Hyperliquid, once the uncontested leader in the on-chain perpetuals market, is fast ceding ground to emerging platforms such as Lighter and Aster.
At one point in May, Hyperliquid accounted for 71% of the on-chain crypto perpetuals market. That number now stands at 38%, according to pseudonymous Dune Analytics user @uwusanauwu.
Meanwhile, competitors such as a16z-backed Lighter and Binance Labs-backed Aster have increased their market share to 16.8% and 14.9%, respectively, from lower single digits in May. These percentages are based on weekly trading volumes and exclude wash trading figures.
The on-chain perpetuals market refers to the decentralized trading of perpetual futures contracts (with no expiration) that occurs directly on a blockchain, ensuring transparency and immutability.
Perpetuals are derivatives without an expiration date, allowing traders to speculate on the price movements of the underlying assets. These contracts employ a unique funding rate mechanism to maintain perpetual prices in alignment with the spot price of the underlying asset.
Hyperliquid is losing ground to competitors. (@uwusanauwu/Dune)
The on-chain perpetual market has experienced rapid growth. All platforms combined have registered a cumulative trading volume of nearly $700 billion over the past four weeks, with activity reaching $42 billion in the last 24 hours alone.
The number of protocols has grown significantly from just two in 2022 to over 80 as of today. This expansion perfectly exemplifies capitalism at work: a thriving market attracts a flood of new entrants, increasing competition and eroding the market share and profitability of early pioneers.
The absence of traditional barriers to entry or exit, a key feature of the crypto market, allows anyone with the technical know-how to launch new protocols and compete.
Lately, a war of sorts has been unfolding between Hyperliquid and Aster. Last week, Hyperliquid listed Aster’s native token ASTR, allowing users to long or short the token with 3x leverage. On Monday, Aster responded by offering Hyperliquid’s HYPE perpetuals with 300x leverage.
