In the evolving world of decentralized finance (DeFi), two protocols have consistently stood out for their ability to generate revenue and attract users—Lido Finance (LDO) and GMX. Both platforms operate in high-demand sectors of the crypto ecosystem: Lido dominates liquid staking, while GMX leads in decentralized derivatives trading. This in-depth analysis compares their tokenomics, revenue models, user engagement, and long-term potential to help investors understand which might offer stronger value in 2025.
Understanding Lido Finance and the LDO Token
Lido Finance is a decentralized protocol enabling users to stake Ethereum (and other proof-of-stake assets) without locking up their tokens. In return, users receive stETH—a liquid derivative that represents their staked ETH—and continue earning staking rewards while maintaining liquidity.
The LDO token serves as the governance token for the Lido DAO. While holding LDO doesn’t directly earn staking rewards, it grants voting rights on protocol upgrades, fee structures, and treasury allocations. A key feature of Lido’s model is its 10% fee on staking rewards, split evenly between node operators and the protocol treasury.
As of now, the Lido treasury holds approximately $191 million**, primarily in LDO tokens. With a fully diluted market cap of around **$1.1 billion, Lido has become one of the largest DeFi protocols by total value locked (TVL), operating across multiple blockchains including Ethereum, Solana, and Polygon.
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Key Metrics and Performance: LDO
Over the past year, Lido generated $32.6 million in protocol fees, giving it a price-to-earnings (P/E) ratio of roughly 33.26. This metric suggests moderate valuation relative to earnings—reasonable for a market leader with strong network effects.
Despite its scale, LDO has experienced significant price volatility. Trading at $1.11 at the time of writing, it remains 85% below its all-time high, though still 172% above its 52-week low. The token is highly liquid and listed on major exchanges such as Binance, Coinbase, Crypto.com, and Gemini.
With 78% of the total supply already distributed, inflationary pressure is minimal, making long-term holding more predictable for investors.
Pros and Cons of Investing in LDO
Advantages:
- Market leader in liquid staking with strong first-mover advantage
- Multi-chain expansion increases user reach and resilience
- High TVL ensures consistent fee generation
- Limited inflation due to high supply distribution
Challenges:
- No direct revenue sharing with LDO holders (only governance rights)
- Performance closely tied to ETH price movements
- Faces growing competition from rivals like Rocket Pool and Frax Ether
While LDO doesn’t currently distribute fees to token holders, future governance proposals could change this—potentially unlocking new utility and demand drivers.
Exploring GMX: The Decentralized Derivatives Powerhouse
GMX operates on Arbitrum and Avalanche, offering users the ability to trade major cryptocurrencies like Bitcoin, Ethereum, Chainlink, and Uniswap with up to 50x leverage. Unlike traditional centralized exchanges, GMX uses a virtual automated market maker (vAMM) system that eliminates counterparty risk and enables trustless margin trading.
What sets GMX apart is its dual-token model:
- GMX: The governance and reward-receiving token
- GLP: A diversified liquidity pool token backed by stablecoins and major cryptos
When liquidity providers deposit assets into GMX, they receive GLP tokens representing their share of the pool. These assets back traders’ positions and earn fees from swaps, funding rates, and liquidations.
Critically, 70% of all fees go to GLP holders, while 30% are distributed to staked GMX holders. This creates a powerful incentive for long-term participation.
GMX Financials and User Growth
GMX has demonstrated robust financial performance despite market downturns. Over the last 12 months, $31 million in fees were shared with stakeholders**, with GMX stakers receiving nearly **$9.3 million. Given its fully diluted valuation of $551 million, GMX trades at a P/E ratio of just 17.8—significantly lower than Lido’s.
The platform averages between 2,000–2,500 daily active users, making it one of the most used dApps on Arbitrum. Its TVL consistently ranks among the highest on the network, reflecting strong user trust and capital commitment.
GMX’s token price sits at $33.50**, down **33% from its peak of $41.67, but up 261% from its 52-week low. Around 63% of the total supply is in circulation, with ongoing emissions designed to reward early adopters and reduce sell pressure through vested staking rewards.
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Strengths and Risks of GMX
Strengths:
- Highly attractive fee-sharing model for token holders
- Low P/E ratio indicates undervaluation relative to earnings
- Strong position within the Arbitrum ecosystem
- Innovative reward system using escrowed GMX (esGMX) and multipliers
Risks:
- Regulatory scrutiny possible due to leveraged trading features
- Reliant on trader activity; prolonged low volatility can reduce fees
- Not listed on U.S.-based Tier-1 exchanges
- Faces competition from dYdX, Kwenta, and other derivative protocols
A unique aspect of GMX is its use of escrowed GMX (esGMX) rewards. Stakers earn esGMX instead of immediate cash-outs, which they can later vest or use to boost future rewards via multiplier points. This mechanism reduces short-term selling pressure and aligns incentives for long-term growth.
GMX vs LDO: Which Is the Better Investment?
Both protocols have proven resilient during bear markets—a key indicator of sustainable design. However, their investment profiles differ significantly.
For Conservative Investors: LDO Offers Stability
If you're seeking exposure to Ethereum’s success without direct price risk, LDO provides indirect leverage through staking fees and ecosystem growth. As ETH adoption rises—especially post-upgrades—Lido benefits passively through increased TVL and fee accumulation.
However, without direct revenue sharing, upside is limited unless governance changes unlock new utilities.
For Yield-Focused Investors: GMX Delivers Stronger Returns
GMX offers superior income potential through its 30% fee distribution to stakers. With a lower P/E ratio and higher yield profile, it appeals to investors comfortable with higher risk for greater returns.
Moreover, if broader crypto markets rally—especially Bitcoin and Ethereum—increased trading volume would directly boost GMX revenues.
That said, regulatory risks loom larger over derivatives platforms than staking protocols. Any crackdown on leveraged trading could impact GMX’s operations.
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Frequently Asked Questions (FAQ)
Q: Can I earn passive income from holding LDO?
A: Not directly. LDO provides governance rights only. Future upgrades may introduce fee-sharing mechanisms through community votes.
Q: How does GMX generate revenue?
A: GMX earns fees from margin trading—including funding rates, swap fees, and liquidation penalties—which are then distributed to GLP and GMX stakers.
Q: Is Lido safer than GMX?
A: Generally yes. Lido operates in a less-regulated space (staking) compared to GMX’s leveraged trading model, which may attract more regulatory attention.
Q: Where can I buy GMX or LDO?
A: Both tokens are available on major exchanges like Binance, Coinbase, Kraken, and OKX. Note that GMX is not listed on some U.S.-based platforms.
Q: Does staking GMX involve lock-up periods?
A: No mandatory lock-ups, but stakers receive esGMX rewards that vest over time or can be used to increase future yield multipliers.
Q: Which token has better growth potential in 2025?
A: If ETH rallies strongly, LDO could see outsized gains due to rising staking demand. However, GMX offers higher yield potential if trading volumes remain elevated.
Final Thoughts
Both GMX and LDO represent innovative forces within DeFi—one empowering liquid staking at scale, the other revolutionizing decentralized derivatives. While neither is risk-free, each offers compelling value propositions.
For investors prioritizing yield and active participation, GMX stands out with its robust fee-sharing model and undervalued metrics. Meanwhile, those favoring stability and ecosystem alignment with Ethereum may prefer Lido (LDO) as a foundational DeFi holding.
Ultimately, diversification across both could balance exposure to two critical pillars of the DeFi economy: staking infrastructure and decentralized trading.