Organization is needed during a recession

There are no secrets in the crypto market, only the speed of dissemination.

A follow-up article should indeed be written for Perp DEX. Nearly 20 projects are set to embark on the TGE path in Q1 2026. From Aster's trading volume to StandX's order book points, the noise being projected onto the market is unsettling for everyone.

This shouldn't lead to doubt about Hyperliquid. The synergistic flywheel between HyperEVM and HYPE failed to materialize, but Lighters couldn't crush the new king. We're so focused on firsthand information about the Binance vs. FTX battle that the Perp DEX War has become a secondhand memory.

Trapped in a New Chapter of HYPE Lighter is not Lighter, Hyper is more Hyper Lighter is undoubtedly a successful project. After Hyperliquid proved its worth in the Perp sector, it successfully gained a foothold, creating the established impression that Hyperliquid is Binance's competitor, and Lighter is Hyperliquid's competitor. A turtle can't keep stacking itself. Considering the competitive landscape of exchanges, OKX, outside of Binance, faces exceptional difficulties operating OKB. Coinbase's market capitalization is more than five times that of Kraken. Trading has a natural monopolistic effect; even the second-largest player in the industry cannot achieve self-sustaining growth. Perp DEX has already entered a red ocean phase, making large-scale market growth impossible. What remains is a zero-sum game for TGE. First, let's set the record straight about BNB. Binance's main site and BNB Chain require a connector, something HYPE has yet to accomplish.

Image description: Comparison of Binance and Hyperliquid

Image source: @zuoyeweb3

Project teams need the "listing effect" of Binance, so they are willing to pay the most expensive channel fees, from spot and futures trading on Binance's main site to pre-market trading, and even Alpha for wallets and EASY Residency for YZi Labs. Binance needs projects to engage in "traffic management" outside its main platform to delay the post-listing death curve. Therefore, BNB Chain's "children" (such as PancakeSwap and ListaDAO) need to accept project assets and use operational actions to sustain the next wave of listing effects. This is the true role of BNB and BNB Chain for Binance, but this is predicated on the existence of a listing effect on Binance's main platform, which ironically led to Hyperliquid's self-breakthrough. To correct this logic, Hyperliquid's rise is proof. Perp has long followed the established logic of "spot first, then futures," but Hyperliquid does not follow this approach. Instead, it focuses on "trading Perp" itself. This is based on the fact that the entire industry, especially exchanges, can no longer guarantee a listing effect, and mainstream trading has become an industry consensus. OKX and similar tokens cannot maintain project prices after listing. Lacking both liquidity and an on-chain DeFi ecosystem, they can only act as secondary distributors for project teams. OKB lacks on-chain value capture capabilities and can only be used as in-site coupons, losing its fundamental function as a token. Hyperliquid provides traders with a professional experience. After the FTX crash, HyperCore became synonymous with on-chain trading. The larger the transaction, the more necessary Hyperliquid liquidity support becomes. To add a point, Aster and CZ promoted "privacy/dark pool trading," but failed to shake Hyperliquid's market share. Aside from a few money laundering needs, privacy is not a priority for traders, and Binance's main site requiring KYC is irrelevant. The truly fundamental and irreversible trend is that people only trade mainstream cryptocurrencies such as BTC/ETH. New coins only have a certain trading volume when they are listed, from BeraChain to newer L1 coins such as Monad and Sonic. The "listing effect" that top exchanges relied on for survival, and the transaction fees that second- and third-tier exchanges depended on, have all become history. This may be the real reason behind exchanges' self-operated Perp DEX and their focus on trading everything, including traditional finance (stocks, forex, and precious metals). However, none of this will harm Hyperliquid's liquidity. In the article "RFQ Architecture: Market-Level Market Makers, a Belated Alternative Choice for Perp DEXs," I pointed out that Variational's advantage/feature lies in opening up its market maker architecture to ordinary retail investors, which is a genuine market demand. However, most Perp DEXs' volume-boosting competitions are a kind of "early-stage debt," waiting to be cashed out at the TGE (Trading Execution) time. If you think Bitget can seize Binance's derivatives market with its gold-themed marketing, then StandX's order book points can challenge Hyperliquid's market share. Markets with better liquidity are more likely to become the daily arena for traders. In the Perp DEX space, where the listing effect is even less pronounced, the profiles of arbitrageurs and real users are even more divergent. Don't forget, most people are still relying on CEXs to buy two tokens to win, let alone actually trading Perp on-chain.

Image description: Perp DEX trading volume

Image source: @TheBlock__

Lighter accepts foreign exchange, and Edge builds its own Chain. Without surpassing HyperCore's liquidity, it has inevitably become complex to support its narrative, which will conversely reduce its token's ability to capture value, thus evolving into something similar to OKB—an in-site coupon.

• Theft Group: KuCoin (2020), ByBit (2025, stolen 1.4 billion+ USD)

• The Crash Group: BitMEX 2020·3·12 Unplugged Network

• The Reputation Group: Huobi—Sun's pGala Incident

In addition, only SBF's FTX was killed by Coindesk's FUD, and lost because it was less experienced than CZ. From this perspective, 1011 is just an annual routine for established exchanges like Binance. Now is a rare moment of relaxed regulation from the SEC. Binance has officially listed in Abu Dhabi, Hashkey has completed its Hong Kong IPO, and Hyperliquid is not in a state of being unregulated. Even though the Hyperliquid team insists on a "decentralized" facade, it can refer to Binance's separate-entity regulation, bringing its core clearing portion under the regulatory framework. The law is an entry barrier for the weak; compliance is the price paid for the strong to gain access. Public chains need strong operations. Turning back the clock, retro is becoming the main theme. The listing effect on CEXs and the volume-washing effect on DEXs are both declining. Hyperliquid's liquidity is not a problem; HYPE has crossed the cutoff line and will not become the next FTT. This isn't the whole story. HYPE remains misaligned with the HyperEVM ecosystem, failing to create a "false prosperity" similar to BNB's ecosystem, rather than a DeFi system like the Ethereum mainnet. This phenomenon has already been detailed in Misalignment: Ethereum Bleeding, Hyperliquid Stalling, and won't be elaborated upon here.

This article focuses on the causes of this phenomenon and where the solution lies.

The relationship between rocket fuel and thrust is logarithmic, and so is the relationship between HyperCore trading volume and HYPE's price. Limited to a chemical rocket architecture, this means that fuel mass needs to increase exponentially to achieve a linear increase in speed. Currently, HyperCore trading fees support HYPE's price, but HyperCore's trading volume cannot increase indefinitely, especially with Binance and Perp DEX diverting traffic.

Image description: Token price and trading volume

Image source: @zuoyeweb3

Note that the above is only for illustrating the changes in price. HYPE's initial price was in the single digits, but it only truly stabilized at $30, which is the initial fair valuation "in the public eye." The trading volume has also been modified to better illustrate the relationship between the token price and HyperCore's trading volume.

Note that this doesn't contradict the idea that Perp DEX can't kill Hyperliquid. In the crypto world, the only assets are BTC/ETH, and the overall Perp market size has already peaked. Let's analyze the Hyperliquid team's "laissez-faire" approach. The reason might not be complicated, but it's harsh enough. The Hyperliquid team still uses BTC as the public chain standard and FTX as a reference for derivatives exchanges, learning from the good and avoiding the bad. USDH's auction ticketing system is very telling. Hyperliquid's official nodes don't participate in voting, don't designate any team, and don't provide official liquidity support. The current situation is that USDH lacks sufficient development potential and doesn't have a significant advantage over USDC and USDe. The Hyperliquid team's "laissez-faire" approach is currently HyperEVM's biggest problem. This isn't to say that Hyperliquid lacks the willingness and ability to operate. You might recall that Hyperliquid first gained widespread attention because of Meme, and its subsequent Unit also functioned as an "official" cross-chain bridge. USDC also long relied on Arbitrum to directly connect to HyperCore. However, all of this was limited to HyperCore. Perhaps in the Hyperliquid team's view, HyperCore is the product, and HyperEVM is the ecosystem; the product requires strong operation, and the ecosystem needs to be sufficiently open. Unfortunately, times have changed. Today's public chains are more like super apps, and similar to internet giants, there haven't been any new, universally appealing products for years. TON/Monad/Berachain/Sonic are all examples of this, and even Plasma doesn't resemble a stablecoin public chain at all; it's more like a Vault come to life. The excessive maturity of on-chain infrastructure has led to a lack of direct network effects for public chains/L2. They either need to focus on existing resources like ETH L1/Solana, introduce RWA as a SaaS variant like Canton, or be artificially maintained like BNB Chain. However, Jeff, wanting to avoid the disasters caused by FTX's aggressive operations, opted for a conservative strategy in the HyperEVM ecosystem. This resulted in projects relying solely on community self-governance, unable to build interaction with HYPE, leading to a rapid rise and fall after HYPE distribution. Even HyperCore's operations follow a minimalist principle; you can follow the Hyperliquid, Jeff, and Hyper Foundation accounts, which show virtually no interaction with project teams. This situation was suitable for the DeFi Summer of 2017 or 2020, when there was a lack of corresponding niche products on the blockchain. Creating one meant instant traffic and profit, and there was even excessive speculation about the token. These conditions have now disappeared. Furthermore, Hyperliquid doesn't even need to drastically change its style; simply learning from BNB's approach is enough to build its own unique growth flywheel. HYPE's way out lies in imitating BNB. Image Description: Relationship between Ecosystem and Applications Image Source: @zuoyeweb3 Observing the public chains/L2 blockchains that are currently surviving, it's not simply a matter of a thriving ecosystem and a strong ability to capture the value of the mainnet token. The reality is far more complex than theory. Only ETH itself fits the established impression; the rest cannot be easily categorized. In other words, ideals are ideal, but they never manifest in reality. Single Application Group: TRON and Polygon both survive on a single application, the former with USDT and the latter with Polymarket; Technology-Driven Group (Remnants of an Era): Polkadot and ATOM, advanced in technology and concept, but their tokens cannot capture economic value; Pure Token-Driven Group: Monad/Berachain, need no further explanation, their historical mission is complete after issuing the token; Ecosystem Prosperity Group: Solana and Ethereum; Existentialist Group: Ripple, Avalanche, existence is everything, everything is existence; Further subdivisions include Binance's main site and HyperCore. All of them are in the "best of the best" category, their tokens have extremely strong value capture capabilities, and their products are multi-functional: spot/Perp trading, wealth management, staking, and even transfers. They are not public chains, but they are better than public chains. BNB Chain's value lies in being a component of Binance's main site as a "public chain." Even after the departure of Evanova and the arrival of Rong, Binance has not given up on BNB Chain for this reason: many things are easier to do on a public chain than on an exchange, and the value of traffic is long-term. However, Hyperliquid's HIP-3 is also a spillover of HyperCore liquidity, essentially competing with HyperEVM for traffic entry points. This traffic battle is now occurring not only between HIP-3 project teams but also between Builder Code and HyperEVM project teams. Hyperliquid aims to become a liquidity AWS, but its internal organizational structure is not clearly defined. BNB Chain isn't the perfect form Binance envisions, but it's sufficient for Hyperliquid to learn from. BNB Chain is a distribution channel for Binance's main site and cannot generate its own revenue without strong operations, let alone support Binance itself. However, it's adequate for HyperEVM at its current stage. There's a possibility of moving forward between minimizing operational costs and maintaining HyperEVM's openness. The failed HIP-5 proposal, which "handpicked" leaders in lending, swaps, and LST, was too drastic, and using HYPE to iterate and repurchase project tokens is also unfeasible. Ecosystem collaboration doesn't violate any principles. The Hyperliquid team rarely interacts with any project teams, perhaps preferring off-chain collaborations like the MM alliance, but on-chain exposure is still necessary. If even the most basic HyperEVM operations aren't implemented, we'll likely see HYPE at around $50. Lacking the imaginative potential of HyperEVM's network effects, HYPE will lose its exponential growth potential. Without HyperEVM's support, HyperCore would need liquidity to reach OKX's level, but that still wouldn't build a HYPE flywheel. In short, for the on-chain ecosystem, the "decentralized" HyperEVM has no way out. Conclusion: Hyperliquid is lighter and more capital-efficient than Binance, Lighter isn't any lighter, and Aster is eager to become complex. TGE, or similar Perp DEXs like Aster and Edge, will all develop their own L2/public chains as part of their valuation-boosting plans, just as PumpChain's is part of its token issuance plan. Now, Hyperliquid is becoming more complex, a crucial moment for it to leverage its scale advantage for future growth. As mentioned before, Hyperliquid isn't particularly adept at innovating specific product types (Jeff has also worked on prediction markets), but its strength lies in its engineering and composability. If FTX isn't a good model to learn from, then BNB Chain is a good one to emulate.