An in-depth reading of Perp DEX patterns: Why did Hyperliquid win, dYdX, GMX
By OkX Ventures
This does not represent the ChainCatcher view, nor does it constitute any investment proposal。
Perp DEX has become one of the most explosive and competitive tracks in the current chain application. OKX Ventures hopes that through this study, the Perp DEX will be systematized from budding, bursting to polarized whole evolution, and will analyse in depth its representational projects at different stages, showing how this core track is constantly reshaped in the alternation of bear cattle and technology。
On the basis of a deep reset, we will focus on dismantling the two early mastersdYdXWITH GMX, WHY THE LIGHT WENT FROM HIGH TO LOW AND FURTHER EXPLOREDHyperliquidHow can new powers such as Aster and others rush in the face of intense competition: structural innovations? Reconstructing the trade philosophy? Or the evolution of community economic models
By comparing success with failure, this study hopes to reveal the most critical, difficult, but inspiring “trade-off moments” in Perp DEX’s construction, providing a new generation of entrepreneurs with replicable experiences and insights into product, technology, and market strategies。
1. Market context
1.1 Perp DEX Market Development History
At the heart of the first phase was the validation of the concept and the dawn of Layer2 (2017-2021). The theory of Perpetual DEX/Perpetual Swap dates back to 2017 when dYdX: A Standard for Decentrazed Margin Trading and Deviatives and Hart Lambur published the White Paper BitDEX: A Decentrazed BitMEX Using Prices Financial Contracts in 2019. In 2020, dYdX had its first BTC lasting contract on the Ether host network, putting the theory into practice, and in the same year, Perpetual Protocol launched a v1 version on the xDai chain, with its innovative virtual AMM mechanism allowing users to trade without an order book. However, these early explorations are, without exception, constrained by the performance shackles of the ETA network. High Gas fees and slow transaction confirmations have made it impossible for user experiences to match those of the Centralized Exchange (CEX), with average daily trade volumes hovering only between millions and hundreds of millions of dollars, which is insignificant compared to the huge size of the then hundreds of billions of dollars of CEX。
The real turning point was in 2021, when Perp DEX came up with its first high-speed growth with the maturity of the Ether Layer2 technology. dYdX seized the opportunity to migrate its products to the Layer2 programme in StarkWare, significantly increasing speed and reducing costs. On that basis, dYdX issued a governance token in August of the same year and started trading for mining, an incentive that blew up the market. On September 28, 2021, dYdX single-day transactions rose to about US$ 9 billion, exceeding not only the sum of all other DEXs but even the same period of CEX data as the mainstream Cinbase. This landmark event proved, for the first time on a scale, the potential of Perp DEX to challenge CEX and charted the way for the entire industry: Embracing Layer2 is the path to growth。
The second phase of narratives was dominated by the AMM Model Innovation and the rise of GMX (2021-2023). After dYdX validated the viability of L2 purchase book, the market began to explore more dollar protocol models. In September 2021, following Arbitrum's main online line, GMX became the flagman of this new wave. The GMX innovatively adopted a combination of multi-asset liquidity pool (MLP) and predictor feeder models, with the GLP pool serving as the counterpart to all traders, achieving the unique advantages of zero-point trading and LP-unusual losses. The success of GMX was the result of a shift in market confidence resulting from its precise choice of track (the early stages of the Arbitrum ecological outbreak), a friendly incentive mechanism for LPs, and the collapse of FTX in 2022. As a result, GMX grew rapidly in 2022 to be the Perp DEX that dominated the cycle。
During the same period, the Perp DEX was further expanded by the Synthetix Synthetics Contract for Sustainability, Gains Network, and so on. This phase was characterized by increased patterns of diversification and competition. Even though the market entered the bear market, Perp DEX's turnover remained resilient and its share of the encrypted derivatives market steadily increased. A key trend is that the market share of dYdX fell sharply from 73 per cent in January 2023 to 7 per cent at the end of 2024, ending its unique age. Increased competition has also led to a struggle over the bottom infrastructure: dYdX announced a shift to an independent Cosmos application chain (v4), where Solana was born with high-performance DEXs such as Mango, Drift, and so on, and Sei, a dedicated application chain, which has also begun to emerge, setting an ambush for the arrival of the third wave。
Figure : The ratio of perp DEX to perp cex is rising slowly in the overall trend from 2023 to 24
The third stage is the high performance revolution led by Hyperliquid (2023 to date). The core feature of this wave is the pursuit of extreme chain performance and professional trading experiences, with the intention of truly matching speed and depth with CEX。Hyperliquid comes online at the beginning of 2023 with its 'specially high performance chain '+CLOBTHE TECHNOLOGICAL ARCHITECTURE AND RADICAL MARKET INCENTIVES OF ORDER BOOKS HAVE RESULTED IN EXPONENTIAL GROWTH. THE DETONATION POINT WAS THE DROP OF THE HYPE TOKEN ON NOVEMBER 29, 2024, WHICH ALLOCATED 31 PER CENT OF THE TOTAL SUPPLY TO EARLY USERS, GREATLY STIMULATING THE COMMUNITY. ITS GROWTH CONTINUED UNABATED AFTER AIRDROPS, REACHING $160 BILLION PER MONTH IN DECEMBER 2024, AND THE CITY'S SHARE ROSE TO ABOUT 66 PER CENT, WITH A SINGLE-DAY RECORD OF $21 BILLION ON 19 JANUARY 2025。
The rise of Hyperliquid has completely reshaped the market pattern. In 2024, the industry-wide DEX total turnover reached $1.5 trillion, an increase of 138 per cent over the same period, with the Hyperliquids contributing more than half in the fourth quarter. By mid-2025, Hyperliquid alone accounted for over 75 per cent of the market, while the former kings dYdX and GMX had both fallen to single digits. In the face of shocks, old projects are also responding: dYdX officially released the technologically advanced Cosmos Independence Chain (v4), in November 2023, decentralizing the blending engine but failing to recover the market share decline; GMX also failed to stop the loss of users through incremental improvements. At the same time, Solana's ecological Jupiter quickly climbed to market number two, showing the gravity of a strong ecosystem。
The third wave identified future technological trends: order books in high performance chains were the focus. The success of Hyperliquid demonstrates that decentrization and high performance can be achieved through a dedicated chain. However, it also leads to a new trade-off between the performance advantages of a dedicated chain and its short-set on ecological complication. As noted by Multicoin Capital, dedicated chains face problems of inadequate cross-chain asset support and dependence on bridge connectors. To this end, projects such as dYdX and Hyperliquid are also trying to compensate, for example, through integration of primary USDCs or online compatible EVM sub-chains. It is foreseeable that in the future the Perp DEX track will continue to be explored in the trade-off between performance and ecology, seeking the best combination of speed, depth and deFi composition。
1.2 Market data
Figure: DEX transactions divided by CEX Volume indicator: Spot dex 20 per cent and Perp dex 8 per cent; Perp dex this indicator grew rapidly after mid-2024。
Figure: In 2021-2023, the market was largely monopolized by dydx, gmx; weekly volume remained essentially above or below $10b after the large-scale dydx drop in August 2021, and GMX weekly volume remained at around $2b for a long time. Hyperliquid appeared around May 2023, and weekly volume maintained GMX at $2b-3b flip, and grew to about $10b in August 2024, and dydx v4。
Figure: In terms of market share, Hyperliquid has occupied 50-70% of the market since November 2024
Diagram: From DAU it appears that Hyperliquid maintained DAU at 25k+ levels in the last few months after the airdrops were completed in 2024 and late November
2. Building Perp DEX core modules and underlying challenges
2.1 Balance between liquid cold start cost and size ceiling (AMM vs. CLOB)
The primary problem that Perp DEX faced in the initial period was that of a mobile cold start-up, the core of which was to balance the “cold start-up costs” with the “scaled ceiling”. This trade-off is mainly reflected in two mainstream bottom-up structural choices: automarketing (AMM) and central limit price booking (CLOB)。
1) ON AMM MODEL: LOW-THRESHOLD START-UP ADVANTAGES AND BUILT-IN SCALE BOTTLENECKS
The AMM-based mobility pool (usually the Oracle-based AMM, such as the GMX structure) has the core advantage of significantly lowering the liquidity supply threshold through the design of the LP Pool. Any user can deposit assets in the pool as a liquidity provider, which enables the agreement to pool initial liquidity quickly and at low cost at an early stage and to effectively address cold start problems. However, this architecture also creates two interrelated and inherent bottlenecks that limit its size ceiling:
BOTTLENECK 1: PASSIVE RISK EXPOSURE OF LP AND INTRODUCTION OF PROFESSIONAL FINANCE。
The AMM mobility pool is essentially a collective counterpart to all traders. This model is a “passive management”, and LPs cannot manage their offers and risks on their own initiative, as the order book does for the market. This leads to a direct directional risk to the LP: when the position of market traders is collectively biased in one direction (e.g. in cattle markets), the LP pool must assume the opposite net empty position. If markets continue to operate unilaterally and traders collectively profit, the LP pool will suffer the corresponding systemic losses. Although GMX v2 version photo v1 by introducing dynamicFunding rate mechanismWHILE SOME BALANCE HAS BEEN STRUCK BETWEEN THE STORAGE COSTS OF MULTIPLE EMPTY PARTIES AND THE RISK BIAS OF THE POOL HAS BEEN MITIGATED, IT REMAINS SUBJECT TO RISK MITIGATION RATHER THAN RISK ERADICATION MEASURES LIMITED TO THE BOTTOM-UP MECHANISM. THIS PASSIVE, COLLECTIVE RISK EXPOSURE IS OF LIMITED ATTRACTION FOR LARGE-SCALE PROFESSIONAL MARKET FUNDING IN PURSUIT OF ACCURATE RISK CONTROL AND PROACTIVE STRATEGY IMPLEMENTATION, AND THEREFORE A PURELY AMM POOL MODEL IS MORE DIFFICULT TO ATTRACT TO TOP MARKETERS THAN AN ORDER BOOK MODEL。
BOTTLENECK 2: TVL SIZE VERSUS UNSETTLED CONTRACT (Open InterestThe size of the ceiling。
THE ABOVE-MENTIONED RISK MODEL LEADS DIRECTLY TO THE NEED FOR THE AMM PROTOCOL TO HAVE A RIGID CEILING ON THE TOTAL AMOUNT OF ITS OPEN CONTRACTS. THE SIZE OF THIS CEILING IS DIRECTLY RELATED TO THE SIZE OF THE PROTOCOL TVL. IN ORDER TO PROTECT THE SOLVENCY OF THE LP POOL AGAINST BAD DEBTS ARISING FROM EXTREME MARKET FLUCTUATIONS OR EXCESSIVE POSITIONS, THE AGREEMENT MUST LIMIT ITS EXPOSURE, I.E. TOTAL OI CANNOT GROW INDEFINITELY. THIS UPPER LIMIT IS USUALLY SET AS A MULTIPLE OF TVL (THE TOTAL OI UPPER LIMIT IS ABOUT FIVE TIMES THAT OF TVL, DEPENDING ON THE VOLATILITY OF THE ASSETS AND THE CONTROL PARAMETERS OF THE AGREEMENT). FOR EXAMPLE, A $100 MILLION MOBILE POOL, THE AGREEMENT MAY SET THE TOTAL OC CEILING FOR MULTIPLE EMPTY PARTIES AT $500 MILLION TO CONTROL RISK. ONCE OO IS CLOSE TO THIS THRESHOLD, THE PROTOCOL ' S RISK CONTROL MECHANISM (E.G. SURGING FINANCIAL RATES) WILL BE ACTIVATED, SIGNIFICANTLY INCREASING THE COST OF HOLDING A WAREHOUSE, THEREBY DISCOURAGING USERS FROM CONTINUING TO PRE-EMPT THE IMBALANCE. THIS DESIGN IS PARTICULARLY CRITICAL DURING PERIODS OF HIGH VOLATILITY OR CONVERGENCE OF MARKET SENTIMENT, WHICH, WHILE SAFEGUARDING THE SECURITY OF AGREEMENTS, CLEARLY LIMITS THE GROWTH POTENTIAL OF MARKETS。
Figure: Polynominal founder Gautham expressed the same idea in a post discussing the application of the perp DEX: the size of the AMM pool, which entered the decentrazed market in 2021。
2) On order book models: high ceiling advantages and severe cold start-up challenges
The CLOB model is a mature model of traditional financial markets such as stock and futures exchanges and is also used by many high-performance Perp DEX such as Hyperliquid. Its core mechanism is to facilitate transactions by directly matching price-limited orders submitted by buyers and sellers in a point-to-point manner。
THE ORDER BOOK MODEL FUNDAMENTALLY CIRCUMVENTS THE SIZE LIMITS OF THE AMM POOL MODEL AT THE BOTTOM OF THE DESIGN。
Liquidity and risk of decoupling: Unlike relying on a single mobility pool as a collective counterpart, the mobility of the order book is decentralized by a large number of independent traders (Market Makers) and registered users. The transaction was a direct match between the buyer and the seller, and the risk was transferred between individuals rather than concentrated in a pool。
Infinite OO size cap: because of the size of the TVL without relying on a fixed mobility pool, the order book model is theoretically unlimited in size. Its ceiling depends only on the total liquidity and risk carrying capacity that all participants in the market are willing to provide. The size of the market can continue to grow as long as there is sufficient participation by market traders and traders。
Quality of excellent transaction execution: This competitive pricing environment can lead to better price discovery mechanisms. For large-scale transactions and high-frequency arbitrage strategies, the order book can provide extremely low slide points and closer trade price differentials, greater liquidity and more accurate prices。
Taken together, the order book model is the ideal option to carry large, specialized market mobility, with a theoretically large ceiling that is widely regarded as the ultimate form of Perp DEX towards maturity。
However, the enormous advantages of the order book model are accompanied by an extremely serious challenge – high cold start-up costs. A healthy and dynamic order book market is premised on the need for multiple professional vendors to provide a continuous, deep and highly priced bilateral offer from the first day. However, marketers are only profitable when there is sufficient market volume (Taker Flow), and traders are willing to enter only when the market is sufficiently liquid. This creates a classic dilemma of having chicken or eggs first. In order to break this impasse, the new platform must invest significant capital and resources in the early stages of operations to attract and coordinate the first business entry through market incentives (e.g. token incentives, fee refunds, etc.)。
Figure: A recent article on Twitter, Deadly Perp DEX Traps (and the Paths Out), reveals that if a team were to charge 0.035 per cent of the fees, it might have only 0.015 per cent after being allocated to market vendors and returning to domestic service. Assuming that the team costs $500,000 a month, it takes at least $111.1 million a day to eat a single amount to keep it。
2.2 Establishment of fair market game rules
After resolving the initial liquidity problem of Perp DEX, the core challenge shifted to the issues related to market integrity, which included transparency, anti-manipulation and fair trade-offs of the efficiency of vs., mainly in the context of transaction sequencing and liquidation mechanisms。
1) game on trade sequencing: fair vs efficiency
In a block chain environment, the final packing order of the transaction directly determines the outcome of the transaction, which gives rise to the MEV. This problem is particularly acute in Perp DEX, where the nature of the leverage trade increases the sensitivity of prices, and where MEV strategies, such as Front-running and Sandwich Attacks, multiply user losses in the leverage environment, not only hinder the participation of ordinary retail traders, but also make marketers (Makers) highly vulnerable to high frequency (HFTs) use, resulting in their sustained loss and exposure to so-called “toxic flows” (Toxic Flow)。
THIS MAKES IT A FUNDAMENTAL TRADE-OFF FOR PROTOCOL DESIGNERS: TO GIVE PRIORITY TO SAFEGUARDING EQUITY, PROTECTING ORDINARY USERS AND SMALL AND MEDIUM-SIZED TRADERS FROM MEV EXPLOITATION; OR TO PURSUING EFFICIENCY, ALLOWING INTENSE COMPETITION BETWEEN HFCS TO DRIVE DEEPER MOBILITY AND FASTER PRICE DISCOVERY. THIS IS A PHILOSOPHICAL CHOICE WITHOUT PERFECT ANSWERS, AND DIFFERENT AGREEMENTS GIVE A VERY DIFFERENT ANSWER。
The design of Hyperliquid is clearly biased towards the protectionist path of “equity first”. In order to achieve this objective, the agreement introduced a key mechanism known as Speed Bumps, the core of which includes: an internal pool buffer (which provides a processing buffer of approximately 3 blocks for transactions), priority for cancellation orders, Cancel Order First (in a blended engine, orders to cancel orders have higher priority than new orders). The immediate effect of this design is to provide a powerful protection layer for the hanger, especially for small and medium-sized market traders, who have enough time and privileges to cancel or modify their hangers before they are “snipers” for the HFT strategy when they monitor a self-listed, loss-causing, food bill。
Opponents, like GTE, prefer the Darwinist path of “efficiency first,” arguing that the Hyperliquid “fast belt” mechanism, while protecting some participants, is at the expense of the overall efficiency of the market and may limit the upper limit of the depth of liquidity. Their argument is that real market efficiency and prices are found to result from unrestricted and intense competition among top and most sophisticated market traders, as neither the headhouse of the encryption industry nor the NASDAQ/CME of traditional finance have these top-level exchanges put in place similar protective “speed belts” for market traders. The bulk of the transactions on the front exchange is not from “marketer vs. bulk”, but from “marketer vs. marketer”. Protecting vulnerable marketers so that they can easily avoid losses can actually reduce the profitability of top marketers with real alpha (excess gains) capacity, thus potentially crowding them out of the market and ultimately undermining overall liquidity。
2) On liquidation mechanisms: a balance between transparency and resistance to manipulation
The clearing mechanism is the “lifeline” of any leverage-trading agreement, and its core mission is to preserve the solvency of the agreement and the overall trust of the user by preventing the accumulation of systemic risks through forced silos when the traders' positions exceed the coverage of the bond. However, the design of this seemingly simple safety valve is extremely complex, as it must seek a fragile balance in a polygon of conflicting objectives of transparency, fairness, resistance to manipulation, sensitivity and stability。
The difficulty of a liquidation mechanism focuses on the price at which the position should be liquidated. If the final bargain within the platform is directly used, either a single large transaction or a small transaction when liquidity is depleted may lead to sharp price swings “plugs”, thereby triggering a large number of “unfair liquidations” that should not have occurred. To address this problem, the Mark Price (Mark Price) mechanism is widely used in industry. The mark price is not a single bargain, but a composite price intended to reflect the “fair value” of the asset. It is usually derived from the consolidation of spot prices in many mainstream, highly mobile markets (e.g., the median or weighted average of Coinbase) and smoothed in combination with factors such as financial rates. The tag price is used only for the calculation of unrealized gains and losses and for judgement liquidation, while the final bargain is used to settle realized gains and losses. This design greatly enhances the fairness and anti-manipulation of liquidation: because prices are diversified and dispersed, it is difficult for a single entity to manipulate multiple markets at the same time, thus effectively filtering isolated anomalies and safeguarding the objectivity of the basis for liquidation。
Figure: XPL incident in Hyperliquid: On 26 August 2025, a whale raised the price of the XPL token from $0.6 to $1.8 in minutes, resulting in the liquidation of an empty warehouse worth $25 million, while the price of CEX remained stable during the same period. This is because internal prices are highly susceptible to manipulation in the context of the “front market” scenario, which lacks reliable sources of external prices。
However, in pursuing a perfect mark price, the designer of the agreement also faces the dilemma of “Sensitivity” vs. Stability” in Yaoqi's recent article Oracle, Oracle, Oracle: How Price Feed Designed Design Turned $60 Million Into a $19 Billion Catastrophe: a highly sensitive predictor of real-time markets that, while reflecting changes in prices in a timely manner, is more vulnerable to short-term manipulation, such as the recent $60 million that the US De was completely absorbed by its sensitive predictor and finally detonated the $19.3 billion chain of liquidation. Instead, a prognosis that is too stable to filter noise (e.g., with a long window), while resistant to short-term manipulation, may be slow to react to a real and sustained decline in the market. This “difficult” may result in the agreement missing the best window for the timely settlement of the loss position, creating a cumulative risk of bad debts, which may eventually lead to more serious systemic deficits。
2.3 Guarantee capital efficiency issues
Another challenge that Perp DEX faces when competing with the Centralized Exchange is the area of continuous upgrading by designers, such as Kyle Samani, who wrote DeFi's Invisible Asymptotes in 2020, and On Forking DeFi Products, both earlier mentioned that this direction would be central to future development. The difference between Perp DEX and CEX in terms of the efficiency of the bond is essentially due to the difference between the two bottom structures:
1) THE EFFICIENCY OF CEX IS ROOTED IN ITS “CENTRALIZED TRUST”. USERS ENTRUST FULL CUSTODY OF ASSETS AND ENFORCEMENT OF TRANSACTIONS TO A SINGLE ENTITY. AS A RESULT, THE ENTITY HAS A GLOBAL PERSPECTIVE THAT ALLOWS REAL-TIME INSIGHT AND CALCULATION OF THE OVERALL RISK EXPOSURE OF ALL USERS IN THE PLATFORM, LIKE A CENTRAL BRAIN. THIS KNOWLEDGE-BASED CAPABILITY ALLOWS FOR EASY REALIZATION OF COMPLEX RISK HEDGES, FOR EXAMPLE, WHEN A USER HOLDS MULTIPLE AND EMPTY POSITIONS AT THE SAME TIME, CEX IS ABLE TO IDENTIFY ITS NET RISK AT ALMOST ZERO, THEREBY SIGNIFICANTLY REDUCING THE REQUIREMENT FOR A BOND. MORE IMPORTANTLY, BECAUSE CEX ACTUALLY CONTROLS THE ASSETS OF THE USER, IT CAN RE-TRAD OR BORROW FUNDS THAT ARE USED AS BONDS BUT ARE TEMPORARILY IDLE TO GENERATE ADDITIONAL BENEFITS FOR THE USER, WHICH IS ESSENTIALLY A REUSE OF SEDIMENTARY CAPITAL。
2) Perp DEX design philosophy is the opposite. Its first principle is that the code is the law, and the security of the system is not dependent on any middle party, but is guaranteed by an open and transparent smart contract. This principle confers absolute asset sovereignty on users, but it also creates a profound constraint. For a user's asset to be a bond, it must be “locked” through its private key authorization in a particular smart contract. This lock-in process is rigid and isolated. Once capital enters the vault of a contract, it is isolated, and its only mission is to support this independent warehouse, which cannot move anywhere else that needs it, or be used for profit, as it did in CEX. This has led to the serious “discretion” of capital, and every transaction is like an independent risk island and requires its own exclusive bond to maintain security。
Such asset isolation and risk atomization have two consequences: first, it is difficult for the agreement to identify a hedge position. Since an intelligent contract cannot see the behaviour of a user in other contracts, it can only mechanically require the user to provide full collateral for each position in the opposite direction, forcing the user to impose a large number of unnecessary excessive collaterals. Second, the modularization of functions in the DeFi world, which separates lending and trading agreements, makes their clearing logic and risk parameters difficult to reconcile, makes it difficult for capital to flow seamlessly between the two systems, further exacerbating the fragmentation of capital。
In order to address these challenges, a variety of solutions emerged within the industry: the Marginfi Unified Mortgage Pool and the Drift Protocol Multi-Account mechanism, which can be seen as a “simulation” of centralization efficiency within a decentrization framework. Through more complex contract designs, they seek to reassemble user-deficit capital and create a CEX-like shared bond environment within the agreement, thereby increasing flexibility. The GMX GLP pool has a different path, concentrating risk into a single mobility pool and simplifying the counterparty model。
Recently, the Tarun Chitra and Bain Capital teams launched a paper "Perpetual Demand Lending Pools" to solve the problem of combining the perp dex and linging models, and their presentation of the “PDLP” study represents a “restructuring” based on the first principle. Instead of trying to imitate the CEX function, it reverts to the nature of financial risk and treats long-term contractual transactions and borrowing as two sides of the same coin. According to the model, the risk of a multiple position is inherently equivalent to borrowing of a base asset, while an empty position is equivalent to borrowing of a stable currency. Based on this insight, PDLP integrated the two into a holistic framework, creating a unified pool of assets in which capital is both a deposit for transactions and a liquidity for borrowing。
3. Perp Dex Operations Data Comparison
source: defillama, perpetualpulse.xyz (2025.10.20)
At the heart of liquidity is “how quickly can traders complete a transaction at minimal cost”. This cost includes trade differentials, slide points and transaction costs. Many platforms, in order to attract users quickly at an early stage, stimulate transactions through token incentives, which can lead to a large number of “Wash Trading” – frequent self-employment transactions in which users are rewarded. This trade, while pushing up the Platform's “trade volume” data, does not provide real liquidity. When incentives are reduced, this false prosperity disappears (the most typical example is dYdX)。
One of the dimensions of the main measure of liquidity for health is the ratio of unsettled contracts to transactions (Open average vs Volume), which, according to OI/Volume data provided by Coinglass, is 92% Binance, 80% OKX and 184% Bybit. In contrast, the low rate of Perp DEX, many of which rely on token incentives, suggests that their transactions are more of a brush than a genuine holdout. But it's just not the only point of reference or whether it's going to take a long time and look at the main active address
source: perpetualpulse.xyz (2025.10.20)
4. Comparison of the four main hot spots Perp Dex project: Hyperliquid, Aster, Lighter, EdgeX
4.1 Hyperliquid
4.1.1 Founder Jeff Business System Design Philosophy - Transprint Market, Non-Toxic Flow
In June this year, Jeff, founder of Hyperliquid, spoke on Twitter and podcast (push 1, tweet 2, podcast) in an open debate on the philosophy of its controversial “Transparent Market” trading system, whose core ideas challenge traditional market structures to generate widespread industry attention. It is necessary here to understand in depth why the development of Hyperliquid is subversive and is read in two pieces (identify basic user objectives and risks, construct basic principles)
I. Core motivations and risk analysis of market participants
Objectives of market participants: In a trading market, the objectives of the participants can be clearly divided into two categories. The core goal of the liquidity demand side (Taker) is to achieve “best implementation”, i.e. the best price, the fastest speed and the smallest market shock. The core objective of the liquidity provider (Maker or marketer) is to earn a difference in prices by continuously offering offers, but the main risk they face is the trade losses caused by information asymmetries。
Core risk identification: "Toxic Flow": The core risk for marketers is expressed in "Toxic Flow". This type of transaction refers to arbitrage that takes advantage of asymmetrical technological advantages, which invalidates the offer of a marketer instantaneously and leads to a loss in the transaction. In contrast, the “non-toxic Flow” type of transaction does not rely on instant information advantages, such as trading for long-term warehouse positions, and therefore the risk of doing business is much lower. On this basis, the rational strategy of doing business in the market is to do everything possible to avoid dealing with “toxic streams” while actively serving “free streams”。
The impact of market transparency on business behaviour: market transparency directly determines the patterns of business behaviour. In a non-transparent market, because it is not possible to distinguish between “toxic flows” and “free flows”, marketers can only use defensive strategies to protect themselves by widening price differentials and reducing the depth of their listings, but this increases transaction costs for all liquid demand sides, including “free” traders. On the contrary, in a fully transparent market such as Hyperliquid, open chain addresses and historical behaviour make it possible to identify and assess the intentions of counterparties. When they are able to identify a “no poison stream” with a lower risk, their perceived risk will be significantly reduced, and their perceived risk will be more likely to provide a narrower price differential and a better depth of mobility, ultimately allowing the “no poison” demand side to achieve the transaction at a lower cost。
II. Ideally market design principles based on the above analysis
Competing principle (Counterparty Prince): At its core is that the quality of the transaction depends essentially on the identity and intent of the counterparty. The traditional view that a dark pool or OTC platform can provide better implementation because of its “privileged nature” is a misperception by Jeff. Their true advantage is that they screen their counterparties through the access system and exclude “toxic streams”. Screening is the root cause, and privacy is only a means of achieving screening. Hyperliquid's solution is more thorough, by making the behaviour of all participants public through fully transparent chain addresses, thus enabling the market itself to complete the screening. The City Chamber of Commerce, on its own initiative and in accordance with its public trading history, cooperates with a well-known “drug-free” dealer and avoids arbitrage “toxic” Address, which forms a more efficient and decentralized screening mechanism。
Competition Principle: It follows one of the most fundamental economic principles: best price comes from maximizing competition. Jeff believes that in traditional OTC transactions, a large trader may only seek prices from a small number of market dealers, with limited competition. In a transparent chain such as Hyperliquid, the trading intent can be broadcast to all marketers on the platform. This will inspire hundreds of marketers to fight for this predictable "no poison." The purchase orders were accompanied by intense bidding and constant pressure on their offers. Maximizing the scope of competition necessarily leads to optimal quality of implementation, as any offer that seeks to capture excess profits is immediately replaced by a more competitive counterparty。
Repetited Game Principles: It emphasizes the fundamental differences in the behaviour patterns of participants in one-off transactions and long-term relationships. In an anonymous market environment, transactions are a one-off game, and the best strategy of participants may be to harm their opponents to maximize their own interests, leading to widespread mistrust. Hyperliquid transforms the market into a scene of repeated games through unalterable chain addresses. Every act of each address builds its own reputation record. If a “toxic” transaction is carried out frequently at an address, it will soon be identified and circumvented by a group of market agents. In order to preserve the reputation for sustainable trading, all participants are more motivated to act in good faith and predictable ways, thereby driving markets towards a healthier balance of good behaviour。
Full Transparency Principles: Information asymmetries are the most dangerous in information processing. The worst case is where the information is only known to some, such as an internal member of a centralized platform who knows the end-up unit of the user, and who can precisely “hunt” the order without external competition. The best state, however, is complete symmetry of information, i.e. full knowledge. Any attempt to trigger liquidation by a price-throwing is foreseen by other rational players in the market when everyone knows the location of the stop list. These participants would become “anti-hunterers” and set up a purchase price nearby to obtain cheap chips, making hunting very costly or unprofitable and creating a market-based self-defence mechanism。
4.1.2 Hyperliquid products and technologies achieved
Hyperliquid’s excellence is that it not only introduces the subversive theory of “transparent markets” but, more than anything else, transforms this philosophy perfectly into a high-performance, vertically integrated trading system. Each of its technical decisions serves precisely the four main principles of the Jeff design philosophy we mentioned above (competents, competition, repetitive games, full transparency)。
I. Create an exclusive L1 chain for "best execution" HyperCore
In the face of the general question “What kind of public chain should be built”, Hyperliquid gave the answer to “Being the chain themselves”, which is an uncompromising option in its product vision (and some believe that hyperliquid may have been backed by professional MM from the beginning, and that for professional MM, they can only accept the order book, so “super-high performance”, “facility to stand off the bill before takingr” has naturally become the core design point of hyperiquid。
Jeff's “competition principle” requires the system to be able to carry global bulk, high-frequency orders to update and bid. The L1 of Hyperliquid is “designed to support the finality of high frequency order book transactions and near-immediate transactions”. In practice, it has supported the processing capacity of up to 100,000 orders per second, and it has reduced the “toxic flow” from the physical level to the arbitrage space of delay。
II. Speed Bump, Cancel Order First Mechanism for the Protection of Businesses
Hyperliquid's scheme, also known as the cancer order first system, is the core design feature of its L1 block chain. The mechanism gives priority to cancer orders in the implementation of blocks, while other orders are entered into immediately, etc. In essence, this provides a short “buffer period” for the suspension, allowing them to adjust or cancel offers before takingr orders are executed, while takingr orders need a buffer of about three blocks in the pool, which reduces the risk that maker will be “snipers” on fast takingr orders。
Why: The central purpose of this mechanism is to protect the market from the monopolistic toxic flow and to make them more comfortable in providing liquidity without fear of being quickly picked up by HFT taker. This is highly compatible with thesis of the founder of Jeff: in his view, traditional order books often lead to the “loser curse” between HFT taker and marker, i.e., the manker is hit before the order is cancelled, leading to a deterioration of liquidity, a widening gap, and ultimately to the quality of implementation by end users (e.g. retail traders). By reprioritizing, Hyperliquid optimized the end-user experience and encouraged maker to provide more compact offers and deeper liquidity rather than seeking to maximize transaction volumes or costs. The design also emphasizes the priority of decentrization: the dedicated L1 chain ensures that the platform remains solvent during extreme fluctuations and allows community mobility pools such as HLP (Hyperlibrity Production) to intervene in the maker retreat to achieve a profitable liquidity supply. Overall, this is an improvement on the traditional CLOB, giving priority to retail and marker rather than to toxicity, thus creating a fairer and more efficient ecology。
Community Evaluation: Although the mechanism is actually working (currently highly experienced with high retail users), it is also controversial: critics like the GTE team believe it limits trade between HFT MMs, thus constraining overall trade growth, which may make it difficult for Hyperliquid to fly Binance, and Dan Robinson is a positive judge of the mechanism。
Figure: BTC transactions compared depth (Hyperliquid, Lighter, EdgeX) @andyandhii used one hour of data from Lighter, EdgeX and Hyperliquid in one test. The results showed that Hyperliquid was able to remain deep when handling large orders in excess of $16 million, while the $6 million order scale was comparable to EdgeX, suggesting that Hyperliquid was indeed the best place to deal with large households。
REDEFINITION OF "DECENTRALIZED" - A FULLY CHAINED CENTRAL LIMIT ORDER BOOK (CLOB)
To understand the technical core of Hyperliquid, it is important to understand its redefinition of the term “decentralization”. In a recent analysis of the development dilemmas by EdegX, GTE et al., Headly Perp DEX Traps, there is a saying that decentrization is often misused in the area of perp dex — most perp dex simply shifting the centralized risk from the “deposit level” to the less visible “executive and liquidation level”。
Hyperliquid’s solution is to ensure that the agreement does not unilaterally interfere with or liquidate user funds by fully operating all core components – order books, arranging, clearing – in a transparent chain. This means that any change in funds (whether transactional or liquidation) must strictly follow the rules that are open, verifiable and written down in chain agreements. None of the "administrators" or "centreized servers" are above this rule. The ultimate technological form of achieving this goal is the fully chained CLOB。
iv. HLP – Two engines: Market Make + Backstop Limiteds
Hyperliquid faces the challenge of “how to inject initial and continuous liquidity” after building a fair and transparent CLOB framework. The solution is not a one-time total decentrization, but a phased evolution centred on HLP (Hyperlibrity Production): it starts with an agreement-led “Protocol Vault” to assume the role of “dippinning” for markets and liquidation, and then gradually decentralizes liquidity to open communities, Maker Vaults。
HLP Bootstrapping: Hyperliquid first set up a framework called "Market Make Valts" with a team-led flagship running the market vault HLP. The founding team personally directed early mobility with the vision of “Democratizing Market making”: HLP does not charge any management fees, P& L is shared in proportion to depositors' share (currently P& L at $80m). The strategy is currently operating under the chain, but the warehouse slots, billings, trade history, deposits and withdrawals are visible in real time chains for any person to audit。
The founder’s background and strategy: Jeff Yan, with his marketing experience at the top quantitative firm Hudson River Trading, managed HLP with proactive, professional strategies to “synthecate” the core experience of early users – a trading opponent who is permanently online and does not need permission. However, HLP's marketing strategy is passive, accounting for less than 2 per cent of the Platform's total transactions, most of which occur between non-HLP users。
THE DIFFERENCE BETWEEN HLP AND GLP:
HIPs (Hypeliquid Improvement Products) to improve decentralized autonomy: HLP completed the first phase of its cold-started historical mission, and Hyperliquid gradually turned power over to the market through the Community Governance Proposal HIPs。
HIP-1: Native token standing — transparency and disclosure mechanism for the listing of new assets. Liquidity is premised on the fact that “assets are liquid”. The HIP-1 is the first step towards de-centreization, establishing a transparent and marketable new asset distribution mechanism. Through the USDC auction, any projecter can compete for currency (the Dutch auction, every 31 hours, will have a new “opportunity” to be auctioned publicly at a price that is twice as high as the last “opportunity” deal, but which will then gradually decrease over time until someone buys it) and solves the problem of past market reliance on centralised team audits, and the lack of transparency in the process, which has introduced fresh and continuous blood into the order book。
HIP-2: Hyperliquidity – Ensuring base liquidity for long-term assets that have just been installed. The initial liquidity of these long-tailed assets is a new challenge. To this end, Hyperliquid has launched HIP-2: An automated business strategy that combines passive mobility supply ideas with CLOB. We can imagine Hyperlibrity as a sort of automated robot mobility provider that lives inside the order book. When a new HIP-1 token is launched, the deployer can use some USDC to initialise the Hyperlibrity strategy, define a price range, and then the agreement automatically places a purchase and a bill of sale within a symmetric range and updates each piece (approximately every three seconds), so it is essentially a grid-based marketer to ensure that even the newly installed coin has basic liquidity from the first day。
Five, HyperEVM - Smart contract level on Hyperliquid L1
General: HyperEVM and HyperCore constitute two engines on Hyperliquid L1, one focusing on exchange operations, one supportinggenic smart developments, and two engines sharing one United State
Figure: Hyperliquid chain: HyperCore (Rust VM) + HyperEVM structure
Compare the whole Hyperliquid to a high-performance computer:
UNIFORM STATUS: ALL DATA, WHETHER IN ORDER BOOK STATUS, USER BOND OR EVM SMART CONTRACT CODE AND STORAGE, ARE STORED HERE
HyperBFT Consensus: Nuclear in the operating system. Its only function is to receive all incoming commands (transactions), sort them and then wrap them into a non-mutilable command collection (blocks) and tell the computer what to do next。
HyperCore (RustVM) and HyperEVM:HyperCore are specific tasks such as handling order book set-ups, clearing, etc., with extreme efficiency, for a specialized processor created for the transaction; HyperEVM, as a common processor, is capable of performing any smart contract directive that meets the criteria of the Taifung。
When a new block is created, HyperBFT will distribute the command set to the corresponding processor. The transaction command is executed by HyperCore and the Smart Contract Directive is executed by HyperEVM, which read and write to the same unified state。
Specific examples: seamless processes from ideas to chain markets:
The project owner's issuing token for a project made by HyperEVM can trade directly on HyperCore
Deployment contract: A project party may deploy its ERC20 token contract (e.g. XYZ) on HyperEVM using standard EVM tools (e.g. Hardhat)。
On-line transactions: Without any permit, the project party is directly involved in the HIP-1 spot auction on HyperCore to create an original order book market for its XYZ tokens。
Status Link: The protocol links the contractual address on HyperEVM to the spot asset on HyperCore。
A seamless experience: Since then, XYZ tokens held by the user can be used in the HyperEVM DeFi application, or traded in HyperCore's high-performance order book。
4.1.3 Hyperliquid Commercial and Ecological Operations Strategy
I. AGREED DISTRIBUTION OF INCOME AND RERUCTION OF POINTS
Hyperliquid’s main source of income is transactional fees, which in 2025 have reached tens of millions of dollars per month – nearly $1 billion (approximately 83 million per month) of annualized revenue, reflecting the magnitude of the deal。
In terms of income distribution, Hyperliquid uses a highly transparent and community-oriented strategy, giving almost all of the agreement’s revenues back to currency holders and ecology to avoid the “team sales” that is common in traditional projects. Ninety-seven per cent of the transaction fee revenue is used for the repurchase of HYPE tokens and for eco-finance: this part of the money is remitted to the “Assistance Fund” to achieve a permanent deflation destruction programme through the continuous repurchase of HYPE through the secondary market. Only 3 per cent of the fee income is allocated to HLP as a municipal treasury to motivate liquidity providers。
Figure: 97 per cent of transaction fee income remitted to Assistance Fund on a continuous basis through secondary markets
II. MARKET FUNDS
The HLP Treasury is the central municipal and clearing mechanism of the Hyperliquid Agreement and acts as the platform's passive marketer and final liquidator, similar to the exchange's “insurance fund” plus “market pool”. Any user can put USDC in HLP vaults and participate in sharing profits and losses from marketing strategies, thereby democratizing the income opportunities of traditional professional business only to ordinary users。
THE HLP STRATEGY OPERATES AUTOMATICALLY IN THE BACKSTAGE (SOME OF WHICH IS CURRENTLY CARRIED OUT UNDER THE CHAIN, BUT CHANGES IN POSITION AND FUNDS ARE PUBLICLY AVAILABLE ON THE CHAIN) AND ASSUMES THE RESPONSIBILITY OF COMBINING THE LIQUIDITY OF THE COUNTERPARTY IN THE ORDER BOOK AND TAKING OVER THE POSITION OF THE FLAT. IN RETURN, THE HLP TREASURY IS ENTITLED TO PART OF THE PROTOCOL FEES (ABOUT 3 PER CENT AS DESCRIBED ABOVE) AND LIQUIDATION PROCEEDS, WHICH ARE USED TO INCREASE THE RATE OF RETURN ON THE TREASURY。
Since its launch in mid-2023, the HLP Treasury has grown significantly in size and performance: TVL has risen to $500 million in a short time. The annualized rates of return between 2023 and 2024 reached 8-15 per cent, and, more importantly, their returns were less, if not less, relevant to the trend of the encrypted market, achieving significant post-risk adjustment gains at relatively low volatility rates (e.g., between mid-2023 and 2024, HLP earnings were -9.6 per cent relative to BTC, with the Sharpe ratio significantly higher than BTC), which makes HLP particularly attractive to users: both provide a stable source of returns different from mere currency hoarding and, to some extent, hedge the risks of single market trends。
IN THE AREA OF RISK MANAGEMENT, HLP TREASURY ADOPTS THE PRINCIPLE OF LOSS SEGREGATION TO ENSURE THAT EVEN A LOSS IN THE TREASURY DOES NOT AFFECT THE OTHER PARTS OF THE AGREEMENT: EACH TRADING MARKET AND ACCOUNT IS A WAREHOUSE DEPOSIT, AND LOSSES ARISING FROM AN ASSET ARE NOT DIVERTED TO OTHER ASSET MARKETS. THE HLP LIQUIDATION MODULE (ALSO KNOWN AS THE LIQUIDATOR'S TREASURY) FIRST ATTEMPTS TO LEVEL THE WAREHOUSE THROUGH AN ORDER BOOK; IF MARKET LIQUIDITY IS INSUFFICIENT AND BAD DEBTS MAY ARISE, THE AGREEMENT TRIGGERS THE AUTOMATIC REDUCTION (ADL) MECHANISM, WHICH IS TRIGGERED ONLY IN EXTREME CASES AND IS RARELY ACTIVATED WHEN UNREALIZED GAINS FROM PROFIT POSITIONS ON THE ASSET IN QUESTION ARE USED。
III. LOCAL TRANSFER
Hyperliquid has adopted a radical community decentralization strategy in the issuance of tokens: a combination of large-scale air drops + trade incentives, quick crowding and the process of transforming users into shareholders. In the late November 2024 HYPE token TGE, 31 per cent of the total supply was flown directly to early users, which covered over 100,000 active trade participants。
iv. HIP-3 Go to centralised market deployment mechanisms that turn Hyperliquid into a "liquid AWS"
HIP-3: Builder-Deployed Personals was a major upgrade introduced by Hyperliquid in 2025. It delegates the creation of a permanent contractual market from the governance of the certifying authority to the community and third-party developers, and achieves the deployment mechanism for a full chain of authority. Previously, the new market lines were inefficient because of their dependence on centralized processes; the HIP-3 project, which opened up markets and stimulated external innovation through auctions and pledge models, was the HIP-3 ecological project。
Five, Builder Code -- looking for more growth engines from the front end of the traffic entrance
Builder Codes, an innovative product launched by Hyperliquid, provides third-party developers (e.g. wallets, other front-end trade-type applications such as forecasting markets, trading robots, etc.) with an original, programmable business model. It's a core logic that abandons a simple API call and replaces it with a tight chain of work streams。
In July of this year, for example, Phantom was able to access Hyperliquid Builder Codes: the Builder Code mechanism allows Phantom to trade by custom interface a user's order book to Hyperliquid and allows Phantom to earn extra money from the transaction. Total cost paid by the user = additional route for the base transaction fee for Hyperliquid + Builder (Phantom)。
Data Source: https://www.lowscan.xyz/
VI. USDH
The USDH is a home-grown dollar stabilization currency for Hyperliquid ecology, designed to replace USDC, which dominates the platform, and captures huge interest earnings back to flow ecology. In September 2025, Hyperliquid launched an open bidding process to attract giants such as Paxos, Frax and Ethena to submit their proposals, which was won by Native Markets after a nine-day vote by the certifiers。
The $5.5 billion in the Hyperliquid chain is mainly held by the user USDC (as a trade bond or liquidity), and interest earned on the reserves of these funds (e.g. US$ 200 million/year) is retained by USDC issuer Circe for its operation and profit, rather than being distributed directly to USDC holders. This is because USDC is an interest-free, stable currency with only one dollar anchor for the holder, while the issuer earns revenue by managing the reserve。
Now it's a similar situation: USDH is also an interest-free stabilizer, Native Markets do not intend to give any interest directly to USDH holders (i.e. 0%) but they commit 100% of net interest earnings from reserves to Hyperliquid Ecology: 50% Note Assistance Fund for buyback of HYPE tokens from secondary markets (upgrading the value of HYPE) and 50% for expansion of the USDH application scenario, such as incentives for Builder Code front-end integration, HIP-3 markets to use USDH prices, user incentives and partnerships. This means that the USDH holders will not receive interest directly, but may benefit indirectly from ecological growth (e.g. higher liquidity, incentives and the appreciation of the HYPE, if they also hold the HYPE). This design is designed to “internalize” the proceeds to Hyperliquid, rather than to flow out like USDC。
PS: It is worth mentioning that the Stable Currency is worth mentioning again that Hyperliquid has an enormous wave of pull-up in the platform after May (Day OI from $5b level directly to $12b+), which is mainly due to USDT0 collaboration that has brought USDT users into Hyperliquid。
Community feedback: the team is fully engaged in market research and flexible adjustment strategies at different stages to provide users with the required products
According to the sharing of raccoons from large households in the Chinese-speaking community in Web3101 — why do giant whales like Hyperliquid? — Hyperliquid captured users in six stages:
Depth users of the early perp dex track: Early team took the initiative on Twitter that DM used to invite deep users of earlier perp dex tracks like GMX and communities to participate in the Private Beta test
SYSTEMS: THE SECOND WAVE OF EARLY USERS CAME MAINLY FROM THE "SYSTEMS" POOL, WHICH IS HEALTHIER FOR THE MARKET AND THE LP。
Packing up the token index: The growth of third-wave users, and the growth of Hyperliquid's most concentrated user data, is the fact that they are on line with a product of a FriendTech eco-coin ETF that, while not necessarily earning money, brings great attention。
Airdrops: The next wave of large-scale user growth is the drop of Memecoins Purr rather than waiting for a year and a half of a governance token。
Giant whale silos: The latest wave came from the Big Whale silos, James Wynn or Aguila Trades, traders with huge profits and losses, and became a phenomenon under the control of the Chinese-speaking media
4.2 Aster
Aster was born on March 31, 2024 of a multi-asset liquidity agreement between Astheus and the Enduring Contract Agreement APX Finance, a perp dex, bound up with BNB eco-high, providing a perp trading backend integration for Pancakeswap, with full YZi Labs investment, and ecological resources and flow support。
4.2.1 Aster team
In May 2025, when a high-value settlement involving a well-known encrypted trader, James Wynn, triggered a market dispute, Jeff of Hyperliquid publicly issued a “transparent market theory” tweet in response to the market dispute. At the same time, the Aster Corps responded by tweeting that it was the perfect time to launch a dark pool perp DEX。
Aster CEO Leonard has a completely different view of Jeff's transparent market theory: In his view, large transactions would significantly affect market prices, leading to slip points and losses. Professional traders and institutions need effective ways to hide their trading intentions in order to avoid being exploited by other traders (in particular, procedures that employ a “first-to-first-off” strategy)。
We think it may be difficult to define whose theory is right or wrong, and Jeff's theory is to reach the end game that does nothing to price all the risks to the trading system. This theory is subversive to the traditional trading system (because even the traditional stock exchange does not have a similar speed-reducing mechanism to protect market marker), and the environment may theoretically be more friendly to many medium-sized market makers, and the space available in the system to exploit tech asymmetry arbitrage is even lower, but tradeoff may be at the expense of price discovery efficiency, as well as being targeted as an absolute transparency that the taker angle will encounter。
And Aster is offering a specific solution for these two tradeoffs, with the potential to capture different users (especially those who are more sensitive to large transactions and fear loss from front run or targeted snipers)。
4.2.2 Aster products and technologies achieved
I. Two Model Structures (GMX + Hyperliquid) - to serve two distinct user groups
Aster is known for its “twin mode” trading experience, offering Simple Mode to ordinary users: a network-based mobile pool-based marketing mechanism that allows users to deal directly with the pool, a GMX-like GLP + Oracle Priced AMM model, without a single-locking arrangement, with a market-to-market LP acting as a rival, which supports even a 1001-fold over-leverage, known as the “Degen model”, to cater to the needs of a dispersed household. Simple models do not require pre-charged funds to Platform accounts and assets in user wallets can be directly involved in transactions, which lowers the threshold for use。
For professional traders, Aster provides Pro Mode: using the CLOB mechanism to provide a high performance setting for quantifying institutions and marketers. The professional model is equipped with such features as grid-trading robots, advanced APIs and privacy orders. At the same time, ProMode's rate is a targeted hit of 0.010 per cent for Astermaker / taker 0.035 per cent and 0.015 per 0.045 per cent for Hyperliquid
II. DIFFERENT FUNCTIONS: INDIVIDUAL orders — The theory of a philosophical conflict with the Jeff traverse market trading system
1) Aster's Main Solutions - Hidden Orders
Along the lines of the above, Aster lists three types of private environments that exist to resolve trade orders and each track off:
Dark Pools: Performs large transactions in a private, completely anonymous place separate from the public order book。
Iceberg Orders: Split a large order into many small orders, only a fraction of which is shown in the public order book (“the tip of the iceberg”). When a small part of the contract is concluded, the other part is automatically replenished until the entire order is completed。
Hidden Orders: Put a completely invisible price limit list directly into the open market blended engine, which will be seen by the market only after the order has been made。
Aster believes that hiding orders is the best option for a highly leveraged, fast-paced crypto perp market. It takes into account the secrecy of enforcement, centralized liquidity and minimal market impact, providing traders with a trading experience that is better than dark pools and iceberg orders。
2) General realization technology logic for Hidden Orders
The fundamental question to be addressed by Hidden Order is how to implement a fully confidential, private transaction in a fully transparent and open system. This problem can be broken down into three sub-issues:
I NEED TO PROVE TO THE SYSTEM THAT I HAVE A LEGITIMATE, WELL-FUNDED ORDER, BUT I CAN'T DISCLOSE ANY DETAILS OF THE ORDER: SEALING IT (EARMARK LOCAL ENCRYPTED ORDER), GENERATING ZK CERTIFICATES (PROVE SUFFICIENT COLLATERAL TO SUPPORT LEVERAGE POSITION, PRICE AND QUANTITY FORMAT CORRECTLY), SUBMITTING ZK CERTIFICATES TO THE CHAIN, TRADING INTENT TO BE STORED IN A CLOSED DATA STRUCTURE (PRIVATE STATUS TREE)
Hiding the order to find the counterparty and make the deal (no one can see): Unified mobility pool + Shadow matching algorithm, Unified mobility pool (hidden order and open order sharing pool to ensure the best chance of a deal), Shadow matching algorithm (decryption of hidden order)
When matching occurs, how to prevent attack at the moment of final settlement: when matching, the engine first delivers Hashi ' s promise to lock up the trade fingerprints, then discloses the explicit data and executes the asset exchange at the atom to prevent the raid and trap attack。
4.2.3 Aster Business and Ecological Operations Strategy
I. Product and user operations
Drawing on its previous experience with APX, the two models are intended to achieve tiered coverage: new hands can work in a simple mode (high multiples, single-key transactions are suitable for degen) and gradually move to a professional mode (the point of contention before the CB to provide privacy) to enhance user retention。
In terms of asset support, Aster supports not only the long-term contract transaction of mainstream encrypted assets, but also boldly engages in 24/7 long-term trading of traditional stock derivatives, such as US stock, allowing users to trade stock contracts, such as Tesla, 24/7。
Figure: TT Group user discussion in April of this year (Yzi Labs was not invested at the time)
From the outset, Aster was rooted in the ecosystem of money, working with front-line projects like PancakeSwap and SafePal to build up brand trust and access to user traffic quickly (e.g. users can use Aster contract transactions directly in SafePal's wallet, PancakeSwap provides liquidity support for its stable currency, etc.), Aster's off-the-shelf and chain credit agreement, Creditlink, is the only receiving platform for its CDL tokens to be dropped by air and to be closely linked to the emerging chain credit track. In addition, Aster joined Four.meme's token support scheme, providing traffic and channel support for the Meme project, and the three main project partners co-organized a competition。
Explore the combination of bonds and DeFi: introduce USDF to “live” bonds
Aster allows the user to use the liquid tokens (e.g., as BNB) directly as a bond with the original earnings stabilizer USDF (Lista DAO-issued Delta neutral stabilizer), meaning that the user can achieve “one fish eat more”: A pledge of proceeds can be accompanied by leverage with interest-bearing assets. For example, the user holds as BNB as an ecological pledge incentive while it can be used as a guarantee. Aster's extreme quest for capital efficiency has unlocked another heavy yield dimension for traders。
In particular, Aster developed Trade & Earn to encourage users to use USDF as a bond (to encourage users to switch USDT to USDF for basic ASY 4.5% of the proceeds) and to trade the USDF as an additional 12.2% ASY, with a combined gain of 16.7%), and the enhancement of wealth effects has stimulated the steady growth of Aster TVL。
III. Economic incentives such as token distribution
Aster Team plans to allocate 53.5 per cent of the coin supply to community airdrops to reward early contributors and traders. Of these, 8.8 per cent (704 million) of the coins were dropped by air on eligible users of the crediting activity at TGE on the same day, with the remainder being released gradually within 80 months。
Figure: But, as we mentioned in section III above, many in the community question the current generally low perp dex OI/Volume radio reaction, which wash dropping。
IV. Introduction to business
Aster introduced Market Makers to enhance the depth of the order book and to reduce the slide points, especially the Pro Mode Hidden Orders need a reliable counterparty. The main operational strategy is to provide discounts and exclusive API access to encourage them to inject liquidity. Eco-allocation (30 per cent) is partially used for municipal incentives, such as incentives for high-frequency bidders through grants or buy-back mechanisms. The Platform also indirectly engages marketers in the USDF pool through the integration of revenue-based assets with partners such as Lista DAO. To further enhance mobility, Aster introduced a municipal fund, which is allocated from the treasury (7 per cent) and ecological allocations, and established a dedicated fund to support the automation of the market strategy. The Fund provides incentives for highly volatile assets (e.g. BTC sustainability), and Fund participants receive $ASER incentives and agreed income shares。
4.3 Lighter
The Lighter project was initially identified as a spot dex, and then converted perp dex. It's a self-built zk rollup settlement relying on the Ether's CLOB perp, which provides a coupling speed and experience close to the central exchange. The main technical highlights are the zk snark programme to ensure that every order set-up logic and liquidation results can be validated to address the chain of transactions trust. Vladimir Novakovski, founder of the project, graduated from the Department of Economics at Harvard University as a financial quantitative background (former Citadel HF trader). The main investor is a16z, Coatue, etc。
4.3.1 Lighter Founder Vladimir Novakovski ' s Product Design Philosophy
The Lighter team believes that the main problem with the existing Perp DEX is "compromise to the core principles of decentrization":
PERFORMANCE COMPROMISES HAVE LED TO CENTRALIZATION: IN PURSUIT OF HIGH PERFORMANCE, ALMOST ALL ORDER BOOKS DEX HAVE PLACED THIS CORE FUNCTION IN A CENTRALISED SUB-CHAIN SERVER。
Fake “verifiable”: Existing zk rollup programs, such as StarkEx, have left the blending process entirely to a centralized operator, while ZK has proved that it only validates the results, but does not contain a validation of the blending process. In their view, such certification would be incomplete and would give room for abuse by central operators (e.g., failure to verify whether a first-to-first-to-first-to-first-to-first-to-first-to-first-to-first-to-first-to-first-to-first-to-first-to-first-to-first-to-first-to-first-to-first-to-first-to-first-to-first-to-first-to-first-to-first-to-first-to-first-to-first-to-first-to-first-to-first) if it was not guaranteed that the core principle of fairness in the transaction would be strictly enforced。
At the expense of safety and ecology in the pursuit of sovereignty: the application chain programme, for the sake of full autonomy, had left the Ethera, a step backwards. In their view, the security of derivatives exchanges and the combination of deFi ecology were essential and should not be sacrificed for performance。
AMM IS UNABLE TO MEET PROFESSIONAL TRANSACTION NEEDS: THEY ARE CONVINCED THAT ORDER BOOKS ARE THE MOST EFFICIENT AND PROFESSIONAL MODE OF DEALING. AMM IS UNABLE TO BECOME THE MAINSTREAM INFRASTRUCTURE IN FINANCIAL MARKETS BECAUSE OF ITS INHERENT SLIDE POINTS AND ERRATIC LOSSES。
Perp DEX:
Instead of using generic L2, a highly optimized Rollup is built from the top for trading this particular scene to achieve extreme performance。
"Enforcement" of the transaction by achieving the complete blending and clearing engine in the ZK circuit Take it from the central Sequencer and hand it over to a mathematical algorithm that cannot be altered。
DESIGNED TO OPTIMIZE THE DATA STRUCTURE FOR ZK, NEW TOOLS SUCH AS “ORDER BOOK TREE” HAVE BEEN CREATED, MAKING IT POSSIBLE TO IMPLEMENT COMPLEX EXCHANGE LOGIC IN CIRCUITS。
Resolutely staying away from the Ether in order to inherit its unparalleled security, mobility and composition。
4.3.2 Lighter Products and Technologies Achieved
The central goal of Lighter is to use zero-knowledge proof to construct a mathematically fair and efficient process, while at the same time inheriting a safe trading agreement at the top of the Taifung, which is a “no triangle”。
Basic structure: application of the dedicated ZK-Rollup
The core idea is to process thousands of transactions at the Off-chain high speed, and then wrap the “Executive Summary” of these transactions into a simple, unforgerable zk snark proof, and end with this certificate being published for validation in the Taifung。
How to operate: The user sends the transaction to Sequencer > Sequencer in chronological order of the transaction received into a block > Prover takes this sequenced block, executes every transaction in the block on its own server and produces a ZK certificate > Prover for the entire execution process to submit this certificate to the smart contract on the Taipei > The smart contract verifies that all transactions under the chain are valid and compliant, thereby updating the system。
II. Core engines: the blending and clearing engine of the verifiable process
This technology is at the core of Lighter’s technical differences, and the traditional zk rollup exchange only validates the “results” of a transaction (for example, proof that an order for A and B has been made), but the “process” for a transaction (i.e. why is a deal between A and B rather than A and C?) is entirely determined by a centralized black box service provider. Lighter's engine uses the basic principle of the “Price-Time Priority”, which is fully encoded into the ZK circuit, so that this blending process can also be verified by zk if it is completed in accordance with the principles。
How it works: When Proover executes a transaction, it does not just verify that two orders can match. It's inside the ZK circuit, compulsory and probable:
Find the best offer on the current market (the lowest or the highest purchase price)。
If the price is the same, the first order to be hung was found。
Implementation of this highest priority order。
EVERY STEP OF THIS PROCESS IS RECORDED IN THE ZK CERTIFICATE. THE LOGIC OF LIQUIDATION IS THE SAME, AND IT IS VERIFIABLE AND FAIR EXECUTION ON THE CIRCUIT。
What is being addressed: the ability of centralised operators to conduct order reviews, favour specific market players, or carry out run-away transactions has been fundamentally eliminated。
4.3.3 Lighter Commercial and Ecological Operations Strategy
I. Product and user operations
The unique point at the core of the product / technology is to ensure that the logic of each order set-up and the outcome of the settlement can be verified through zk snark method to address the confidence of the chain transaction (through custom ZK circuits that guarantee equity, “price-time preference” and hard-coded circuits that primarily address the MEV run by miners)。
Second, in order to gain market share from Hyperliquid, the most differentiated feature of user operation Lighter is the introduction of a zero-fee strategy: a billing / full fee exemption. This strategy worked immediately to attract a large number of traders and traders: Lighter’s average daily turnover over the past month was $3.8 billion, ranked second, and TVL jumped from millions to $500 million。
II. Economic incentives such as token distribution
Lighter has not yet issued currency, but has introduced a credit scheme to motivate early users and liquidity providers for future air drops. Users who trade on the platform or provide liquidity to public funds pools receive Lighter credits and invite others (through the Discord invitation code) receive additional credits. Scores are settled once a week and rankings are adjusted dynamically。
As a result of the successful precedent of Hyperliquid (where 31% of the coins were dropped to the user), it is widely anticipated that Lighter will convert the points into a percentage of the coins that will generate heat for off-site transactions: The cut-off figures show that the Lighter score in the OTC market is about $33/point, and the cumulative value has reached $363 million. Due to the fact that the total supply of points has not been disclosed, it is difficult to give a reasonable valuation of the tokens. But we can refer to the path of Hyperliquid: on the other hand, Hyperliquid dropped 30% of its tokens into the community, and the value on the line was about $3 billion. If Lighter adopts a similar distribution strategy, its overall valuation would be in the range of $3 billion. While the final valuation of air drops remains highly uncertain, speculative trading of points has become an important driving force driving Lighter's trade and OI growth。
4.4 EdgeX
EdgeX is the first project of a brand-new accelerator hatching launched by Amber Group in July 2024. It is now highly hot in Korean communities and has a good experience of user feedback moving end AP。
4.4.1 EdgeX Design philosophy
the core of the product philosophy of EdgeX is "making products that traders really love to use." The team had insight into the pains prevailing in the current encryption market, CEX and DEX, and had targeted a set of systemic solutions。
CEX ' S CRISIS OF CONFIDENCE AND ASSET SECURITY RISK: THE SECURITY OF USER ASSETS CANNOT BE SELF-PROVEN, AND THE ISSUES OF PLATFORM MISAPPROPRIATION, VETTING OR SINGLE-POINT FAILURE REMAIN THE SWORD OF DAMOCLES HANGING OVER TRADERS。
Existing DEX performance and experience bottlenecks: Most DEX, especially early AMM models, face high Gas fees, trade delays, slide points and MEV attacks. Even in order book style DEX, the performance and user experience are often difficult to compare with CEX, the relative lack of functionality (e.g., advanced type of order, leverage), the complexity of the onboarding process, and the large number of retail users who are accustomed to CEX silk experience are excluded。
DeFi Lego ' s fragmentation and high threshold: the existing modularization system is still highly fragmented, the development threshold is high and it is difficult for ordinary users to use its portfolio. In order to introduce a financial product, developers need to integrate multiple levels of technology, such as consensus, implementation and settlement, which are costly and inefficient。
4.4.2 EdgeX product and technology realization:
For these pain points, the EdgeX solution is a clear evolutionary path from application to platform, from V1 to V2:
V1 Achieved - - Sustained contract based on StarkEX and compulsory withdrawal
EdgeX uses StarkEX to renew the contract to achieve trustless settlements and anti-censorship functions (e.g., compulsory withdrawals)。
As it operates on the second floor, the transaction of the user is carried out under the chain and subsequently submitted to StarkEx for certification, which is eventually settled at the Ether. This guarantees both the integrity and verifiability of the transaction。
If EdgeX fails to process the user's withdrawal request within the grace period (usually 1-2 weeks), the user may also initiate a mandatory withdrawal。
First, the user can register his/her Stark Key to an L1 address and then submit a withdrawal request directly to the Taifung. If the request is ignored, the user can certify direct exit through Merkle。
And finally, it's important to stress that EdgeX never hosts user funds. The funds are kept in the Etheraf contract and only the user ' s own signature can move them。
V2 Achieved — build modular financial systems and lower deFi innovation thresholds
edgeX V2 is designed to provide a range of financial modules (trading, liquidity, borrowing, wallets, etc.) that are immediately available. The system, like the Lego block in the financial field, allows users and developers with little programming experience to easily customize and construct their own financial products, significantly reducing innovation costs and entry barriers。
At the same time, EdgeX completes the construction of a single DeFi portal in v2: by aggregating multi-chain mobility and providing a single front-end UI (webpage, App, TG Bots), EdgeX aims to become a bridge for retail users from CEX to a vast, complex multi-chain DeFi world, simplifying the complexity of multiple chains and multi-agreements。
In short, the idea of EdgeX is to move from the “point” (a good Perp DEX) that a trader needs most, to build an open, efficient, and secure “face” (a modular financial ecosystem), with the ultimate goal of leading a more innovative, efficient, and inclusive decentralised financial future。
Move end priority experience. Currently, most traders have access to Hyperliquid or Lighter via OKX Wallet or Phantom, while EdgeX has simplified the process by introducing a native mobile application (which has been mounted on App Store) that allows users to trade easily and easily at any time (popular in Korean communities)。
5. dydx, why did GMX lose the competition
5.1 dYdX 's pre-emptive advantage why it failed - too Ponzi 's token return incentive finally burned out
The COO DHM of Fulid/Instadapp sent a tweet in May of this year, “What did dydx do wrong” and community discussion about why dydx lost competition under circumstances that led to extensive discussion (240,000 readings, 246 comments), for reasons already summarized in the commentary area
topic: why did dydx lose to hyperliquid
Financial advantages: $85m, top Vc investment a16z, Paradigm, Polychain, Dragonfly。
Airdrop size: dYdX had an initial value of $2 billion, exceeding $1.6 billion for Hyperliquid。
Pre-emptive advantages: Having five years of development to build the most competitive products (2017 White Paper)。
Revenue capacity: Accumulated income of over $530 million。
Technical autonomy: A self-contained chain (dYdX Chain) has also been established, and the theoretical team should have all the tools to build the best performance setup engine。
I. General causes: problematic mobility incentive models
dYdX used its original token to pay market marker as an incentive to return to domestic service. This leads to a negative cycle: the marketer wash trafficking/fake trafficking to get a token, and immediately sold it, creating constant pressure to dig and sell。
By contrast, Hyperliquid has not returned to domestic service much, and for large households and high-frequency traders: the real importance is only the slide points and the financial rates, and the fees themselves are not so important. This is similar to people who prefer to pay high Gas fees on the main network to get lower rates of borrowing. And the problem of fees can be solved through the VIP hierarchy. In addition, Hyperliquid adopted the HLP Treasury model, whereby the user deposits the asset to the counterparty of the trader to earn the cost, and the agreement is not subsidized by a token。
As early as 2022-23, analytical data in the market indicate that there are serious doubts about the sustainability of this form of token subsidy:
the bulk of dYdX ' s trade volume is attributed to a trade-drilling process similar to Ponzi, in which: 1) users begin mining coins (usually using delta neutral strategies) prior to their introduction; 2) they are valued very high at the outset due to the large volume of transactions; and 3) higher token prices stimulate more transactional volumes。
So despite the fact that dYdX generated billions of dollars a day. However, such activities cannot be sustained in the long term and are highly dependent on token prices and sustained incentives. Ultimately, dYdX will exhaust fuel to sustain trading activities, and long-term sustainability will depend on organic demand. Data for 2022 already show that only about 10 per cent of dYdX transactions come from organic demand, and most of the rest is likely due to token incentives。
II. A rigid product strategy
dYdX did not go to any new trading market for two years。
Hyperliquid, on the other hand, keeps up with market hot spots and trends, and keeps trading in new online currencies, not only to satisfy current users, but also to attract a large number of new users who want to trade hot assets, leading to dYdX users being lost because they are “no money.”。
Polynomial's foundationer also refutes the view that “the mainstream currency is only important (because the dydx is long-term only btc, eth, sol and dominates most transactions)”: “perp traders often switch between different markets, and new markets are important tools for attracting more traders.” He said, for example, if only three coins were important, then the GMX or the Jupiter on Solana should have been a winner in the sustainable contract field。
III. Wrong strategic focus
dYdX devotes a lot of effort to building its own Cosmos chain. This decision has not brought any real value to the traders themselves。
Many people in the community think this is more of a dYdX team, "To solve legal problems in America." Instead, product decision-making is based on user needs。
Background to compliance issues
before moving to cosmos, dydx operated on the L2 solution of the Ether Workshop (dydx v3), although the final settlement of the transaction took place on the Ether Workshop, its day-to-day operation depended on a centralised component, Sequencer, which received user trade orders, sorted, bundled and operated by dYdX Trading Inc. (United States entity). The legal risk here lies in the fact that, from the perspective of US regulators, if an entity controls the core of a transaction, it is tantamount to operating an exchange, which may be defined as an illegal exchange – dYdX Trading Inc – providing leverage derivative transaction services to United States users without authorization, in violation of relevant financial regulations。
After moving to cosmos, the new dYdX chain no longer has a central Sequencer, replacing it with a network of globally distributed, independent validars who run networks, process and broker transactions, while dYdX Trading Inc becomes the role of the technology software service provider。
V. Team issues
in 2023-2024, dydx experienced great team upheavals, when the foundationer Antonio Juliano left office and came back in six months, with large-scale changes in middle- and senior-level staff, and in a later postcast, Antonio Juliano shared the time he spent and was tired of dealing with people issues and eventually had some burn out, which was the window during which heperlikid seized market opportunities。
5.2 GMX v2 roll-out why it did not meet expectations — once the largest organic flows, but mainly lack speculative expectations
GMX v1 Design logic: GMX introduced v1 at the end of 2021, using the GLP single pool model as a source of counterparty liquidity, and the GLP pool covers a wide range of assets (e.g. BTC, ETH, stable currency, etc.) and is an adversary to all transactions, earning transaction fees and losses. GMX offers the price of the mark, allowing the user to trade at index prices given by the predictor, so that there is no slide point for the theoretical transaction. This design brings a fluid experience close to a centralized exchange: users open or flat at market index prices without fear of price shocks due to insufficient liquidity. At the same time, the GLP pool provides traders with up to 30 times the leverage trade and reduces errors from large fluctuations by renewing prices through prophecies. This “zero price shock” sustainable contract model once became a unique offer for GMX。
v1 structural problems:
1) THE LP, AS THE COUNTERPARTY TO THE TRANSACTION, IS EXPOSED TO SIGNIFICANT MARKET RISKS AND RISKS OF UNILATERAL EXPOSURE LOSSES IN THE EVENT OF CHRONIC IMBALANCES IN MULTIPLE OR EMPTY POSITIONS. FOR EXAMPLE, IF THE MAJORITY OF USERS DO MORE THAN ONE ASSET AND THE PRICE RISES SHARPLY, THE GLP WILL HAVE TO PAY THE USER FOR PROFIT, WHICH COULD LEAD TO SIGNIFICANT LOSSES AND EVEN DEPLETION OF THE POOL。
2) Effective multi-empty balance and arbitrage could not be achieved because v1 did not use the traditional funding mechanism to limit hold time by paying borrowing fees on both sides. This means that, in extreme cases, the GLP pool may have suffered huge losses due to open imbalances, and that the LP's confidence has collapsed
3) THERE IS A RISK THAT MECHANISMS FOR PREDICTING MACHINE PRICES WILL BE MANIPULATED. IN SEPTEMBER 2022, THERE WAS AN ARBITRAGE EVENT USING THE GMX ZERO SLIDE POINT FEATURE: TRADERS BOUGHT AVAX AT ZERO SLIDE POINTS AND RAISED THE AVAX PRICE ON AN EXTERNAL CENTRALIZED EXCHANGE, WHICH WAS THEN SOLD AT GMX AT HIGHER PROGNOSIS PRICES, THUS MAKING A RISK-FREE GAIN OF ABOUT $5-0.7 MILLION. BECAUSE GMX PRICES ARE DIRECTLY LINKED TO THE EXTERNAL MARKET, THE DEALER SUCCEEDS IN ARBITRAGE WITHOUT PAYING A SLIDE POINT COST THROUGH A CYCLE OF “BUY-IN FIRST AT A LOW GMX PRICE, PUSH-UP THE PRICE EXTERNALLY, AND EVENTUALLY SELL-OFF AT A HIGH GMX PRICE”. THE GMX TEAM SUBSEQUENTLY HAD TO SET HOLD LIMITS ON ASSETS SUCH AS AVAX TO PREVENT SIMILAR MANIPULATIONS FROM OCCURRING AGAIN。
4) GMX v1 has very limited types of transactional assets that are supported due to different risk models, limiting the growth of GMX users。
GMX v2 Key improvements:
In response to the above-mentioned challenges, the GMX team officially came on line on 4 August 2023 in version v2。
Multi-pool isolation model: GMX v2 broke the single GLP pool model and introduced the “GM Pool” multi-liquid pool structure, each of which corresponds to a market or asset supported by the LP that provides liquidity for the asset. The GLV (GMX Liquidity Vault) Treasury was launched to optimize asset allocation across multiple markets. This isolation design separates high-risk assets from the risk exposure of mainstream assets。
Dynamic costs and funding rates:
1)v2 introduction of a funding mechanism and dynamic price impact fees to reconcile the multi-space hold balance and increase efficiency in the use of funds. funding rates are adjusted to the multiple ratio, and when the size of the dominant side (multiple or empty) space reaches a threshold of 70 per cent relative to the pool capacity, the rate increases sharply, magnifying the risk-free arbitrage space and directing the fund to balance the market。
2) v2 retained a specific loan fee (Borrow Fee) and continued to charge time costs to hold the warehouse to prevent long-term occupancy of liquidity. Compared to v1, where both parties charge a loan fee at the same time, v2 is used only to limit occupation and is no longer a balancing tool。
3) The most important change is the increase in price shock costs (Price Impact Fee). In v2, large openings charge a percentage of the price impact fee based on size, the higher the size, the less the current multi-space balance. This mechanism simulates the slip point effect in order book transactions: the larger the space, the greater the order book level, the higher the cost. By making the impact of the trade on the pool obvious as a cost, GMX v2 increases the cost of maliciously manipulating prices, reduces the likelihood that the price of the predictive machine will be drawn up in an instant, and protects the LP from losses caused by the “large direct hit price.”。
More efficient prophecies and implementation: GMX v2 continues to work in depth with Chainlink to access high-frequency prophecies such as Chainlink Data Streams to achieve lower-delayed price upgrades。
Income distribution and sustainability: v2 has also been adjusted for income distribution, starting to retain a fee for agreements to support sustainable development. This pattern has led to a lack of stable sources of income for the project manager and the vault. v2 Transfer 8.8% of the handling fee to GMX DAO as future development and operation reserve; 1.2% to Chainlink for better service. The remaining approximately 90 per cent still gives back to LP and GMX pledge holders (specific percentages pending governance decision). This change, while slightly reducing the share of currency holders, has contributed to the long-term stability of the operation of the agreement。
GMX v2 Why didn't you get up:
Market environment:
the v2 was just launched with the whole perp dex coming up with a new round of competition. As a result of the migration of the old 2023 rival dYdX to cosmos and the gradual reduction of the v3 mining incentive, there was a transition period for other agreements to give way to the development window. For example: Synthetix, through its front-end Kwenta, has launched a long-lasting product based on prophecies, and has attracted users through the Optimism chain, Vertex (a hybrid order book based on Arbitrum, DEX), MUX (a convergence protocol evolved by MCDEX), which have radical market strategies (including token air drop expectations, mining, lower transaction costs), while GMX has no tokens and new "story" irritation (even we can directly assume that on GMX it has been the real user oforganic volume)。
By the end of 2023, Hyperliquid began to appear, and Jupiter launched a perp, so GMX v2 market share was further diluted, although volume has been growing at a small rate around $2b, so it can be considered not that GMX v2 was too bad, but that it was too much more radical and new than GMX。
Team and resources:
GMX is a project developed by two anon dev and 10 or so developers, with two solid dev xdev and Saulius at the core of the team, but not at all in public or speaking, so few of them know them。
GMX has not done fundraising, v1 all protocol revenues are allocated to LP and token holder, v2 only a small 10% split into protocol revenues。
SO, IN GENERAL, GMX IS VERY COMMUNITY-BASED。
6. Summary: Differentiated path of the Perp DEX track "mainstream player"
6.1 Hyperliquid Why did he win
The success of Hyperliquid is not the result of a single factor, but the perfect expression of its synergistic innovation at three levels: the core architecture, the business philosophy and the community economy。
Strategicly abandoning the traditional DEX compromise on performance: unlike other generic L2-based competitors who relied on it during the same period when it went online in 2023 (aside from GMX at that time, there were many new products based on OP Ecotrade Mining), the boldest decision of Hyperliquid was to move away from traditional Perp DEX compromise on performance, but to build its own system (even though it has been a central dispute) to sustain a fully chain-based, high-performance, low-delayed, medium-sized CLOB that provides the basis for a business environment。
The subversive philosophy of the “transparent market”: the theory of the “transparent market” by Jeff, founder of Hyperliquid, is its core philosophical innovation, allowing marketers to effectively distinguish between real trading intentions (non-toxic) and high-frequency arbitrage attacks (Toxic blow) and thus dare to provide a narrower, worse and deeper mobility. In the end, he sacrificed the interests of some “place privacy” whale users and high-frequency arbitragers in exchange for the most healthy pricing and trade enforcement environment in theory。
HLP + Airdrops to build strong community economic engines: Hyperliquid also demonstrates great skills in cold start-up and community building. The HLP Treasury was designed not only to provide critical “pressure rock” mobility in the early stages of the agreement, but also to involve ordinary users by democratizing the benefits of professional marketing. Its large and precise token drops have succeeded in transforming the early user from a “mineman” to a “shareholder” and avoiding the dYdX “deep and sell” ponzi token model. Together with a radical model that uses almost all of the revenues of the agreement for currency buy-backs, Hyperliquid has built a powerful community flying ship that is highly bound to the interests of the currency holders。
6.2 Pre-car: dYdX lessons and GMX highlights
dYdX failed: fed back by "Ponche Incentives" and disconnected from user needs. The fundamental problem with dYdX is the reliance on unsustainable token subsidies to create a false boom in trade volumes. This model attracts a large amount of “mercenary capital” and, once incentives are reduced, users and mobility are quickly lost. Moreover, the rigidity of its product strategy, its long absence of hot new assets and subsequent strategic decisions to migrate to Cosmos in order to avoid legal risks have not resulted in direct value-added for users, ultimately losing their pre-emptive advantage in intense market competition. The central lesson is that token incentives that are not supported by real user needs will eventually burn out。
Value of GMX: Successful exploration of organic flows and product models. Although GMX v2 did not last brilliantly, it still has an important place in the history of DEX. The GMX v1 GMP model is a great innovation that streamlines liquidity provision (LP) to unilateral asset deposits, significantly reduces the participation threshold for ordinary users and successfully captures a large number of “organic” user flows seeking simple, low-threshold trading experiences. After the FTX thunderstorm, GMX took over a large number of users who had fled from CEX with its decentralized trust advantage. The success of GMX has proved that, in addition to the pursuit of extreme performance, identifying and serving the unique needs of specific user groups is equally key to success。
6.3 Overall strategy of new competitors: seeking breakthroughs in differentiation
Faced with the dominance of Hyperliquid, emerging competitors, in addition to adopting a rather aggressive low-cost strategy (Lighter ' s 0 handling fee) and a currency drop-off strategy, also have different strategies, mainly in the following directions:
Philosophical rivalry: represented by Aster, directly challenging Hyperliquid's philosophy of “full transparency”. It introduces the "Hidden Orders" function and uses "Simplicit + Professional" A two-model structure designed to attract large, privacy-sensitive traders who are afraid of being snipered by high-frequency transactions, while serving users of Degen who seek leverage。
Differences in technology pathways: In the name of Lighter, pursue "absolute technological fairness". Using ZK-proof technology, it aims to create an order book that is fully verifiable and resistant to censorship, and solves the problem of the "black box" that unites the dYdX v3 engines. Its aggressive strategy of zero fees is its core weapon of market share。
Experience and ecological integration: represented by EdgeX and Aster. EdgeX is the main move-end priority, which seeks to provide the smoothest slide app experience and lower the CEX user migration threshold. Aster, on the other hand, deeply bound BNB ecology, working with front projects like PancakeSwap, trying to capture flows and users through ecological synergies。
6.4 CLOB, AMM, WHAT TO DO
Figure: Agreements with the highest margin are those with less liquidity deposited but very active transactions, leverage multiples / frequent use of bonds, such as Avantis and SynFutures, Aster although the ratio of TVL is relatively large, indicating its "transaction activity" And it's high, but it's probably a little more stable than those little, but high-trade agreements。
Source of liquidity and dependency: AMM Perp is centred on a pool of assets such as USDC/USDT, which serves as a direct countervailing board for all transactions. LP funds are thus “silent” in the pool, where the TVL, which naturally forms part of the agreement, can receive passive gains such as fees, fees, etc., even if the volume of transactions fluctuates. By contrast, CLOB perp's blending logic is similar to that of a centralized exchange's order book, where funds usually exist in the form of “guarantees” from traders, the depth of which is created by traders willing to hang up and pro-marketers, so that money flows with the activity of the transaction and does not sink naturally. This difference determines their source of liquidity: AMM attracts passive LPs, while CLOB relies on high-flow capital flows, only returns, and profit-driven marketers who may move at any time. Therefore, the CLOB model is extremely liquidity-intensive and requires a professional marketer to provide a continuous “worst point + full order book” that will be evacuated if there is no stable and continuous volume of transactions。
CAPITAL EFFICIENCY, INCENTIVE MODELS AND SYSTEM DESIGN: THE DESIGN OF THE CLOB PROTOCOL IS NATURALLY ORIENTED TOWARDS LOW-CAPITAL DEPOSITION. FIRST, IT SUPPORTS HIGH LEVERAGE AND CROSS-GUARANTEES, SIGNIFICANTLY INCREASING THE USER'S FINANCIAL UTILIZATION, AND TRADERS CAN OPEN LARGE WAREHOUSES WITH LITTLE COLLATERAL, WHICH MEANS THAT THE SUPPORT OF TRANSACTIONS DOES NOT REQUIRE AS MUCH “FREE CAPITAL” AS THE AMM MODEL. HIGH FINANCIAL EFFICIENCY HAS LED DIRECTLY TO LOW FUNDING. SECOND, IN TERMS OF INCENTIVES, AMM CAN DIRECTLY SUBSIDIZE LPS IN NEGOTIATED TOKENS TO ATTRACT CAPITAL, WHILE THE MAIN PLAYERS IN THE CLOB (TRAFFICKERS AND MARKET TRADERS) ARE LESS SENSITIVE TO THE INCENTIVES FOR TOKENS, WHICH ARE MORE FOCUSED ON MARKET MECHANISMS AND TRANSACTION COSTS, MAKING IT VERY DIFFICULT FOR THEM TO BECOME INSTRUMENTS FOR SETTLING LONG-TERM FUNDS. FINALLY, FROM THE POINT OF VIEW OF SYSTEM SECURITY, THE CLOB AGREEMENT RELIES ON THE LIQUIDATOR AND BOND MECHANISMS TO MAINTAIN SYSTEM SECURITY RATHER THAN A LARGE PRE-SET INSURANCE FUND OR COUNTERVAILING POOL. THIS MODEL ITSELF DOES NOT REQUIRE LARGE-SCALE FUNDING TO BE PRE-POSITIONED IN THE AGREEMENT, THUS FUNDAMENTALLY DETERMINING THAT IT WILL NOT AUTOMATICALLY FORM A LARGE VOLUME OF TVL。
Ultimately, we think that entrepreneurs need to be “compulsory, new asset cover, liquidity depth, price fair” The four dimensions trade-offs of priority rankings will make it possible to find the best path for their positioning and objectives。
RECOMMENDED READING:
Bloomberg News: Money is the enemy, read a book about how Hyperliquid managed to gain market share
THE EPIC CRASH! BTC, SAFE, $100,000. WHY IS THE MARKET FOR MONEY BEING BLED
Cheonan Memecoin on the other side of the party: 1.4% graduation rate, Big Whale over $3.5 million
