A look at 6 unissued Perp DEXs: What are the potential opportunities?

Original author: Jiang Haibo, PANews

DecentralizationPerptual Futures exchanges, known as Perp DEXs or Perps for short, may be one of the few tracks that have been identified as valuable and have a large number of innovative projects. While dYdX, GMX, Synthetix and other projects occupy the main market, a number of recent popular unissued projects have shown strong competitiveness, including Aark Digital, Drift, Zeta, MYX, Hyperliquid, Jupiter and others. Most projects implement cold starts in the form of credits, etc., and there may be a better opportunity to deploy in advance, which PANews will cover in more detail below.

Aark Digital

Aark Digital, an Arbitrum-based Perp DEX, announced in July that it had closed an undisclosed seed round led by Delphi Digital with participation from OKX Ventures, Big Brain Holdings, and Keyrock.

Key features of Aark Digital include:

• With a virtual liquidity pool model, the Liquidity Provider (LP) remains the counterparty to the trader.
• Parallel Market Maker (PMM) structure. Liquidity of centralized exchanges (CEXs) and DEXs (DEXs) is aggregated. Since it mirrors the LiquidityDepth of CEXs, it prevents Arbitrage losses due to price manipulation and supports long-tail assets. At the same time, it incentivizes longs and shorts to achieve balance through funding fees, price influences, etc.

• Cross Margin mode with multiple Collateral supported. Assets including popular stable coins (USDC, USDT, DAI), ETH, and WBTC can be used as collateral for transactions, and each collateral has a preset weight. When trading, users will still hold their own collateral assets, and profits and losses will be calculated in USDC only at Settlement.
• Providing Liquidity is also the process of opening a position like trading, supporting leveraged Liquidity and supporting the use of multiple Collateral.
• Efficient Settlement Process. Click to place an order in Aark to complete the transaction, without waiting for the wallet to pop up the transaction and sign, which solves the on-chain latency and gas problems, and also avoids problems such as preemptive transactions.

Overall, Aark Digital is indeed a very silky Perp DEX to use. To achieve a cold start, Aark Digital has taken a series of measures to incentivize liquidity and trading volume. For Liquidity, there are two rounds of Liquidity Soft Locking Program, the second round currently being conducted from December 20 to February 20, with a total of 200,000 AARK Tokens (total amount of 100 million) rewards. For trading volume, starting October 11, there is an Mining activity that lasts for 18 weeks, with 200,000 AARK allocated weekly.

Drift

Drift is a Solana-based Decentralization trading platform that provides Spot Trading, Margin Trading, Perpetual Futures, Lending, Earn Yield and more. The project closed a $3.8 million funding round in 2020 led by Multicoin Capital with participation from Jump Capital, Alameda Research, and others.

Drift’s functionality and features include:

• Constructed a full set of products for Spot, leverage, and Perptual Futures trading.
• There are multiple liquidity mechanisms, including Virtual Automated Market Maker (Drift AMM), Decentralization Limit Order (DLOB), and Just-in-Time (JIT) Auction Liquidity, ensuring on-chain liquidity.
• All transactions are prioritized through short-term Dutch auctions and then executed by DAMM, with limit orders on the order book as a final supplement.
• There is an insurance fund that allows you to receive a portion of the agreed costs, but in the event of a loss, this part of the funds will be prioritized for compensation. Deposit $10,000 into the insurance fund to receive a discount on transaction fees.
• Support a variety of Collateral as Margin, and the Collateral will automatically receive deposit income. Settlement of the user’s profit and loss will be automatically settled on a regular basis, and this part of the funds will be converted into the user’s deposit or debt, and Interest will also be generated or required to be paid.
• Liquidity Providers (DLPs) can use leverage, may lose all Margin, and can open separate sub-accounts to provide Liquidity.
• Not only does Maker not need to pay a processing fee, but also gets a 2b p processing fee rebate.

Drift is a powerful DEX and has the highest TVL among Solana’s Perp DEX. Currently, Drift has a weekly lottery based on Taker trading volume, Drift Draw, with prizes from insurance funds, but Drift does not explicitly state that it provides native Token incentives to traders and liquidity providers.

Zeta

Zeta is a Derivatives protocol on Solana that provides Perpetual Futures trading services. It closed an $8.5 million funding round in 2021 led by Jump Capital with participation from Electric Capital, Wintermute, Alameda Research, Solana Capital, and others.

Zeta’s product is very simple, with a fully on-chain limit order book for perpetual futures trading, similar to dYdX.

Zeta currently has a point system, Z-Score, where the higher the points, the more Tokens you get. The first season of the Z-Score campaign has now ended, and 1 point will be awarded for every $1 traded as a Taker during the campaign period. However, the fee ratio of Taker is also relatively high (0.1%), and Maker is free of fees, so there are no points. Zeta has also partnered with other programs to issue Zeta Cards, which can be destroyed to earn double points. The second season of the Z-Score campaign is about to begin.

MYX

MYX is a highly scalable Perptual Futures agreement that announced in November 2023 that it had closed a $5 million funding round led by HongShan with participation from Consensys, Hack VC, OKX Ventures, and others.

It can be said that MYX directly hits the pain point of GMX, and in most Perp DEXs, including GMX, whether long or short positions are entered a position, a part of liquidity will be taken. When the Liquidity occupancy reaches the upper limit, it means that the un Close Position amount reaches the upper limit and can only be Close Position, not Enter a Position. MYX employs a unique matching pool mechanism that still has a liquidity pool as a counterparty for traders. When long and short Position wants to wait, at this time the LP is not at risk as a trader counterparty, and MYX believes that the LP does not hold any positions at this time. If the state of long-short equilibrium is maintained all the time, then theoretically the un Close Position amount can be infinite. Only the difference between the long and short will put the LP at risk, and the funding fee can incentivize the long and short to keep it in balance.

Since the un Close Position amount is no longer limited by the funds in the Liquidity pool, the same Liquidity of MYX may lead to higher trading volumes, so other features can be compromised, such as zero Slippage, no loan fees, etc.

MYX is currently in the second phase of testing, and users who have joined the waiting list can receive rewards for participating in the test.

Hyperliquid

Hyperliquid is a Decentralization Perpetual Exchange running on its own Layer 1 that offers similar functionality to traditional centralized exchanges.

It mainly contains an order book exchange that trades with USDC as margin. It is characterized by supporting the trading of many long-tail assets, and may be the only project that supports on-chain leveraged or Perptual Futures trading of certain assets (such as CANTO). In addition, Hyperlierliquid offers a vault of multiple market-making strategies, such as HLP (Hyperliquidity Provider), which currently shows an APR of 264%, but may be due to recent market Fluctuation.

Starting November 1, Hyperliquid began a points system that allocates 1 million points per week to users over a six-month period.

Jupiter

Jupiter’s JLP is Solana’s last product similar to GMX’s GLP, providing Perptual Futures trading services through a basket of assets.

Although it is not innovative, it is exceptionally popular on Solana, and the capacity of JLP has been at the upper limit for a long time, reaching the upper limit quickly after each increase; JLP may be at a premium of 10% in the secondary market; and the utilization rate of SOL, BTC, and ETH in Perpetual Futures contracts often reaches 100%.

The main reason may be Jupiter’s extremely high valuation (more than $6 billion in Aevo) and the fact that 40% of the tokens are used for Airdrops. Some users who buy JLP at a premium and traders on Jupiter Perpetual Futures may be motivated by potential Airdrop considerations.

Summary

The development of Perp DEX is not perfect, some projects show the diversity and innovation of the track, and combined with different incentives, there may be projects that can replace the current status of GMX or Synthetix. For users, the sooner they get involved, the better it may be.

However, it should be noted that the track is also prone to safety accidents. Even the top projects dYdX, GMX, and Synthetix have been attacked to varying degrees, although in most cases only a small amount of money has been lost. New projects can be riskier.