Original author: Jiang Haibo, PANews

The decentralized perpetual contract exchange (referred to as Perp DEX or Perps) may be one of the few areas that is definitely valuable and has a large number of innovative projects. Although projects such as dYdX, GMX, and Synthetix occupy the main market, many recently popular projects that have not issued coins have shown strong competitiveness, including Aark Digital, Drift, Zeta, MYX, Hyperliquid, Jupiter, etc. Most projects implement cold start in the form of points, etc., and early layout may have better opportunities. PANews will introduce it in detail below.

Aark Digital

Aark Digital is a Perp DEX based on Arbitrum. In July this year, it announced the completion of an undisclosed seed round of financing 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, liquidity providers (LPs) still serve as traders’ counterparties.

• Parallel Market Maker (PMM) architecture. Aggregates the liquidity of centralized exchanges (CEX) and decentralized exchanges (DEX). Because it reflects the depth of liquidity in CEX, it can prevent arbitrage losses caused by price manipulation and support long-tail assets. At the same time, it incentivizes long and short to reach a balance through capital fees, price effects, etc.

• Full position and cross-margin mode that supports multiple collaterals. Assets including common stablecoins (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 a process of opening a position just like trading, supporting leveraged liquidity and the use of multiple collaterals.

• Efficient settlement process. Click to place an order in Aark to complete the transaction. There is no need to wait for the wallet to pop up the transaction and sign it. This solves the on-chain delay and gas problems and avoids issues such as pre-emptive transactions.

Overall, Aark Digital is indeed a very smooth Perp DEX to use. To achieve a cold start, Aark Digital took a series of measures to incentivize liquidity and trading volume. For liquidity, there are two rounds of liquidity soft lock plans, the second round currently taking place from December 20th to February 20th, with a total of 200,000 AARK tokens (total 100 million) rewards. For transaction volume, there is an 18-week mining campaign starting on October 11, with 200,000 AARK allocated each week.

Drift

Drift is a decentralized trading platform based on Solana that provides spot trading, margin trading, perpetual contracts, lending, earning income and other functions. The project completed a $3.8 million financing in 2020 led by Multicoin Capital, with participation from Jump Capital, Alameda Research and others.

Drift functionality and features include:

• It has built a full set of products for spot, leverage, and perpetual contract trading.

• There are multiple liquidity mechanisms, including virtual automated market makers (Drift AMM), decentralized limit orders (DLOB), and just-in-time (JIT) auction liquidity, to ensure on-chain liquidity.

• All trades are prioritized through short-term Dutch auctions and then executed by DAMM, with limit orders on the order book as a final addition.

• There is an insurance fund that can obtain a portion of the agreement fee, but in the event of a loss, this part of the funds will be used first for compensation. Deposit $10,000 in an insurance fund and get a discount on closing fees.

• A variety of collaterals are supported as margins, and the collaterals will automatically receive deposit returns. The users profits and losses will be automatically settled regularly, and this part of the funds will be converted into the users deposits or debts, and interest will also be generated or required to be paid.

• Liquidity providers (DLPs) can use leverage and may lose all of their margin deposits, and can open separate sub-accounts to provide liquidity.

• Not only does Maker not need to pay a handling fee, but it can also receive a 2b p handling fee rebate.

Drift is a powerful DEX and has the highest TVL among Solana’s Perp DEXs. Currently, Drift has a weekly lottery called Drift Draw based on Taker’s trading volume. The prizes come from the insurance fund, but Drift has not clearly stated that it provides native token incentives for traders and liquidity providers.

Zeta

Zeta is a derivatives protocol on Solana that provides perpetual contract trading services. It completed an $8.5 million round in 2021 led by Jump Capital, with participation from Electric Capital, Wintermute, Alameda Research, Solana Capital and others.

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

Zeta currently has a point system Z-Score. The higher the points, the more tokens you get. The first season of the Z-Score event has ended. For every $1 spent as a Taker during the event, you will receive 1 point. However, Taker’s handling fee ratio is also relatively high (0.1%); Maker’s handling fee is free, so there are no points. Zeta also issues Zeta Cards in conjunction with other projects, and you can get double points by destroying the cards. The second season of the Z-Score campaign is about to begin.

MYX

MYX is a perpetual contract agreement with strong scalability. In November 2023, it announced the completion of a US$5 million financing 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. In most Perp DEXs, including GMX, whether long or short positions are opened, part of the liquidity will be occupied. When the liquidity occupation reaches the upper limit, it means that the open position reaches the upper limit, and the position can only be closed but not opened. MYX uses a unique matching pool mechanism that still has a liquidity pool as the counterparty to traders. When long and short positions want to wait, LP does not have the risk of being a trader counterparty at this time. MYX believes that LP does not hold any positions at this time. If a long-short balance is maintained, the open interest can theoretically be infinite. Only the difference between long and short puts LPs at risk, and funding fees incentivize long and short to maintain balance.

Since the amount of open interest is no longer limited by the funds in the liquidity pool, the same liquidity of MYX may bring higher trading volume, and then compromises can be made on other features, such as zero slippage and no borrowing fees. wait.

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

Hyperliquid

Hyperliquid is a decentralized perpetual exchange running on its own Layer 1, providing similar functionality to traditional centralized exchanges.

It primarily consists of 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 leveraged or perpetual contract trading of certain specific assets (such as CANTO) on the chain. In addition, Hyperlierliquid provides Vault with a variety of market making strategies, such as HLP (Hyperliquidity Provider), which currently shows an APR of 264%, but this may be due to the recent market volatility.

Starting on November 1st, Hyperliquid started a points system that will allocate 1 million points to users every week for 6 months.

Jupiter

Jupiters JLP is a product on Solana similar to GMXs GLP, providing perpetual contract trading services through a basket of assets.

Although it is not innovative, it is extremely popular on Solana. The capacity of JLP has been at the upper limit for a long time, and it quickly reaches the upper limit after each increase; JLP may have a premium of 10% in the secondary market; in the perpetual contract The utilization rates of SOL, BTC, and ETH often reach 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 purchased JLP at a premium and traders on the Jupiter perpetual contract may be considering potential airdrops.

summary

The development of Perp DEX is not perfect. Some projects demonstrate the diversity and innovation of the track. 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.

But be aware that safety accidents occur frequently on this track. Even the leading projects dYdX, GMX, and Synthetix have suffered varying degrees of attacks, although in most cases only a small amount of money was lost. New projects may be riskier.