Dragonfly Partner: Hyperliquid's Order Book Model Can't Solve RWA Liquidity Issues, Variational's RFQ Model Can

Odaily Odaily has reported that Dragonfly partner Haseeb Qureshi posted on X, stating that the Central Limit Order Book (CLOB) model cannot solve the liquidity problem for RWA assets. He noted that Hyperliquid has indeed mastered liquidity for a handful of macro RWA assets, but beyond the top 10 assets by trading volume (which account for approximately 90% of the volume), liquidity drops off a cliff.

The order book model can function when retail demand is sufficiently strong, but if every asset requires building its own order book, it means you must cold-start demand ticker by ticker, subsidizing to "rent" liquidity, ultimately resulting in a series of thin liquidity markets.

Variational bypasses all of this with its RFQ (Request for Quote) model. RFQ is the true trading method for institutions. In this model, market makers provide instant quotes on demand and hedge in primary trading venues after orders are placed. This enables Variational to directly tap into TradFi's mainstream liquidity and map it on-chain — with margin managed via smart contracts, settlements settled using stablecoins, and liquidity sourced from users who already trade on underlying major markets like the CME and NYSE.

This means anyone can permissionlessly access the same market depth and spreads as traditional markets. Once the cold-start problem is solved, launching new markets can be as fast as releasing software. It is expected that by next year, RWA perpetual contracts will become the largest contract category on-chain, potentially exceeding the combined size of BTC and ETH perpetual contracts. Ultimately, the platform that wins this race will not look like a traditional exchange.

Yesterday, it was reported that Variational announced the completion of a $50 million Series A funding round, led by Dragonfly Capital, with participation from Bain Capital Crypto and Coinbase Ventures.