Recently, the upcoming TGE of Hyperliquid has drawn renewed attention to the Perp DEX track. In the previous cycle, the performance of Perp DEX was unsatisfactory, failing to become the 'star of on-chain liquidity' that people expected. However, since the end of last year and the beginning of this year, Perp DEX protocols like Hyperliquid, Drift, Surf, and Orderly have emerged, while the established leader dYdX has also become active again. With the rapid rise of the meme track, the power of on-chain liquidity has further opened up new opportunities for the Perp DEX market.
Memecoins lead the new cycle, on-chain liquidity gathers
In this cycle, the performance of meme coins is extremely eye-catching, with on-chain golden dogs appearing frequently. MOODENG, SPX, and GOAT have not only become potential meme coins in various sectors during this meme craze, but they have also attracted more and more players to join the on-chain space. Even though on-chain players joke that they are doing real 'POW' every day, transitioning to various battlefields for 'PVP', it cannot be denied that liquidity has gradually begun to concentrate on-chain, with an accelerating trend. Among them, MOODENG and GOAT have also caught the attention of CEX listings like Binance.
In addition to the emergence of golden dogs, the exaggerated increase in on-chain liquidity is also directly reflected in the data of meme-based infrastructure. For example, the well-known Pump.fun started its 'main upward wave' at the end of August, with the number of listed tokens continuously reaching new highs. This indicates that the current Crypto native users have a great enthusiasm for on-chain memes, and it reflects the market liquidity concentrated in on-chain memes.
In addition to Pump.fun, there is also the breakout moonshot as a major liquidity gateway. As Murad gave his speech on 'memecoin supercycle' at Token2049, Moonshot began to break out alongside MOODENG. Moonshot not only has a strong listing effect, becoming the 'Binance' on-chain, but its fiat deposits have also opened a new Mass Adoption windfall, contributing to the growth of web2 traffic for crypto. By the end of September, Moonshot's daily expenses rapidly increased from about 3681 USD to 24,000 USD, with daily trading users rising from 396 to 3458. Its cumulative figures have also been steadily increasing, with an accelerating trend in its slope. The success of Moonshot further concentrated liquidity on-chain.
Perp DEX on-chain liquidity beneficiaries
Behind the explosive popularity of meme infra and memecoins on-chain, Perp DEX has naturally become a beneficiary of this on-chain liquidity aggregation. Perp DEX did not stand out in the previous cycle, but has gradually gained attention from the English-speaking community to the Chinese-speaking community during the recent market recovery. On one hand, due to the ample narrative from the last DeFi cycle, Perp DEX did not have a sufficient stage to shine; on the other hand, this round's on-chain meme market has performed better than the secondary performance of CEX listings, leading retail investors to prefer DEX with higher odds and more diverse gameplay.
Dydx: An excellent negative teaching material
In decentralized perpetual trading projects, DYdX is the earliest big brother. Since the project's establishment in 2017, DYdX has stood out in terms of 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. At the beginning of this cycle, it undoubtedly became the focus of market attention. However, since this year, Dydx's development has been increasingly inadequate. Both its protocol revenue and token price have been in a severe decline, gradually being caught up by the later Perp DEXs. The specific fundamental changes of Dydx can be reviewed in our previous article: From the perspective of price-to-earnings ratio, is today's DeFi industry overvalued? | Rhythm Finance.
Although Dydx is a 'pioneer' of perp DEX, it has almost become a negative teaching material for Perp DEX 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 about 6%. In this wave of meme craze, Dydx has not gained much benefit aside from announcing a pump, and there have also been recent layoffs and personnel changes, indicating the severity of its decline.
The crypto market is ever-changing, and the yet-to-issue Hyperliquid has quietly taken over the leading position from Dydx.
Hyperliquid: The low-profile top student
Hyperliquid, as the most popular Perp DEX in the English-speaking area, has always been relatively 'low-profile'. It was originally built on Tendermint, allowing users to query orders, cancel, trade, and build order books on-chain.
In terms of technical improvements, the introduction of the HyperBFT optimization algorithm in May 2024 increased the TPS from the previous 2W based on Tendermint to 10-20W, achieving a leap in magnitude. The introduction of HyperBFT allows users to trade more smoothly, but there is still a certain gap compared to CEX (e.g., Binance's 140W TPS) in trading processing capability. At the same time, Hyperliquid's ambitions go beyond just being an ordinary Perp DEX. Hyperliquid is also actively developing an L1 public chain, aiming to build a low-latency, high-throughput public chain that features high-frequency trading and order book characteristics, becoming a 'trading' public chain.
Hyperliquid is also actively embracing meme culture and has become the biggest beneficiary of this meme craze. Compared to CEX, Hyperliquid offers more meme spot options for users to choose from. This gives Hyperliquid a significant advantage in memes compared to CEX listings that arrive late when the meme coin market cap reaches billions.
According to Dune, in the past three months, Hyperliquid has achieved a rise as a latecomer, becoming the largest market share Perp DEX, occupying 40% of the market share and becoming the undisputed leader. Its TVL has also seen explosive growth this year, now reaching nearly 670 million USD.
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. With the approach of the $HYPE TGE, millions of users will join Hyperliquid, injecting more capital into its ecosystem. This is favorable for the spots already listed on Hyperliquid.
However, the launch of Hyperliquid EVM may have some negative impressions on its spot trading. If the EVM launches 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 scenario, the current native spot tokens may experience a certain degree of dilution due to the influx of new tokens on EVM.
What is everyone playing on Perp DEX?
Hyperliquid has shown a strong wealth creation effect, yet the discussion remains focused on the English-speaking community. According to Hyperliquid's spot trading volume ranking, it can be seen that under the premise of catching up with CEX trading experience, tokens with increases of over 100% already provide an experience that is comparable to CEX. Instead of trading contracts on CEX, it's better to trade spots on DEX.
Low market cap and highly discussed tokens in Hyperliquid include:
$SCHIZO
SCHIZO, as a representative of viral memes on Solana, originally means 'schizophrenia'. Its quirky image characteristics have strong virality among many memes. SCHIZO zeroed out in August this year, but started to rise again in October and has now reached a new high with a market capitalization of 4.72 million USD.
$CATBAL
In the Hyperliquid ecosystem, the cat category of memes, particularly the mysterious cat, has become a hot spot for meme dissemination, currently with relatively few followers, but a strong price trend. It started to rise on October 15 and has now achieved about 30 times growth, reaching a market capitalization of 6.92 million USD.
$JEFF
JEFF is a character-type meme on Solana and is also the most undervalued meme spot token on Hyperliquid. JEFF hasn't experienced the exaggerated hundredfold increase like other memes, but with a market cap of 4.76 million, it still has room for growth. The current price hovers around 4.8 USD, showing potential to hit new highs.
$NOCEX
NOCEX, as the spot launched on Hyperliquid, has the ticker 'NO CEX', which is quite ironic. It is precisely this ironic type of ticker that has attracted more attention from the community. From October 2 to now, NOCEX has achieved a hundredfold increase, with a current market cap of 687,000 USD, and after reaching 2.3 USD, it has seen a pullback.
$PURR
When Hyperliquid launched its spot features, it airdropped MEME coin - PURR to early users of the platform, which was also the first spot token listed on Hyperliquid. The current price trend is strong, nearly doubling since the beginning of October.
