Signum Newsletter 43
Weekly alpha for your weekend reads
This edition of the newsletter compares 3 perpetual DEXes (Hyperliquid, Ostium, and Lighter) by examining their unique selling propositions and execution risks, highlighting how each takes a different approach to capture market share. Hyperliquid offers a custom L1 with an on-chain order book and community focus, Ostium specializes in bringing real-world assets on-chain with a dual liquidity structure, and Lighter prioritizes verifiable trading execution using SNARKs technology, though all three face regulatory and technical challenges typical in DeFi. We'll also share some interesting articles, portfolio updates and market highlights.
1. Research
a) Underestimating China - Why America Needs a New Strategy of Allied Scale to Offset Beijing’s Enduring Advantages
• The United States has shifted from fear of China's economic dominance to overconfidence, underestimating China's unprecedented scale advantages in manufacturing, military capacity, and critical technologies that will persist despite economic challenges.
• To effectively counter China, America must abandon its outdated alliance model of treating partners as dependents and instead adopt "capacity-centric statecraft" that coordinates with allies to collectively outscale China, rather than pursuing counterproductive unilateralism that fractures essential partnerships.
Underestimating China
Why America needs a new strategy of allied scale to offset Beijing's enduring advantages.
b) The State of Crypto Lending
• The crypto lending market has rebounded to $36.5b in Q4 2024, with DeFi lending growing dramatically (959%) and now representing 63% of the market, while CeFi has consolidated with just three players controlling 89% of that segment.
• This structural shift reflects a market preference for transparency and permissionless protocols, alongside improved risk management practices implemented after the 2022 crash that exposed weaknesses in asset-liability management and collateralization standards.
The State of Crypto Lending and Borrowing
Overview of Crypto Lending and Borrowing Market in Decentralized Finance and Traditional Finance
c) The Upgraded Go-To-Market Playbook
• The new formula is a product + community framework.
• Build where your users already are, enable them to try and buy without friction, create authentic connections rather than sales pitches, and find ways to turn users into advocates on and off your platform.
The Upgraded Go-to-Market Playbook
Modern GTM strategies have evolved. Learn how fast-growing startups are building authentic communities to drive growth.
2. Portfolio
a) Teller Finance
• Teller Protocol has introduced time-based loans that allow DeFi protocols to borrow stablecoins against their treasury assets with fixed repayment terms and zero liquidation risk.
• This enables teams to access working capital without selling tokens or exposing themselves to market volatility, as demonstrated in their case study where a protocol borrowed 250,000 USDC against 2M tokens for 30 days at 6% fixed interest.
Time-Based Loans: Case Study via Treasury
Most protocol teams sit on treasuries made up of long-tail coins and their own native token. These reserves are designed to fund growth, pay contributors, and extend runway - but actually putting that capital to work can be complex. Selling tokens impacts price and signaling. Lending markets often exclude long-tail assets.
b) Fluence
• Fluence, a decentralized compute network for Web3, had a productive March 2025 featuring a redesigned website, expanded token liquidity, and the publication of a comprehensive DePIN Tokenomics Report.
• The company continues to strengthen its cloudless infrastructure through strategic partnerships, high APR offerings, media engagement, and advocacy for the DePIN Pledge initiative that aims to rebuild Web3 infrastructure with decentralized hosting, compute, and indexing.
Fluence Monthly Recap: March 2025
From a redesigned website that clearly communicates Fluence's mission, to a foundational tokenomics report grounded in real DePIN data and expert insights, March was about sharpening the our message and strengthening the Cloudless network. With expanded liquidity, clearer staking opportunities, and ongoing engagement through AMAs, podcasts, and media, Fluence
c) Infrared Finance
• The Infrared protocol has upgraded to version 1.4, which expands BGT boosting beyond its own validator set to external validators, improving yield efficiency and increasing rewards for iBGT stakers.
• This change addresses previous inefficiencies caused by concentrated boosts on Infrared's validators, contributes to greater decentralization of the Berachain network, and allows the protocol to leverage more favorable incentive rates from various validators across the ecosystem.
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3. Perp DEXes
As more traders migrate from CEXes to on-chain alternatives due to various reasons such as (long-tail) token availability, security and counterparty concerns (not your keys not your coins ethos) and no KYC requirements, perpetual DEXes are competing to offer superior speed/usability, liquidity, and innovative mechanics. Three standout contenders — Hyperliquid, Ostium and Lighter — are taking distinctly different approaches to capture market share in this growing segment.
a. Unique Selling Propositions
Hyperliquid
On-chain Order Book: Delivers high-performance trading with full transparency
Purpose-Built L1: Custom Layer 1 blockchain designed specifically for trading, offering CEX-like speed
HyperEVM Integration: Enables developers to build dApps that directly interact with the order book for liquidity
Community-First Approach: Self-funded without VC backing, distributing substantial token allocation to early users
Spot Ecosystem: Features native token standard and auction system for launching new tokens (Hypurrfun)
Ostium
RWA Focus: Specifically designed for trading traditional financial assets (forex, commodities, and indices)
Dual Liquidity Architecture: Innovative Liquidity Buffer + Market Making Vault structure that mitigates adversarial relationships between traders and LPs
High Leverage Capacity: Offers up to 200x leverage on select assets
Market Hours Integration: Built to handle trading schedules, market closures, and holidays of traditional markets
Risk-Adjusted Fee Structure: Dynamic fee system that adjusts based on position size, open interest imbalance, and asset volatility
Lighter
Verifiable Matching and Liquidations - "the first and only exchange that provides verifiable matching and liquidations," using SNARKs to generate cryptographic proofs for trades on order book matching execution. This makes it (mathematically) impossible for the matching engine to act maliciously.
Trustless Exchange Architecture - The platform operates as a trustless service bound to function in a predefined way, ensuring price-time priority is always respected and eliminating potential manipulation.
Trading Fees - "Lighter currently does not charge taker or maker fees. Everyone can trade in all of the markets free of charge," which is a significant competitive advantage compared to other exchanges.
b. Execution Risks
Hyperliquid
Centralized Validators: Currently operated by only 16 nodes and 5 are controlled by the team
Single Point of Failure: Custom L1 design may harbor undiscovered vulnerabilities
Oracle Dependency: Relies on price feeds that could potentially be manipulated, particularly for less liquid assets
Competition from Established CEXs: Directly competing with well-capitalized centralized exchanges
Regulatory Uncertainty: Operating without KYC requirements or formal licensing
EVM Ecosystem Quality: Long-term success depends on attracting high-quality projects to build on HyperEVM
Ostium
Layer 2 Dependency: Heavily reliant on Arbitrum for security and performance
Oracle Complexity: RWA markets necessitate complex oracle solutions with multiple potential failure points
Late Market Entry: Entering an increasingly crowded perpetual DEX space
TAM Expansion Challenges: May struggle to offer significant UI/UX advantages to attract traditional traders
Market Hours Complexity: Managing diverse trading schedules and closures across dozens of traditional markets
Regulatory Exposure: RWA focus may attract heightened regulatory scrutiny
LP Risk Management: Challenge of ensuring Market Making Vault liquidity providers understand and are adequately compensated for directional exposure risk
Lighter
Complex Liquidation Mechanism - Seems like Lighter has a multi-level liquidation system (pre-liquidation, partial liquidation, full liquidation, and auto-deleveraging) --> could be difficult for users to understand and potentially lead to unexpected liquidations if not properly managed.
Reliance on Auto-Deleveraging (ADL) - When the Insurance Fund is insufficient to cover liquidated accounts, the system forces other users into auto-deleveraging, potentially affecting profitable traders.
Zero Price Mechanism - The "zero price" calculation during partial liquidations is mathematically complex and could lead to positions being closed at prices that may be unfavorable to traders, especially during high volatility when liquidations are more common.
c. Conclusion
All 3 platforms represent innovative approaches to onchain perps, but with different focuses.
Hyperliquid has established itself as a leading perp DEX with a custom L1 and onchain order book, gaining significant traction in the crypto-native community. Since it is self-funded, its community-first approach strategy has has resonated very well with its (cult-like) users, though centralisation of its validator set remains a key concern.
Ostium is an up and coming platform which positions itself as a specialised platform for bringing RWAs onchain through perps, with a unique dual liquidity structure designed to align incentives between traders and LPs.
Lighter seems more tech-driven, and focuses on creating a mathematically verifiable trading environment with traditional exchange performance characteristics, appealing to traders who prioritize execution certainty and transparency over other features.
They will all however will face regulatory and technical challenges which is typical in DeFi, and will be interesting to monitor how they overcome such hurdles.
*Disclosure: The information provided on this newsletter is for general informational purposes only and does not constitute professional nor investment advice.
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