Recently, the upcoming Token Generation Event (TGE) for Hyperliquid has reignited interest in the Perpetual DEX (Perp DEX) sector. In the previous cycle, Perp DEX struggled to meet expectations, failing to emerge as the “on-chain liquidity star.”
However, since late last year and into this year, protocols like Hyperliquid, Drift, Surf, and Orderly have begun to make waves, and established leader dYdX has become active again. The rapid rise of the meme coin sector is propelling on-chain liquidity, creating new opportunities for the Perp DEX market.
Memecoins Leading a New Cycle
In this current cycle, the performance of meme coins has been particularly captivating, with new tokens emerging frequently. MOODENG, SPX, and GOAT have not only become potential meme coins in this latest surge but are also attracting an increasing number of players to the blockchain.
Even as players joke about engaging in a “Proof of Work” lifestyle—competing across various platforms—it’s undeniable that liquidity is gradually concentrating on-chain, and even accelerating. Tokens like MOODENG and GOAT have also caught the attention of centralized exchanges (CEX) for listings.
The rise of meme coins has been mirrored in the impressive data from meme-related infrastructure. Take Pump.fun, for example, which saw a surge in listings starting in late August, reaching new heights. This reflects the overwhelming enthusiasm among crypto-native users for on-chain memes and indicates a concentration of market liquidity within this niche.
Another key player is Moonshot, which has emerged as a liquidity hub. Following Murad’s “memecoin supercycle” presentation at Token2049, Moonshot gained traction alongside MOODENG. Moonshot not only demonstrated a strong listing effect, becoming a sort of “Binance” for on-chain activities, but its fiat onboarding has also opened new avenues for mass adoption, driving growth in Web2 traffic.
By late September, Moonshot’s daily fees skyrocketed from approximately $3,681 to $24,000, and daily active users increased from 396 to 3,458. Its cumulative growth trend is steadily rising, further consolidating on-chain liquidity.
Perp DEXs: Beneficiaries of On-Chain Liquidity
As the meme infrastructure and memecoins flourish, Perp DEXs have naturally become beneficiaries of this influx of liquidity. While Perp DEXs did not shine in the previous cycle, they have gradually gained traction as the bull market revives, capturing attention from both English-speaking and Chinese-speaking audiences.
The previous cycle’s lack of a robust narrative for DeFi left Perp DEXs underwhelming, but the current meme trend has prompted retail investors to favor DEXs, which offer higher odds and a wider variety of gameplay.
dYdX: A Cautionary Tale
dYdX, one of the first decentralized perpetual trading platforms, was a standout since its inception in 2017, leveraging an order book model to excel in trading volume and daily active users. However, since the beginning of this year, dYdX has struggled to maintain its momentum. Its protocol revenue and token price have both experienced significant declines, allowing newer Perp DEXs to catch up. For a deeper dive into dYdX’s fundamentals, you can refer to our previous analysis on whether the DeFi industry is overvalued.
While dYdX was once a frontrunner, it has become an example of what can go wrong in the Perp DEX space. Its market share has been steadily eroded by newer entrants. After two years of changes, dYdX has not grown stronger but rather regressed, dropping from an initial market share of 80% to a mere 6%. During this meme craze, dYdX has failed to capitalize on its brand, announcing only minor initiatives like “Pump,” while facing layoffs and personnel changes that highlight its decline.
The ever-evolving crypto market has allowed Hyperliquid to quietly seize the leading position once held by dYdX.
Hyperliquid: The Quiet Achiever
Hyperliquid, one of the most popular Perp DEXs in the English-speaking community, has maintained a relatively low profile. Originally built on Tendermint, it allows users to view orders, cancel transactions, and trade on-chain.
In May 2024, Hyperliquid implemented the HyperBFT optimization algorithm, increasing its transaction capacity from 20,000 TPS to between 100,000 and 200,000 TPS—a significant leap forward. While this improvement facilitates smoother transactions, it still lags behind centralized exchanges like Binance, which handle around 1.4 million TPS. Hyperliquid’s ambitions extend beyond being just another Perp DEX; it is actively developing an L1 blockchain designed for low latency and high throughput, aiming to become a premier platform for high-frequency trading and order book operations.
Moreover, Hyperliquid is embracing the meme culture, becoming one of the biggest beneficiaries of the current meme trend. Compared to CEXs, Hyperliquid offers users a greater selection of meme assets. This early engagement gives Hyperliquid a significant advantage over CEXs that arrive late to the meme scene.
According to Dune Analytics, Hyperliquid has become a major player in the market over the past three months, capturing a 40% market share as the leading Perp DEX. Its Total Value Locked (TVL) has also experienced explosive growth, nearing $670 million.
On October 14, Hyperliquid announced the establishment of Hyper Foundation to support the development of its blockchain and ecosystem.
As the TGE for the native token $HYPE approaches, millions of users are expected to join Hyperliquid, injecting further capital into its ecosystem. This positive momentum is reflected in the recent listings of meme assets on the platform.
However, the launch of Hyperliquid’s EVM could impact its current liquidity landscape. If the EVM is released before or during the TGE, it may lead to capital shifts from Solana investors towards other EVM-compatible chains, potentially diluting the value of existing native assets.
What Are People Trading on Perp DEXs?
Hyperliquid has generated significant wealth effects, but discussions remain largely confined to the English-speaking community. Based on the recent trading volume rankings on Hyperliquid, users are experiencing returns of over 100%, rivaling centralized exchanges. Many are opting to trade spot assets on DEXs instead of contracts on CEXs.
Here are some notable low-market cap tokens currently generating buzz on Hyperliquid:
- $SCHIZO: A meme coin from Solana, SCHIZO features a quirky design and has garnered attention as a viral meme. After dropping to zero in August, it has seen a resurgence in October, reaching a market cap of $4.72 million.
- $CATBAL: This meme token centered around cats is gaining traction in Hyperliquid’s ecosystem. It started rising on October 15 and has seen approximately 30x growth, now reaching a market cap of $6.92 million.
- $JEFF: A character-based meme from Solana, JEFF is currently undervalued on Hyperliquid. While it hasn’t experienced massive gains, it has room for growth, currently hovering around $4.80, with potential to reach new highs.
- $NOCEX: Featuring a playful ticker “NO CEX,” NOCEX has gained community attention. Since its launch on October 2, it has experienced a hundredfold increase, reaching a market cap of $687,000.
- $PURR: A meme token airdropped to early users of Hyperliquid, PURR was the first asset to go live on the platform. Its price has nearly doubled since early October, reflecting strong momentum.
As the landscape of Perp DEXs evolves, Hyperliquid stands out as a formidable contender, capturing both market share and the imagination of the crypto community.
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