he deposits 1 ETH worth of USDC (currently $1.5k) and takes a 10x leveraged long position on ETH. Let’s see two possible outcomes: • If the price of ETH increases to$1,650 (i.e. 10% increase) CEO has a profit of 100% ([$1,650 -$1,500] x 10 = $1,500). CEO’s position is now worth$3,000 which is a 100% gain from his original collateral.
• If the price of ETH decreases to $1,350 (i.e. 10% decrease), CEO has a loss of 100%. ([$1,350 - $1,500] x 10 = -$1,500). At this point, the CEO’s position will be automatically liquidated since all his collateral has been lost.

# GMX

## $GLP ###### As a brief overview,$GLP is:
• GMX’s liquidity provider token
• Represents an index of roughly 50% stablecoins, 25% ETH, 25% wBTC (does have small holdings in other tokens like $LINK) • Can be staked to receive 70% of protocol fees • APY is at least 25% (if share of platform fees < 25% APY the difference is paid in esGMX) ######$GLP acts as a counterparty for traders’ leveraged positions. Let’s take a look at what happens when a trader builds a position, turns a profit or loss, and how this affects $GLP. • If a trader deposits USDC to go long on ETH, they are borrowing ETH from the$GLP pool and paying a funding rate to the protocol (nice juicy fees for distribution)
• If a trader makes a loss, their collateral is given to the protocol in the form of liquidation fees (nice juicy fees for distribution)

## $GMX ###### As a brief overview,$GMX is:
• GMX’s governance and fee-share token
• Can be staked to receive 30% of protocol fees

# The Dopex Tie-In

## Leveraged Perpetual Traders

###### As a brief overview of how Atlantic Perp Protection will work:
• Buy OTM Atlantic Puts slightly above liquidation price
• When the price of the leveraged asset approaches liquidation price, the Atlantic Put’s stablecoin collateral will move from Dopex contracts to top up the trader’s GMX collateral account
• This will deleverage the user’s position so the liquidation price is zero (i.e. asset must reach zero dollars for position to be liquidated)

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