Synthetix (SNX) trading volume overtakes GMX, but is the DEX token rally sustainable?

Synthetix weekly buying and selling volumes surpassed $1 billion, overtaking decentralized derivatives change GMX to turn into the second-most lively platform.

The buying and selling quantity knowledge from Token Terminal exhibits that Synthetix did greater than twice the buying and selling of GMX within the seven-day interval beginning Could 17, due to Optimism (OP) token incentives for perpetual swap merchants.

The Synthetix (SNX) token has encountered resistance on the $2.50 stage after gaining round 10.3% within the final seven days, per CoinGecko knowledge.

However, GMX and dYdX are experiencing a decline in buying and selling exercise, whereas their native tokens are eyeing bearish targets based mostly on technical ranges.

OP incentives drive Synthetix volumes

Synthetix gives perpetual futures contracts on layer-2 rollup Optimism by way of a decentralized software known as Kwenta.

The Synthetix neighborhood approved a proposal to distribute 3.65 million OP tokens, value round $5.7 million, as rewards to Kwenta customers based mostly on their buying and selling exercise and quantity of SNX staked for 20 weeks beginning in April.

The 7-day buying and selling quantity on decentralized spinoff exchanges. Supply: Token Terminal

Kwenta’s utilization has spiked for the reason that March 2023 announcement, per DefiLlama knowledge for Synthetix customers, suggesting that it could possibly be partly because of OP token rewards.

According to the Dune dashboard made by knowledge analyst Gunboats, each $1 in charges spent on Synthetix perpetuals earns $1.27 in OP incentives. Merchants can earn the distinction of $0.27 per greenback by merely inserting trades on each the brief and lengthy sides to cowl for buying and selling danger and earn the OP incentives.

The charges earned by Synthetix Protocol. Supply: DefiLlama

The full worth locked (TVL) in Synthetix has remained persistently round early 2023 ranges at round $430 million, which means that new cash is but to move into the ecosystem. Presently, present Synthetix customers look like farming OP rewards.

Extra proof that buying and selling volumes at Synthetix are inflated comes from the distinction in open curiosity (OI) volumes in comparison with high derivatives platforms like GMX and dYdX.

The full OI quantity of Kwenta is round $50 million in contrast with between $130 million to $150 million at GMX and $250 million to $270 million on dYdX in Could.

The ratio of buying and selling to OI volumes in a weekly timeframe for dYdX is round 16, for GMX round 3.77 and for Synthetix’s Kwenta at 26.

Beforehand, analysts have urged that dYdX volumes might be inflated because of token incentives for increased volumes. Presently, Kwenta exhibits the same pattern.

Technical evaluation of the SNX/USD pair exhibits that it has encountered resistance at round $2.50, which is the midpoint of the pair’s parallel vary this 12 months and the place its 50- and 200-period exponential transferring averages (EMA) are trending.

SNX/USD value chart. Supply: TradingView

A breakout above this stage will see patrons purpose towards 2023 peak ranges of round $3.30.

Kain Warwick, the founding father of Synthetix, proposed 12 enhancements to the protocol on Could 23, together with a “buyback and burn” program to doubtlessly take away SNX tokens value $60 million from circulation. The proposal goals to gasoline SNX value development by lowering its provide.

GMX and dYdX buying and selling volumes decline

Notably, GMX OI and buying and selling volumes have declined in Could 2023, doubtlessly because of a lack of volatility in Bitcoin and Ethereum costs.

The weekly charges earned by the protocol have practically halved in Could in comparison with earlier months. A decline in charges earned results in diminished yields for GMX stakers, as 30% of the platform’s charges are distributed to stakers.

GMX open curiosity and buying and selling volumes since April. Supply: CoinGecko

Decreased revenues can inspire GMX holders to maneuver to different ecosystems with increased yields. The staking ratio, the ratio between staked provide and circulating provide, has dropped from 71% to 69% in Could from the earlier month.

On the brilliant facet, whereas the quantity on GMX has declined barely in Could, the TVL on the decentralized software has remained persistently above $650 million, indicating that not a lot worth has flown out of the GMX ecosystem.

Technically, GMX has misplaced help on the $59.30 stage, presently coinciding with the 200-day EMA. If patrons fail to reclaim this help stage, the destructive slide might seemingly prolong towards the $40.28 help stage.

Associated: Crypto funding seen shifting from CeFi to DeFi after major collapses: CoinGecko

The relative power index, a momentum indicator, additionally exhibits that the token is oversold, which might set off a aid rally. Nevertheless, it stays to be seen if GMX patrons flip up, provided that the platform’s revenues have gone down.

GMX/USD value chart. Supply: TradingView

Much like GMX, dYdX OI volumes have stayed flat, however buying and selling volumes have declined in Could. The DYDX token additionally dropped by 7.53% on Could 24 alongside GMX, dropping help under the 200-day transferring common at $2.10.

The DYDX token is presently eyeing bearish targets close to $1.22. Consumers have to stage a restoration above $2.10 and $2.50 to extend the chance of an upside transfer.