Can the soon-to-launch Lighter surpass Hyperliquid?

Recently, Lighter’s trading volume in the decentralized perpetual contract DEX market has risen rapidly, with its daily, weekly, and monthly cumulative trading volume surpassing Hyperliquid, making it the fastest-growing decentralized perpetual contract DEX in this period. However, from a capital structure perspective, Lighter’s TVL and open interest have not expanded in sync with trading volume, showing a clear divergence between trading activity and capital retention, reflecting the current user structure and trading behavior characteristics. At the same time, Lighter completed a $68 million funding round in November, supported by institutions such as Founders Fund, Ribbit Capital, and Robinhood. With both capital inflow and the approaching TGE, its points mechanism and airdrop expectations have become the main catalysts for increased user activity. Against this backdrop, CoinW Institute will conduct a systematic analysis of Lighter’s current development from the perspectives of trading performance, mechanism design, and potential risks.

I. Lighter’s Trading Volume Continues to Lead

1. Top Daily/Weekly/Monthly Trading Volume in the Sector

According to DefiLlama data, Lighter currently ranks first in daily and weekly trading volume among decentralized perpetual contract DEXs. Its daily trading volume is about $11.9 billion, and weekly trading volume exceeds $64.3 billion. In the past 30 days, Lighter achieved about $297.7 billion in perpetual contract trading volume, ahead of Hyperliquid’s $251.1 billion, firmly holding the top spot in the sector.

Source: defillama, https://defillama.com/perps

2. Relatively Low Total TVL

Although Lighter’s trading volume has risen rapidly recently, its capital retention scale remains limited. Data shows Lighter’s total TVL is $1.22 billion, significantly lower than Hyperliquid’s $4.28 billion and also below Aster’s $1.4 billion. Compared to its high trading volume, this relatively low TVL indicates Lighter exhibits amplified trading activity but insufficient capital retention. The divergence between its TVL and trading volume may be closely related to Lighter’s current incentive structure. Lighter adopts a zero-fee model and has not yet conducted its TGE. Driven by points and potential airdrop expectations, some users and strategy traders prefer to increase their participation weight through high-frequency trading. This means the platform’s trading activity relies heavily on rapid capital turnover rather than long-term capital retention.

3. Abnormal Trading Volume to Open Interest (OI) Ratio

With a sharp increase in trading volume and low TVL retention, Lighter’s trading volume to open interest (OI) ratio also shows a significant difference from its competitors. OI is typically used to measure the real position size on perpetual contract platforms, reflecting capital retention and trading sustainability. Therefore, the trading volume/OI ratio can objectively measure the structure of trading behavior on the platform. Currently, Lighter’s OI is about $1.683 billion, with a trading volume of about $11.9 billion, resulting in a trading volume/OI ratio of about 7.07, significantly higher than Hyperliquid’s 1.72 (OI $5.92 billion, trading volume $10.2 billion) and Aster’s 3.02 (OI $2.62 billion, trading volume $7.92 billion). This deviated ratio means the platform’s trading behavior leans towards short-cycle, high-turnover high-frequency trading models. As TGE approaches, changes in the incentive structure will directly affect the match between trading volume and OI, and whether the trading volume/OI ratio can fall back to a healthier range (generally below 5) will become an important indicator for judging Lighter’s real user retention, trading quality, and long-term sustainability.

II. Lighter’s Innovations and Differentiation

1. Zero-Fee and Paid API Strategy

In terms of fee models, Lighter adopts a different approach from mainstream decentralized perpetual contract platforms, which is also one of its innovations. Lighter implements a zero-fee policy for ordinary users—no trading fees are charged for maker or taker orders—greatly lowering the entry barrier and overall trading costs. At the same time, Lighter has not completely abandoned revenue, but focuses its charges on professional needs. For ordinary users, the system defaults to using maker orders with about 200ms delay and taker orders with about 300ms delay, both with zero fees. Professional traders and market makers sensitive to execution speed can opt for advanced accounts, accessing low-latency matching channels via paid API. Advanced accounts connected via API offer stronger performance, with maker and cancel order delays reduced to 0ms, and taker order delay about 150ms, while incurring a maker fee of 0.002%, taker fee of 0.02%, and corresponding trading volume quota.

The zero-fee strategy has effectively driven user growth in the early stage, but also raised concerns about the sustainability of its business model. The approach is somewhat similar to traditional commission-free brokers: reducing front-end barriers to attract users, while monetizing through advanced services or order flow on the back end. For example, Robinhood’s main income does not come from charging retail commissions, but from market makers paying for order flow and execution priority. In this model, while retail traders do not see fees on the surface, market makers usually cover costs by slightly widening the bid-ask spread, resulting in slightly worse actual execution prices for retail—this spread is the hidden cost. However, unlike traditional securities markets, crypto perpetual contract users are more strategic and sensitive to spreads, slippage, and execution speed. If the platform, in order to maintain zero fees, makes trade-offs in matching resource allocation that widen spreads or reduce execution quality versus competitors, it may weaken professional user retention. Also, although the API is regarded as a key future revenue source for Lighter, current community feedback indicates that its API documentation, integration process, and rollout pace still need improvement; whether the fee system can be smoothly established and generate stable income remains to be seen.

2. Dedicated zk-rollup Architecture

In terms of technical route, Lighter did not adopt a general-purpose Layer 2, but instead built a zk-rollup architecture optimized for trading scenarios. It encapsulates core logic such as matching, clearing, and liquidation in its self-developed “Lighter Core,” and generates zk-SNARK proofs through a proof engine customized for trading load, then submits the compressed on-chain state to the Ethereum mainnet. Compared to general-purpose zkVM, this architecture trades off some versatility for targeted advantages in proof generation speed, latency stability, and high-frequency order book execution efficiency. The design goal is to achieve verification while approaching the processing speed of centralized exchanges—that is, completing order matching and confirming execution results within milliseconds.

This dedicated solution provides the technical foundation for Lighter’s verifiable matching and fair execution, but also increases system complexity and introduces more potential risks. For example, after Lighter’s public mainnet launch on October 2, severe outages occurred during significant market volatility on October 10, with failures in core components such as the database. Some users were unable to submit orders or adjust positions during extreme market conditions, resulting in trading and LP losses estimated at tens of millions of dollars. Afterward, Lighter announced technical fixes and points compensation, but the market continues to closely watch its stability under extreme TPS and the sustainability of its self-developed rollup architecture.

Source: Lighter, https://docs.lighter.xyz/

3. Dual Purpose LLP

In liquidity design, Lighter adopts a public fund pool model similar to Hyperliquid’s HLP, called LLP. Users deposit assets into LLP, receive LP shares, and participate proportionally in the platform’s market-making returns, fee income, and funding fee distribution. For ordinary users, the advantage of LLP is that they can share in the platform’s growth without actively market-making, as long as they bear certain counterparty risks. Notably, Lighter plans to further expand LLP’s functions in future iterations, allowing LP shares to be used as margin. This means the same funds can play two roles at once: earning market-making returns and serving as margin for users’ positions—achieving dual utilization of funds. This design aims to improve capital efficiency and enhance internal asset cycling within the protocol.

However, this dual-purpose may also bring greater risk. In one-sided market moves, LLP, as the counterparty, may face floating losses, causing the pool’s net value to drop; if some users are also using LLP shares as margin at this time, their position losses will be further deducted from LLP, amplifying the pool’s downturn. In other words, market-making losses and margin losses can compound, potentially creating a negative feedback loop, and in extreme cases, may even affect the protocol’s overall solvency. Therefore, most mature perpetual protocols separate LP pools from margin assets to avoid double use of the same funds. For Lighter, if it truly plans to enable dual use of LLP in the future, it must establish more prudent and transparent rules for collateral ratio, risk buffers, and emergency mechanisms during extreme market events to avoid systemic risks.

III. Incentive-Driven Trading Peaks and Uncertain Retention

1. Awaiting Market Test Amid Airdrop Expectations

At this stage, Lighter’s trading volume is largely driven by the points mechanism and potential airdrop expectations. Zero fees reduce participation cost, and TGE expectations further reinforce short-term trading behavior. Combined with the earlier analysis of TVL and OI to trading volume ratio, there is a clear disconnect between Lighter’s intraday trading frequency and capital retention; it currently fits incentive-driven trading rather than natural demand. This growth model, dominated by short-term incentives, makes it difficult for current trading volume and activity to directly reflect true platform retention. Therefore, the key observation window for Lighter will be after TGE. Once airdrop expectations are met, user behavior may change. If trading volume and activity can remain stable after incentives fade, it suggests product experience, matching performance, and fee structure have lasting appeal. Conversely, if key indicators drop significantly after TGE, it means early data had a high incentive component and user stickiness still needs to be cultivated.

2. The Next Phase of the Decentralized Perpetual DEX Competition

As the user structure of decentralized perpetual DEXs matures, growth driven solely by points or airdrops is gradually weakening. Taking Aster as an example, the market began to re-evaluate its trading depth, order execution quality, and stability during volatile markets after incentives faded; while Lighter is still in the pre-TGE stage, its trading performance and user retention after TGE remain to be verified. In addition, it is worth noting that for larger trading capital, slippage control, matching latency, and system availability under extreme conditions are more decisive than incentives themselves. This means that differences in platform fundamentals will be further amplified in the next cycle. In this context, the next stage of perpetual DEX competition may no longer be determined mainly by incentives such as airdrops, but instead by whether each platform can provide stable, predictable trading channels for large, sustained capital. For Lighter, still in the pre-TGE stage, whether it can effectively attract higher-quality capital inflows after incentives are phased out will be a key indicator of its long-term competitiveness.