Daily increase of over 1000%? Perp DEX steps into the eve of liquidity explosion

Author: Raymond, BlockBeats

Recently, Hyperliquid's upcoming TGE has drawn renewed attention to the Perp DEX space. In the last cycle, the performance of Perp DEXs was disappointing, failing to become the "on-chain liquidity star" that many had envisioned. However, since the end of last year and the beginning of this year, Perp DEX protocols such as Hyperliquid, Drift, Surf, and Orderly have emerged, and the established leader dYdX has also become active again. With the rapid rise of the meme sector, the power of on-chain liquidity has further opened up new opportunities for the Perp DEX market.

Memecoin Leads the New Cycle, On-Chain Liquidity Accumulates

In this cycle, the performance of meme coins has been extremely eye-catching, with on-chain meme coins appearing frequently. MOODENG, SPX, and GOAT have not only become potential meme coins across various sectors during this meme craze but have also attracted more and more players to the on-chain space. Even though on-chain players jokingly claim they are doing real "POW" every day, battling in various arenas for "PVP," it is undeniable that liquidity is gradually accumulating on-chain, with even an accelerating trend. Among them, MOODENG and GOAT have also caught the attention of CEX listings like Binance.

In addition to the emergence of meme coins, the data from meme-related infrastructure directly reflects the exaggerated increase in on-chain liquidity. For example, the well-known Pump.fun began its "main rising wave" at the end of August, with the number of listed coins continuously hitting new highs. This indicates that today's crypto-native users have immense enthusiasm for on-chain memes and reflects the concentration of market liquidity in on-chain memes.

Besides Pump.fun, the equally popular Moonshot has become a major liquidity channel. Following Murad's speech on "memecoin supercycle" at the Token2049 conference, Moonshot has also started to gain traction alongside MOODENG. Moonshot not only has a strong listing effect, becoming the "Binance" on-chain, but its fiat deposit capabilities have also opened up a new mass adoption opportunity, creating growth in Web2 traffic for crypto. By the end of September, Moonshot's daily expenses rapidly increased from around $3,681 to $24,000, and daily trading users grew from 396 to 3,458. Its cumulative figures have also been steadily rising, with an accelerating trend in its slope. Moonshot's success has further concentrated on-chain liquidity.

Perp DEX Beneficiaries of On-Chain Liquidity

Behind the explosive popularity of meme infrastructure and memecoins, Perp DEXs have naturally become beneficiaries of this accumulation of on-chain liquidity. Perp DEXs did not stand out in the last cycle, but during the recent recovery of the bull market, they have gradually gained traction from the English-speaking community to the Chinese-speaking community. On one hand, the previous DeFi narrative was abundant, and Perp DEXs did not have enough stage to perform; on the other hand, the current on-chain meme market has outperformed the secondary performance of CEX listings, making retail investors more willing to embrace DEXs with higher odds and more diverse gameplay.

Dydx: An Excellent Cautionary Tale

In the decentralized perpetual trading space, dYdX is the earliest big player. Since its establishment in 2017, dYdX has stood out in 24-hour trading volume and daily active users by adopting an order book model, providing users with comprehensive features including lending, leveraged trading, and perpetual contracts. In the early stages of this cycle, it undoubtedly became the focus of market attention. However, since this year, dYdX's development has increasingly struggled. Both its protocol revenue and token price have severely declined, gradually being caught up by later Perp DEXs. The specific details of dYdX's fundamental changes can be reviewed in our previous article: Is today's DeFi industry overvalued based on P/E ratios? | Rhythm Finance Mirror.

Although dYdX was the "first mover" in the Perp DEX space, it has almost become a cautionary tale for Perp DEXs in recent months. dYdX's market share has gradually been eroded by several other Perp DEXs. After two years of changes, dYdX has not grown stronger but has instead regressed. From an initial market share of 80%, it has weakened to only 6%. During this meme craze, dYdX has not reaped many benefits apart from announcing its involvement in Pump, and there have been recent layoffs and personnel changes, indicating the depth of its decline.

The crypto market is ever-changing, and the yet-to-launch Hyperliquid has quietly taken over dYdX's leading position.

Hyperliquid: The Low-Key Top Performer

Hyperliquid, as the most popular Perp DEX in the English-speaking world, has always been relatively "low-key." Originally built on Tendermint, users can query orders, cancel, trade, and construct the order book on-chain.

In terms of technological advancement, it introduced the HyperBFT optimization algorithm in May 2024, increasing its TPS from the previous 20,000 based on Tendermint to 100,000-200,000, achieving a leap in scale. The introduction of HyperBFT allows users to trade more smoothly, but there is still a gap compared to CEXs (e.g., Binance's 1.4 million TPS). Meanwhile, Hyperliquid's ambitions go beyond just being an ordinary Perp DEX. Hyperliquid is actively developing an L1 public chain to create a low-latency, high-throughput public chain, aiming to become a "trading" public chain characterized by high-frequency trading and order books.

Hyperliquid is also actively embracing meme culture and has become the biggest beneficiary of this meme craze. Compared to CEXs, Hyperliquid offers more meme spot options for users to choose from. This gives Hyperliquid a significant advantage over CEX listings that come late when meme coins have already reached market caps in the hundreds of millions.

According to Dune, in the past three months, Hyperliquid has achieved a rise as a latecomer, becoming the Perp DEX with the largest market share, occupying 40% of the market and becoming the undisputed leader. Its TVL has also seen explosive growth this year, now reaching nearly $670 million.

On October 14, Hyperliquid announced the establishment of the Hyper Foundation to support the development of the Hyperliquid blockchain and ecosystem.

Hyperliquid is also preparing for the TGE of its native token, and with the $HYPE TGE approaching, millions of users will join Hyperliquid, injecting more capital into its ecosystem. This is a positive development for the spot assets already listed on Hyperliquid.

However, the launch of Hyperliquid EVM may create some negative impressions on its spot assets. If the EVM goes live before or during the TGE, there may be a situation where investors from Solana transfer their funds to trade on other EVM chains. In this case, the current native spot tokens may experience a degree of dilution in the form of new tokens flooding in on the EVM.

What Are People Playing on Perp DEX?

Hyperliquid has already shown a strong wealth creation effect, but the discussion remains focused on the English-speaking community. Based on the ranking of spot asset changes on Hyperliquid, it can be seen that under the premise of catching up to CEX trading experiences, token price increases of over 100% already provide an experience that rivals CEXs. Rather than playing contracts on CEXs, it is better to trade spot assets on DEXs.

The lower market cap and more discussed tokens on Hyperliquid include:

$SCHIZO

SCHIZO, as a representative meme from Solana, originally means "schizophrenia." Its quirky image characteristics have strong virality among many memes. SCHIZO hit zero in August this year but began to rise again in October, currently reaching a new high with a market cap of $4.72 million.

$CATBAL

In the Hyperliquid ecosystem, the cat-themed meme, represented by the mysterious cat, is currently a hot topic, with relatively few followers but a strong price trend. It started to rise on October 15 and has achieved about a 30-fold increase, with a market cap of $6.92 million.

$JEFF

JEFF is a character-type meme on Solana and is considered the most undervalued meme spot token on Hyperliquid. While JEFF does not have the exaggerated hundredfold increases of other memes, its market cap is $4.76 million, still leaving room for growth. Its price hovers around $4.8, showing potential to reach new highs.

$NOCEX

NOCEX, as a spot asset launched on Hyperliquid, has the ticker "NO CEX," which is quite ironic. This ironic ticker has garnered more attention from the community. Since October 2, NOCEX has achieved a hundredfold increase, with a current market cap of $687,000, and the price has retraced after reaching $2.3.

$PURR

When Hyperliquid launched its spot functionality, it airdropped the MEME coin - PURR - to early users, making it the first spot token listed on Hyperliquid. Its price trend has been strong, nearly doubling since early October.