Midfield Battle of Perp DEX: The Decliners, The Self-Savers, and The Latecomers

Author: Zhou, ChainCatcher

Last week, Hyperliquid's trading volume reached approximately $15 billion, with commodity-related contracts such as crude oil, gold, and silver becoming the main driving force.

As oil prices fluctuated sharply, the daily trading volume of crude oil perpetual contracts on Hyperliquid surpassed $2.2 billion, second only to Bitcoin.

With the situation in Iran escalating and the Strait of Hormuz in crisis, CME closed over the weekend, and global traders flocked to an on-chain decentralized exchange seeking price discovery.

Meanwhile, GMX Labs, which once held nearly a quarter of the decentralized perpetual contract market, is publicly recruiting a CEO, acknowledging that the early founder-driven model is no longer sustainable and seeking to transition to a traditional leadership structure.

One is capitalizing on the overflow demand from traditional finance, while the other is still rebuilding its foundation.

Why Did GMX and dYdX Fail?

Looking closely at the announcement from GMX Labs, the candidate pool for CEO includes individuals from DeFi, CeFi, traditional finance, and the tech industry, with a base salary of $150,000 to $200,000 paid in stablecoins, and performance directly tied to protocol fee growth. This proposal passed with 96.42% approval in the DAO governance vote.

A decentralized protocol, with overwhelming community consensus, has decided to introduce a traditional professional manager. This indicates that the community has realized that the original makeshift model can no longer hold up, and the solution they could think of is to align more closely with traditional corporate management.

The situation for dYdX is even more dire. At the beginning of 2023, dYdX held a 73% share of the decentralized perpetual contract market, almost monopolizing it; by the end of 2024, this figure had dropped to single digits, with its token price plummeting over 90%.

Today, the two protocols appear in media reports not for product updates or market share, but for token buybacks. When a protocol focuses primarily on maintaining token value rather than gaining market share, its strategic focus has fundamentally shifted.

The decline of GMX and dYdX is due to complex reasons.

First is the starting point issue. A report from OKX Ventures shows that in 2021, dYdX pushed its daily trading volume to about $9 billion through trading mining, temporarily surpassing Coinbase. This figure was inflated by token incentives, where users inflated volumes to earn rewards rather than engaging in real trading.

The more serious consequence is not the false data itself, but that the team responded to the false user feedback as if it were real product signals, leading the iteration direction astray from the very beginning.

Second is the structural issue. GMX employs a multi-asset liquidity pool model with oracle pricing. This design was reasonable in 2021 when order books could not operate effectively on the Ethereum chain; the AMM model was a viable option.

However, this architecture has a quantifiable ceiling; the total open contract size the protocol can support is about five times the TVL, and the TVL cap locks in the upper limit of trading volume.

LPs in this model are inherently at an information disadvantage, acting as the collective counterparty for all traders but lacking the ability to manage risks proactively. Professional market makers are unwilling to enter under these conditions, resulting in perpetually limited liquidity depth.

dYdX recognized the direction of order books and decided to migrate to a self-built application chain on Cosmos. The technical judgment was correct, but execution encountered problems. After the migration, users needed to adapt to new wallets and cross-chain asset bridging, significantly increasing friction costs. More critically, the protocol fees in the v4 version flowed to validators rather than token holders, leading to a zero perception of community growth dividends.

The third point concerns the judgment of decisive points. GMX bets on the liquidity model, while dYdX bets on a self-built chain, but there are only two real decisive points in this track: performance and the density of the market maker ecosystem.

OKX Ventures points out that most perpetual DEXs merely transfer centralized risks from the custody layer to the less visible execution and clearing layers, treating decentralization as a narrative rather than a genuine product issue to solve.

dYdX's shift to synthetic stock perpetual contracts and opening to U.S. users is a way to exchange compliance for survival space, avoiding direct competition. GMX's recruitment of a CEO is an organizational upgrade to make up for strategic misjudgments. These are all correct self-rescue actions, but they are still addressing the results rather than the causes.

The Logic of Latecomers

When Hyperliquid launched in 2023, GMX and dYdX were still the dominant players in this track. It did not raise funds, did not have VC backing, and did not conduct large-scale launch activities.

Early growth was slow. Without token incentives to inflate volumes, the number of traders and market makers accumulated during the cold start period was limited, and the platform's data remained poor for a long time. The profit and loss of the HLP treasury can be checked in real-time on-chain, attracting only those willing to put real money in, but at that time, this was not a prominent advantage.

On the technical front, founder Jeff chose to build a self-developed L1 from the beginning, creating a fully on-chain order book. The underlying logic is to allow market makers to identify different types of trading flows through a completely transparent on-chain environment, thereby adjusting pricing strategies.

This approach determined that it could not follow dYdX's path of migrating to an application chain, nor could it rely on GMX's oracle pricing, and could only rebuild from the ground up. Although this theory remains controversial in the industry, it provides a clear main line for Hyperliquid's product direction.

In terms of traditional asset layout, HIP-3 will launch in October 2025, first accumulating a market maker ecosystem with crypto assets, then sequentially introducing gold, silver, and crude oil.

Reports indicate that when dYdX launches a permissionless traditional asset market in 2024, the daily trading volume of synthetic Tesla stocks will be $4,000, while the Turkish lira will be $0. No market makers are present, and asset launches result in zero.

Hyperliquid's approach is to expand asset categories only after the market maker ecosystem matures, so when the Iran crisis broke out, it captured this wave of trading volume.

Image source: RootData

According to CoinGecko data, as of March 26, based on 24-hour open contracts, Hyperliquid accounts for about 54% of the top ten perpetual DEXs, with Aster ranking second at about 15%, and Hyperliquid's scale still exceeds the total of the other nine.

Aster, ranked second, and Hyperliquid entered the market almost simultaneously; why did Hyperliquid surpass Aster later?

Aster CEO Leonard stated in an interview, "When dYdX appeared, we began trying to build our own things on-chain, and the first version of Aster emerged, which is Apollo X. Since then, perpetual contract DEXs have gone through several cycles, with projects like GMX representing an era. We have always tried to create what the market truly needs, which is how Aster came to be."

From his words, it is clear that Aster's path is gradual. Starting from the AMM model, it iteratively added an order book and then addressed the limitations of transparent markets with privacy order features. Each step responds to market feedback, and each step is a reasonable product decision.

In simple terms, it has always followed the evolution of the track rather than defining the evolution of the track.

Don't Release Your Product Too Early

In the crypto industry, the speed of technological paradigm shifts is too fast; incremental iteration means you are always chasing the decisive points of the previous era.

There have always been people in this track looking for answers, and it is still the case now.

The crypto industry is currently not favored, with a large number of talents and capital withdrawing. But precisely because people are leaving, the technological window will not be quickly filled, giving builders more time. Each iteration of infrastructure, the maturity of L2, the feasibility of application chains, and the operability of on-chain order books will open up new possibilities for products.

First-mover advantage in this industry is much weaker than in traditional industries; this is both a risk for old players and a real opportunity for new players. Especially in an era where AI tools smooth out productivity gaps, homogeneous competition is intensifying, and just-right products are becoming increasingly difficult to establish.

The founder of Particle, summarizing the entrepreneurial lessons of the past year, quoted a statement from Google founder Sergey Brin at Stanford: "Don't release your product too early." What he means is that once you release signals too early, you become tied to a delivery timeline, leaving no time to truly complete what needs to be done.

Therefore, the real issue in entrepreneurship is not how fast you run, but rather understanding where the end state of this track lies.

Conclusion

The recruitment of a CEO by GMX is not a big deal, but it may be looked back on as a footnote at some point.

The entrepreneurial dividend period for the first generation of perpetual DEXs has ended; the era of makeshift teams, founder-driven initiatives, and rapid iterations has reached a point where professional management is needed.

New windows are elsewhere, just as Hyperliquid captured this wave of geopolitical trading with commodity contracts, decentralized exchanges are moving from internal competition within the crypto industry to a genuine replacement of traditional financial infrastructure, and this direction has only just begun.

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