Benzinga - DeFi ecosystem Arbitrum, a Layer 2 scaling solution for Ethereum (CRYPTO: ETH), has now become the fourth-largest decentralized finance, with over $2 billion of total value locked (TVL).
While decentralized perpetual exchange GMX (CRYPTO: GMX) leads the ecosystem, a rising star has been capturing attention in the form of Gains Network (CRYPTO: GNS).
Gains Network has been gaining traction with its gTrade perpetual futures exchange, which offers leverage trading on multiple asset classes, cryptocurrency research firm Delphi Digital said in a research report.
Gains Network borrows concepts from the MakerDAO model to offer synthetic leverage trading with greater capital efficiency, similar to Synthetix.
Users can stake GNS to receive platform fees paid in DAI, allowing them to deliver real yield without relying on token emissions.
With Gains, gDAI liquidity providers (LPs) act as trader counterparties as vault depositors supply DAI to earn yield from trading fees and liquidations.
GNS acts as a backstop while earning a portion of trader losses.
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Gains can undercut GMX on fees partly due to the simple nature of the relationship between traders and LPs.
GMX's lack of restrictions combined with its spot asset usage makes it ideal for integrations with many promising dApps.
However, after being dwarfed by GMX margin volume for most of 2022, Gains Network has nearly reached parity with GMX since its Arbitrum launch.
GMX still has the edge, especially considering that the Gains Network volume shown includes Polygon (CRYPTO: MATIC) data as well.
Gains Network's emphasis on sustainable token economics has helped fuel its growth, which is reflected in its ranking as the fourth-highest protocol earnings in all of the cryptocurrencies over the past six months, the report further stated.
Arbitrum's thriving DeFi ecosystem has started luring established projects from other chains, and Gains Network is one of these projects that has been successfully deployed on Polygon.
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