HMX: An In-Depth Explanation of the Innovative Decentralized Perpetual Trading Protocol

What is HMX

HMX is an innovative decentralized perpetual contract protocol built on the Arbitrum network, with core advantages including native support for cross-margin functionality and a multi-asset collateral system. This protocol offers traders flexibility and efficiency that were previously difficult to achieve in on-chain trading.

Core Trading Features of HMX

HMX allows users to trade multiple asset classes with leverage. Whether it’s cryptocurrencies, forex, or commodities, traders can open and close positions flexibly based on market opportunities. This means you can go long or short and adjust leverage multiples according to different asset types.

Specifically, HMX supports trading in three main asset categories:

• Up to 100x leverage in the cryptocurrency sector
• Up to 1000x leverage in the forex market
• Commodity trading limited to 50x leverage

Multi-Asset Collateral Mechanism — HMX’s Differentiated Competitive Edge

HMX’s most unique innovation lies in its multi-asset collateral management system. As the only decentralized perpetual protocol supporting cross-margin multi-asset collateral in the market, HMX breaks the constraints of traditional models.

Traders can use various cryptocurrencies as collateral, including USDC, USDT, DAI, GLP, BTC, ETH, and ARB. This flexibility offers two major practical advantages:

First, trading can begin without asset conversion. If you hold ETH, BTC, or other tokens, you can use them directly as collateral without first exchanging them for a specific stablecoin.

Second, it enables complex trading strategies. For example, carrying out carry trades or using ETH simultaneously as collateral for an ETH position — something unimaginable on other protocols.

Risk Management and Liquidity Protection

HMX sets Loan-to-Value (LTV) parameters for each collateral asset, which directly determine the account’s borrowing capacity and liquidation threshold. Through this scientific parameter system, the protocol can effectively prevent systemic risks.

Fee Structure Breakdown

HMX’s fee system consists of three parts, with all rates being competitive due to the protocol’s re-utilization of GLP liquidity from the GMX ecosystem.

Trading fees are calculated as a percentage of the position size, with specific rates varying across different asset classes.

Borrowing fees are also based on position size and are distributed to liquidity providers (HLP token holders), with the distribution ratio depending on the utilization of the asset.

Funding fees are used to balance the ratio of long and short positions, preventing market skewness. This fee flows between long and short traders to ensure market dynamics remain balanced.