Despite the surge in Aster, high liquids still make Parp Dex the best position

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A new paper from Defi analyst Patrick Scott argues that despite losing market share from its rivals, Hyperliquid continues to be the most investable, diversified exchange for a lasting future.

Flux’s PERP dex market

A permanent future – or perps – A crypto derivative that allows traders to speculate about prices without expiration dates. The decentralized platforms that host them, known as Perp Dexes, are gaining popularity as traders move their activities away from centralized exchanges (CEXES) such as Binance.

Scott said Perp Dexes expanded from under 2% of CEX permanent trading volume in 2022 to over 20% last month. High lipids that issue hype tokens are a key factor in their growth.

Still, recent shifts raised questions. Hyperliquid’s share of PERP DEX volume has dropped from 45% to just 8% in recent weeks, but Binance’s rival Aster has swelled into more than $270 billion in weekly trading. Other startups like Lighter and Edgex also recorded triple-digit percentage increases in their activities.

Why are high lipids so prominent?

Scott argued that the Hyperliquid foundations highlight it. The exchange continues to generate strong revenues, dealing with what he described as a reasonable multiple compared to his peers, and user stickiness is reflected in open interest.

“Unlike the amount or revenue that measures activity, open interest measures liquidity. It’s much more sticky,” he writes, saying Hyperliquid still commands around 62% of the Perp Dex Open Interest Market.

Beyond the deal, Scott highlights expansion plans that include HypereVM Network, a Stablecoin backed by reserves held by BlackRock and SuperState, already locking over 100 protocols and a total of $2 billion, hosting USDH.

Another initiative, HIP-3, will allow builders to launch a new Perps market by dyeing a massive amount of hype, allowing them to create what Scott calls a “supply sink” of tokens.

Scott warned that if Hyperliquid’s open profits or revenues drop significantly, or if USDH fails to acquire liquidity over the next year, his paper will be invalid. For now, however, he claims he is in a better position than his competitors running heavy incentive programs with high lipids.