Morphex Finance: are we Bullish?

In this writing we discuss a thesis regarding the potential of Morphex and the token economy they have built. Morphex is a unique GMX based project on Fantom that melds a previous project into the GMX based token economy.

Morphex: Bringing GMX to Fantom

While there are many GMX like projects emerging throughout various chains, none have decided to build on Fantom. For those who have been reading along, Fantom is a powerful blockchain that offers layer-2 scaling without the need for assistance from potentially insecure sidechains. For an article on the basics of Fantom, check it out [here].

Previous Morphex users were allowed to convert the old PILLs token into MPX on a 1:1 ratio. This conversion made 50% of the MPX available immediately and the rest vested linearly over a full year [1]. The main benefit of the project currently is that there are no real competitors touting the derivatives setup that GMX provides on Fantom. GMX allows users to trade perpetuals on popular digital assets in a decentralized manner, peer to peer.

Fantom being one of the fastest transaction finality chains, and with inherent storage solutions is an obvious choice. Fantom also solves its own scaling challenge within the base layer of the network. Fantom is revered as one of the more popular chains for building creative Defi projects, often the first of their kind. GMX is one of the most successful Defi projects in all of the crypto market.

With reliable volume, user attraction, and long-term revenue, GMX is has carved out its own niche within the Defi markets. GMX allows users to trade potential price action up or down in a derivative manner focusing on perpetual contracts. Users bet against each other on key blue chip assets. The protocol collects fees from traders as well as allows for compounding of real yield over time. Real yield is when a project provides yield that is outside the token inflation, examples include providing Ethereum instead of just GMX rewards.

Morphex Competitors List
Morphex Competitors

Morphex Thesis

Above is a list of GMX and Morphex competitors. A common way to compare these assets is to use revenue vs. market cap as a metric. You will quickly notice that MPX does not have its market cap listed on coingecko, this lets us know that we are very early. While GMX sits relatively close to all-time-highs, MPX only needs a small influx of capital to provide massive gains. MPX currently sits about a 40x from a 100 million dollar market cap. The token is currently only a boasting 2.5 million market cap.

MPX has a partner token MLP utilizing the GMX token economy. Users can provide a token that is whitelisted within the network and in return they will receive MLP, this is the protocol liquidity. MLP users receive a higher yield than MPX investors, they achieve this by receiving a higher percentage of trading fees. They make out even more if the basket of assets grow in value, this increases MLP price. MLP provides real yield in FTM tokens and escrowed MPX tokens. Escrowed tokens can be compounded, or received as MPX in a years time. This allows farming exposure to MPX without needing to carry the actual asset.

Morphex MVX MLP Pools
Morphex MVX MLP Pools

Another way to compare assets to GMX involves comparing volume of the protocol to market cap. Using both the revenue and volume, users can compare popularity, and likely runway over time. The total volume to market cap ratio for GMX is .006. This ratio for MPX is .06. The GMX Market cap to total fees ratio is 165. This ratio for MPX is 29.9.

Evaluating this information, Morphex is about a 10x behind GMX in market cap ratio, and several multiples behind in fee ratios. While the tokenomics are similar, there are some subtle differences which benefit PILLs holders. Adding 10x to the Morphex market cap only brings the valuation to ~ 20 million dollars, this is till a 34x from GMX valuations. In total this move would be a 270x. It is apparent that the upside for the project is rather massive. This assumes that the project will be able to vacuum liquidity over time.

Fantom is one of the most busy Defi blockchains that carries the Andre Conje hype. Growth is easily attainable during a bull market. Remember, you do not need Morphex to take the crown to make potentially life changing gains on the trade. I personally utilize both MVX and MLP in multiple ways to achieve exposure with limited downside. I achieve this by holding base MVX which is staked, and MLP as both DAI and FTM which adds to the MVX/FTM yields over time.

While risky, Morphex provides a great upside if it can continue to grow in both volume and fees. Protocols that can self-sustain through revenue will build multi-decade runways. The project already has a loyal userbase from its previous iteration with the PILLs token economy. Building on Fantom is a great start, if the project can land key partnerships or increase liquidity, it could potentially catch up to Level or even Gains network over time. Please remember none of this is financial advice, do your own research, and stay safe out there!

Patrick O’Neil

About Patrick O’Neil


Patrick is an avid technology and gaming enthusiast. Patrick taught himself how to assemble computers in 2010 and was always fascinated with the gaming market. In 2019 he decided to sell his grayscale Ethereum funds and dive into the world of crypto firsthand. 

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