The crypto industry is dead, long live Perps

Even a fool can feel that the crypto industry is in the midst of a generational shift.

Over the past decade, the core capability in the crypto space has been asset issuance. Launch a chain, issue a token, create a governance token, design an economic model, and push it to the market with narratives, airdrops, liquidity incentives, and community consensus – a game of pass-the-parcel.

We once boldly hypothesized that blockchain would create a completely new asset system: new currencies, new financial protocols, new gaming assets, new social networks, and even new organizational forms.

Now, however, these native assets are heading towards a slow death, turning every bottom-fishing attempt into a futile gesture.

Sucking away liquidity and attention are the old-world assets: US stocks, US Treasuries, gold, crude oil, indices...

Say Bye Bye to All Native Assets, Say Hi Hi to Traditional Assets

The protagonists on-chain have changed. Native assets are ignored, while tokenized assets are thriving.

Every bear market, people say "ETH is dead," "Alts have no buyers," "DeFi is dead." But why does ETH at $2,000 feel more desperate than it did at $200?

Because the complaints are no longer about price cycle fluctuations or narrative shifts between sectors. Instead, the industry's function is migrating. The crypto industry is transforming from the former "factory of new assets" into a "global asset conduit."

Stablecoins are the earliest and most successful example. The widespread adoption of USDT and USDC doesn't mean crypto has defeated the US dollar. Rather, the crypto space has found a more efficient way for the dollar to circulate on-chain.

Over the past decade, countless projects have shouted slogans about "creating a new monetary system," yet only stablecoins have been adopted on a massive scale by global users. Besides us degens, ordinary users aren't obsessed with discovering a new world currency. They only care about making the US dollar move faster, cheaper, and with fewer restrictions on time and geography.

Upon reflection, this had already sealed the fate of crypto-native assets long ago.

The capabilities of blockchain that have ultimately been validated at scale are not value storage, not governance, and certainly not some complex financial innovation. It's the original functions: peer-to-peer transfer and global settlement. Long live Satoshi Nakamoto.

Except for Bitcoin, the value storage proposition of other coins has been disproven. Their assets are highly volatile, have thin cash flows, ambiguous governance rights, and demand driven purely by speculation.

After all the twists and turns, the market has returned to the blockchain's original, simple functions: transfer, settlement, cross-border flow, collateralization, and trading.

Altcoins? Not Even Dogs Would Touch Them.

The awkward position of crypto-native assets, i.e., altcoins, also becomes clear within this logic.

When hot money floods in, we compare internal crypto assets and pick one that looks promising to go all-in. Public chains are compared by TPS, DeFi protocols by TVL, and Meme coins by community hype. Everyone is immersed in the same narrative pool, lacking real-world anchors. Every story has room for imagination; as long as the packaging is grand enough, a new token can pre-spend ten years of valuation.

But now, internal narratives are exhausted, external wealth effects are everywhere, and plugging one's ears while stealing bells is futile.

On one hand, real-world assets like US stocks, gold, and crude oil are placed into the same on-chain trading interface. On the other hand, AI has barged into everyone's life in a way that feels almost like science fiction becoming reality.

Once, the crypto space was best at telling stories about the future, earning valuation premiums through a "sense of futurism" – new networks, new finance, new organizations, new production relations. But years later, the narratives remain stuck in white papers, roadmaps, funding news, and token prices. Meanwhile, AI, besides its powerful narrative, has already become a tool ready to use on everyone's computers and phones.

Previously, an altcoin only needed to tell a more compelling story than another altcoin. Now, it must simultaneously face two types of external competitors: one is traditional assets with real cash flows, asset backing, and global pricing systems; the other is AI, representing a new technological cycle with both future narratives and real-world products.

On this side, we have junk coins with no revenue, no demand, and no value capture, standing next to Nvidia, Micron, crude oil, and AI applications. It really looks ugly.

Ethereum, On Its Last Legs

The frequently discussed "Ethereum problem" should also be viewed through this framework.

Ethereum isn't just facing short-term pressure from its roadmap and liquidity. It's that the "native asset worldview" it once represented has been squeezed dry.

On one side, traditional tokenized assets are entering the chain. On the other, AI is monopolizing the global tech narrative.

Ethereum remains crucial infrastructure for on-chain finance and asset issuance. But having lost the "native crypto" innovative universe and the faith in its worldview, ETH's own ability to capture ecosystem value is very weak. Users can pay on Base, trade on Arbitrum, transfer assets between Rollups, and trade US stocks on-chain, but they certainly don't need to hold ETH to do so.

The same applies to DeFi. Its initial grand narrative was to rebuild the financial system, but the truly entrenched essential demand is not that vast.

Users don't need a complete suite of on-chain banking. They need cheaper USD transfers, faster settlement, deeper liquidity, and price volatility they can trade. Lending, DEXs, and yield aggregators certainly still exist, but they increasingly resemble part of the infrastructure, struggling to sustain the industry's imagination on their own. The financial lego narrative is a relic of the last cycle.

The Protagonist Has Become the Asset Itself

The crypto space has to admit that on-chain finance doesn't need to reinvent Nvidia, nor does it need to reinvent the US dollar. And of course, we lack the capability to do so.

We only need to strive to make these assets more freely transferable, tradable, collateralizable, shortable, leveraged, and combinable into new financial structures.

So, "crypto is dead" refers to the era of relying on the perpetual inflation of native assets coming to an end.

No one dares to talk about crypto revolutionizing old finance anymore. Now, practitioners are busy installing a new transmission layer for traditional finance. US stocks remain US stocks, but through new infrastructure, they can have 24/7 trading, global liquidity, on-chain settlement, permissionless access, and composability. The industry is fully engaged in producing a new API for the old world.

In fact, tokenizing US stocks, RWAs, and on-chain perpetual contracts are nothing new.

This industry didn't just think of bringing traditional assets on-chain today, nor did it just think of trading everything via perpetual contracts today.

Years ago, there were waves of Perp DEXs, synthetic assets, on-chain stocks, and projects attempting to move traditional assets on-chain. Looking back at the design of some early protocols, their underlying mechanisms are essentially no different from many of today's hot projects.

This is why some old-timers looked down on Hyperliquid and missed the opportunity. Kyle Samani's persistent bearish view on Hyperliquid is a classic example.

It's not that he hadn't seen this kind of thing before; he saw it too early, too much, and got tired of it. Five, eight years ago, or even earlier, many in the industry tried to build on-chain perpetual exchanges, decentralized derivatives, and all-asset-class trading platforms, but they all failed.

I recently stumbled upon a Perp DEX project article published by Odaily in 2020. Honestly, the mechanism is no different from what we see now.

Screenshot from an article 6 years ago

The issue is never the direction, it's always the Timing.

Hyperliquid: The Industry's Beacon

Hyperliquid's early days were also rough, with mediocre liquidity and persistent criticism of regulatory risks. But it continuously rode the wave of change, becoming the biggest beneficiary, leaving latecomers in the dust.

The first wave was the CEXification of on-chain Perps. Hyperliquid's initial highlight wasn't just creating another Perp DEX; it made on-chain futures trading feel less like DeFi and more like a centralized exchange. Order books, low latency, API, rebate programs, ecosystem front-ends, the HYPE airdrop, no VCs, community wealth effects – these things combined propelled it from an on-chain protocol to a primary trading venue. This phase wasn't glamorous, but it was crucial. The hardest part for a trading platform is getting that first drop of liquidity. Once people start trading, market making follows, allowing it to handle larger asset sizes.

The second wave was the shift in trust after the 10.11 incident. The black-box risk of centralized exchanges was exposed again. Since then, many whales would rather trade openly on-chain with everyone than risk being silently liquidated in a dark forest system where they can't see the true face of the counterparty. "Decentralization" isn't just a slogan; it's a practical need for traders to "die knowing how" during extreme market conditions.

The third wave was the volatility in macro assets like gold and crude oil. Wars and geopolitical conflicts pulled global markets back into a macro narrative. Users began needing a venue to trade global assets 24/7. Traditional markets have opening and closing bells, regional restrictions, and account limitations. On-chain perpetual markets don't have these constraints.

The fourth wave, which needs little elaboration, is the explosion of US stock trading. When hot assets are placed in a 24/7, global, low-barrier perpetual market, the assets themselves bring traffic. Traffic attracts B-side market making and ecosystem front-ends, which in turn enhances liquidity, creating a snowball effect.

So, understanding it early doesn't guarantee great results. We all understand that previously, on-chain users were insufficient, wallet experiences weren't mature enough, market-making infrastructure was incomplete, and asset volatility lacked sufficient external opportunities. Without the wind, building a big ship will only leave it stranded.

The Evil and Enchanting Perpetual Contract!

Finally, let's talk about crypto's greatest invention – the perpetual contract.

If you want to trade spot US stocks, you face a whole set of complex issues: compliance, custody, underlying asset tokenization, trading hours, settlement, equity rights, dividends, corporate actions... Every single step requires interaction with the old financial system, and every step can become a bottleneck.

But if you do US stock Perps, the platform only needs to create a contract pool around the price. Liquidity can be provided by ecosystem partners. Users trade price exposure; they don't directly hold the underlying equity.

It bypasses the heaviest parts and captures the part with the most trading demand.

This is also where its evil nature lies. Perp simplifies an asset into a price symbol you can bet on, compressing complex ownership relationships into just a direction (long/short) and leverage size. It doesn't care if you own the stock, nor if you understand the company's value. It only cares about price volatility, whether someone is willing to go long, and whether someone is willing to go short.

This is also its most vibrant and charming aspect.

People might not necessarily want to own Nvidia, but they want to trade Nvidia's volatility. People might not necessarily want to hold gold, but they want to bet on gold's direction. People might not need crude oil, but they might need the risk exposure from crude oil prices.

Perp distills this demand to its purest form. It doesn't create new assets; it creates new casinos. It doesn't offer ownership; it offers risk exposure. Its goal isn't to reconstruct the financial world; it's to turn every asset into a "price" that can be traded 24/7.

So, if we look back at the entire history of crypto, the product that truly survives is likely the Perp.

From a financial perspective, it's even somewhat absurd. Futures have delivery dates because assets ultimately need to return to the real world. Perpetual contracts eliminate delivery, turning a product with a finite term into something eternal. This might be the ultimate lesson from crypto's junk asset era.

Traditional exchanges have opening and closing bells because the market needs rest. Perpetual contracts abolish rest, making the market perpetually online. Traditional finance relies on brokers, clearing houses, and regional regulatory systems, while the perpetual market is inherently borderless.

The perpetual contract might be the most successful, and also the most dangerous, financial innovation in crypto history. It truly seems like a financial monster unleashed by a demon. (Arthur Hayes: Blame me?)

Countless people have been liquidated because of it, and countless fortunes have evaporated because of it. It amplifies humanity's greediest side. But at the same time, it has created unprecedented liquidity and price discovery efficiency.

Conclusion

Looking back, years pass in a flash. In the crypto world, the most successful currency is the US dollar, the most successful asset is Bitcoin, the most successful application is trading, and the "most promising new growth" now comes from US stocks.

This is the failure of the idealists, and more likely, the final filter of the market.

The tales of "been there, done that" are old hat. Humanity's pursuit of wealth, preference for risk, and obsession with leverage have never changed. So today's crypto industry is no longer obsessed with inventing new assets. Instead, it tries to turn existing assets into always-on, globally accessible, permissionless trading pairs.

Crypto is dead, long live the Perp.