Research Disclaimer
Crypto.com Research and Insights disclaimer for research reports
Executive Summary
- The perpetuals market dominates the overall derivatives trading in both centralised and decentralised exchanges. In particular, the decentralised perpetuals market accumulated a trading volume of US$1.4 trillion in the past year.
- The market has witnessed a shift in market landscape in the past two years. The top players by trading volume currently are Hyperliquid and dYdX.
- Existing decentralised perpetual platforms differ by their operating models: order book, Automated Market Maker (AMM), and oracle pricing model, and major players run an order book model. The protocols are also deployed on various blockchains. The top players — Hyperliquid and dYdX — developed their own blockchains.
- Launched in late 2022, Hyperliquid saw a massive uptick in trading volume with a total of $34 billion in the past month (compared to $2 billion in the same time in 2023). Its differentiation includes:
- On-chain order book and matching, which enables transparency in transaction execution and redundancy in case of single-party failure.
- Operates its own Layer-1 (L1) with a customised HyperBFT consensus mechanism to improve confirmation latency and currently supports 100,000 orders/second. The blockchain will also support EVM, which would allow for interoperability between EVM chains and its L1.
- Launch protocol and user vaults to provide yields for users (10-15% for Hyperliquidity Provider (HLP) vault in August) and, at the same time, aid in market making.
- Fulcrom Finance is a decentralised perpetual exchange launched on Cronos, zkSync Era and Cronos zkEVM. Fulcrom Finance’s trades are supported by a multi-asset liquidity pool, Fulcrom Liquidity Pool (FLP), which acts as a counterparty to the transactions. The year-to-date TVL increases by 11%.
- The market landscape can shift quickly in the cryptocurrency space. However, we believe innovation and user experience remain as key factors in successful decentralised exchanges (DEXs). With Hyperliquid’s anticipated token generation event (TGE) and upcoming L1 developments, we see the potential for this protocol to remain as a strong competitor in the space.
1. Market Overview
Decentralised perpetuals refer to trading futures contracts without an expiry date on DEXs. A unique type of contract in the crypto space, the perpetuals market dominates the overall derivatives trading in both centralised and decentralised exchanges. This report looks into the landscape of decentralised perpetuals and Hyperliquid as a case study.
Trading volume of perpetual futures on DEXs was $1.4 trillion in the past year and $134 billion in the past month, according to Artemis.
Since 2023, there has been a market share shift in the decentralised perpetuals market. dYdX and GMX were the top 2 players in 2023, taking up 55% and 10% market share, respectively, by trading volume. In 2024 YTD, dYdX (v3+v4) remained the top player with a 27% market share, followed by Hyperliquid (23%) and RabbitX (10%). Based on the past three months’ data, Hyperliquid has already exceeded dYdX, taking the lead in the market with a 25% market share.
| Rank | 2023 | 2024 YTD | Past 3 Months |
|---|---|---|---|
| #1 | dYdX ($357M; 55%) | dYdX ($308M; 27%) | Hyperliquid ($93M; 25%) |
| #2 | GMX ($62M; 10%) | Hyperliquid ($261M; 23%) | dYdX ($87M; 24%) |
| #3 | Synthetix ($42M; 6%) | RabbitX ($118M; 10%) | Jupiter ($42M; 12%) |
| #4 | Vertex ($34M; 5%) | Jupiter ($95M; 8%) | RabbitX ($33M; 9%) |
| #5 | ApeX ($31M; 5%) | Vertex ($70M; 6%) | Vertex ($23M; 6%) |
| Total | 80% | 74% | 76% |
| Rank | #1 |
|---|---|
| 2023 | dYdX ($357M; 55%) |
| 2024 YTD | dYdX ($308M; 27%) |
| Past 3 Months | Hyperliquid ($93M; 25%) |
| Rank | #2 |
| 2023 | GMX ($62M; 10%) |
| 2024 YTD | Hyperliquid ($261M; 23%) |
| Past 3 Months | dYdX ($87M; 24%) |
| Rank | #3 |
| 2023 | Synthetix ($42M; 6%) |
| 2024 YTD | RabbitX ($118M; 10%) |
| Past 3 Months | Jupiter ($42M; 12%) |
| Rank | #4 |
| 2023 | Vertex ($34M; 5%) |
| 2024 YTD | Jupiter ($95M; 8%) |
| Past 3 Months | RabbitX ($33M; 9%) |
| Rank | #5 |
| 2023 | ApeX ($31M; 5%) |
| 2024 YTD | Vertex ($70M; 6%) |
| Past 3 Months | Vertex ($23M; 6%) |
| Rank | Total |
| 2023 | 80% |
| 2024 YTD | 74% |
| Past 3 Months | 76% |
2. Players Overview
One of the major differentiations amongst existing decentralised perpetual platforms is the operating model — which mainly includes the order book, Automated Market Maker (AMM), and oracle pricing model.
- Order book: Arranges buyers and sellers by price and matches transactions based on supply and demand.
- AMM: Uses algorithms to determine asset prices based on supply and demand, rather than relying on order books. AMMs allow users to trade against liquidity pools.
- Oracle pricing model: Uses external data for pricing, reducing slippage risks.
The order book model is generally regarded as a more efficient model for liquid markets, as it reduces slippage and supports various types of orders (e.g., limit orders, stop loss). It is noted that, out of the major players in the decentralised perpetuals market listed below, most run an order book model.
In addition, the top two players, Hyperliquid and dYdX, developed their own blockchains for perpetuals trading. This gives them flexibility to customise the consensus algorithms and build up the ecosystem beyond a perpetual DEX.
Ensuring liquidity in the DEX is important. We note that it is common for market players to launch vaults or liquidity pools to encourage users to deposit in return for yields. By depositing cryptocurrencies (e.g., USDC) into the vault, the protocol can use the funds in market making. At the same time, users will earn yield through trading fees and sharing the profit-and-loss on the vault’s positions. Examples include Hyperliquid’s Hyperliquidity Provider (HLP) vault, which has $248 million in total value locked (TVL).
3. Hyperliquid
Launched in late 2022, Hyperliquid is a decentralised perpetuals protocol operating on its own L1 blockchain. It utilises an order book model and uses oracles to match asset prices.
Hyperliquid has seen a massive uptick in trading volume in 2024. This has coincided with the team’s continuous launch of new features, including the support of spot trading and native token deployment.
3.1 Protocol Design
One of the differentiations of Hyperliquid is that the order book and matching are on-chain. In comparison, other players, including dYdX and RabbitX, have an off-chain order book. The benefits of Hyperliquid’s model are transparency of transaction execution and redundancy in case of single-party failure. This is also in line with the general value proposition of DEXs.
In addition, Hyperliquid operates its own L1 to optimise the trading experience. Initially built on Tendermint, the Hyperliquid chain is performant to operate the whole exchange: every order, cancellation, trade, and liquidation happens transparently on-chain with block latency less than one second. The chain currently supports 20,000 orders/second.
In May 2024, Hyperliquid announced its plans to transition to a customised HyperBFT consensus mechanism, which will improve confirmation latency and currently supports 100,000 orders/second.
Furthermore, Hyperliquid announced that its L1 will support the Ethereum Virtual Machine (EVM). This is significant, as it would allow for interoperability between other EVM chains and the Hyperliquid L1. In particular, HIP-1 (Hyperliquid’s native token standard) assets will feature an atomic transfer with their corresponding ERC-20 contracts, which is a strong attraction point for launching and trading tokens. Builders will also be able to deploy smart contracts with EVM tools and benefit from Hyperliquid’s DEX for trading on the same blockchain. Moreover, this is expected to unlock more user applications (e.g., borrowing and lending protocols built into the EVM).
It is impressive to see that Hyperliquid has achieved its success today without raising money from external investors; the team adopts a community-oriented approach when running the protocol (for example, it didn’t collect any fees from its protocol vaults).
3.2 Hyperliquidity Provider (HLP)
Hyperliquid was one of the pioneers in democratising market making by introducing protocol and user vaults. The protocol vault — for example, the Hyperliquidity Provider (HLP) — runs market making strategies on the protocol, and depositors share the profit and loss of the vault from market making and fees. It is fully community-owned, and vault owners do not share additional profits. HLP provides 10% to 15% APR in August, and has been generally higher than GMX in the past year.
On the other hand, user vaults are user-generated, which users can either create or choose to deposit into in order to automatically copy trades performed by the vault’s manager. APR varies depending on the vault, and the vault owners share 10% of the profit. This is a distinguishing feature because Hyperliquid enables all users to participate in market making by depositing USDC. Unlike platforms where market making is generally reserved for the team or large market makers, Hyperliquid democratises market making.
4. Fulcrom Finance
Launched in 2023, Fulcrom Finance is a decentralised perpetual exchange launched on Cronos, zkSync Era and Cronos zkEVM. Different from Hyperliquid which runs a orderbook model, Fulcrom Finance’s trades are supported by a multi-asset liquidity pool named the Fulcrom Liquidity Pool (FLP), which acts as a counterparty to the transactions.
FLP consists of more than 10 tokens including BTC, ETH, SOL, NEAR etc and 38.8% stablecoins at the time of writing. It is the native liquidity token on the platform and its value partially derives from the price of its underlying assets. Users can choose to deposit any of the supported tokens in exchange for FLP and earn yields. FLP holders share 60% of fees paid by traders on the platform. On the other hand, FUL is the native governance token of Fulcrom and can be staked to earn rewards and protocol revenue.
In addition to the yield-generation opportunities mentioned above, Fulcrom Finance supports up to 100x leverage on certain trades, and introduced stop loss and take profit orders for appropriate risk management.
The platform launched on Cronos zkEVM in August 2024, which enables users to bridge assets from Ethereum to Cronos zkEVM. Amongst the bridged assets, zkCRO can be used to pay fees on the platform while vETH and vUSD can be used in trading and staking. This expands the platform’s reach and enhances user experience.
5. Conclusion
The decentralised perpetuals market has witnessed a shift in market landscape in the past two years. The current top players are Hyperliquid and dYdX, which have their own app chains for a purpose-built solution and operate with an order book model to reduce slippage and facilitate liquidity for trading.
Hyperliquid, in particular, came in as a new player and has amassed attention within the market. Its success can be attributed to factors including its innovative protocol and user vaults, which aid in market making and providing liquidity. In addition, Hyperliquid has its own L1 blockchain, which provides the speed and scalability required for its perpetual DEX. All of these continuously support Hyperliquid in its ambition to be the place where financial applications are hosted.
Different from Hyperliquid’s order book model, Fulcrom Finance runs a multi-asset liquidity pool which supports more than ten tokens and provides yield-generation opportunities for users. Fulcrom provides cross-chain support across Cronos, zkSync Era and Cronos zkEVM.
The market landscape can shift quickly in the cryptocurrency space, driven by reasons like the entrance of new competitors, launch of new popular features, or simply, a shift in sentiment. However, we believe innovation and user experience remain as some of the key factors in successful DEXs, which can bootstrap liquidity and, in turn, attract users. The Hyperliquid team has demonstrated tenacity reflected from its performance this year. We see the potential for Hyperliquid to remain as a strong competitor in the space with its anticipated TGE and upcoming L1 developments.
Read the full report: Decentralised Perpetuals Market
Authors
Crypto.com Research and Insights team
Get the latest market, DeFi & NFT updates delivered to your inbox:
Be the first to hear about new insights:
