Lighter Challenges Hyperliquid: Opportunities and Risks Behind the $700 Million TVL

After Hyperliquid ignited the DeFi Perptual Futures craze, the zero-fee DEX Lighter attracted 56,000 users and $700 million in TVL within months, even surpassing Hyperliquid in daily volume. However, behind the abnormal data of high volume and low open interest, is it the next star project or just a flash in the pan Airdrop wash trading bubble?

The Technological Revolution of Perptual Futures DEX Track

The perpetual futures exchange arena is undergoing a technological revolution. Following Hyperliquid igniting the entire DeFi derivatives market and ushering in a new chapter for the industry, Aster has recently emerged, with the founder of a CEX personally stepping in to call the shots, even overshadowing Hyperliquid for a moment, adding a second spark to this frenzy.

Beyond the glow of these two star projects, a new project named Lighter is quietly rising. With its unique zero-fee model and ZK Rollup technology architecture, it has attracted over 56,000 users and $700 million in funds locked in just a few months, also drawing significant market attention. What are the exceptional qualities of this project, which is praised as the “next Hyperliquid”?

Lighter Core Data Overview

Core Features of Lighter

Lighter has carved out a third path that is distinct from Hyperliquid and traditional DEX: centralized execution and decentralized verification. Here are its four core features.

Traditional CEX has a fast execution speed, but it is centralized and opaque, making it prone to “black box operations” that harm traders' interests. On the other hand, while DEX puts all operations on-chain, making exchange behaviors transparent and verifiable, it results in slow transaction matching and a poor user trading experience. To address this issue, various technical schools have emerged within DEX.

Comparison of Three Technical Routes:

1. dYdX Route: Off-chain Matching, On-chain Settlement

Advantages: Improve order matching and execution speed

Disadvantages: The off-chain part is opaque, reverting back to CEX status.

2. Hyperliquid Roadmap: Full Chain Layer1

Feature: The first successful, large-scale application of a fully on-chain DEX

Implementation method: Customized Layer 1, fully optimized execution layer and consensus layer

Advantages: The exchange maintains high throughput while having comprehensive on-chain functions.

Applicable scenarios: Meet the immediacy requirements of high-frequency trading, market makers, and other professional teams.

3. Lighter Route: ZK Rollup + Zero-Knowledge Proofs

Features: Centralized Execution, Decentralized Validation

Execution Layer: Layer 2 single Sequencer completes matching, speed is fast.

Verification Layer: Ensure transaction fairness through Zero-Knowledge Proof (ZK Proof)

Core Innovation: Every match and forced liquidation will generate ZK proofs and submit them to Layer 1 for verification.

The biggest highlight of Lighter lies in its self-developed ZK Rollup technology solution. Unlike the general-purpose ZK Rollup on the market, Lighter has been deeply optimized specifically for order book trading. By focusing solely on matching logic, Lighter has significantly simplified the complexity of zero-knowledge proofs, achieving sub-second generation of ZK Proofs, meeting the real-time requirements of professional trading teams.

Key advantages of the Lighter ZK architecture:

· All matchmaking strictly follows the price-time priority principle.

· No dark operations or queue jumping trades are allowed (in theory)

· Sub-second generation of zero-knowledge proofs

· Achieving a balance between execution efficiency and trust transparency

Dual-layer Security Guarantee

The core architecture of Lighter adopts the design concept of “asset custody on Layer 1, transaction execution on Layer 2.”

Architecture Layering:

Layer1 (Ethereum Mainnet)

· Responsible for fund custody

· All user assets are stored in audited smart contracts.

· Provide ultimate security guarantee

Layer2 (Lighter Network)

· Responsible for high-speed matching and settlement

· The final account status will be published in compressed diff format on L1.

· Optimize trading execution efficiency

The biggest advantage of this design is security. Even if the Layer2 system of Lighter completely crashes, users' funds are still safely stored on the Ethereum mainnet and can be retrieved through an emergency exit mechanism.

LLP Dual Purpose Innovation

Lighter has a public liquidity pool (LLP) that acts like an insurance fund, used to absorb liquidation losses and provide market-making liquidity for the platform. Users can deposit funds into the LLP to contribute liquidity to Lighter while enjoying market-making profits. This design mimics Hyperliquid's HLP mechanism.

The innovation of LLP: In future versions, users who deposit funds into LLP will not only be able to earn market-making profits as LPs but also plan to allow LP shares to be used as collateral for trading, achieving dual utilization of funds. This design prevents funds from idling and improves capital efficiency (similar to the yield-generating collateral model of Aster's USDF, etc.).

Risk Warning: This feature is not yet online. During the implementation process, it is necessary to fully consider risk control, which will be detailed in the risk analysis section.

Zero Fee Strategy

Lighter adopts a bold business model in the DeFi space—completely waiving transaction fees for general users. Whether placing an order (Maker) or taking an order (Taker), users can enjoy zero-cost trading. This is undoubtedly a huge attraction in the DeFi world where transaction fees can easily reach a fraction of a percent.

Charging Model Comparison:

Professional traders and market makers are willing to pay these fees for lower latency and better service quality. In addition, the platform also generates revenue through clearing fees (up to 1%) and other value-added services.

Warning: Free is the most expensive thing in the world. The Lighter free strategy not only reminds one of Robinhood's Payment for Order Flow (PFOF) model, but also the zero commission encourages a portion of wash trading. The risks in this regard will be discussed in the following text.

Project Status and Data Performance

1. Development Progress

Lighter began testing at the end of 2023, with an early version (then called “zkLighter”) running in 2024 and private testing starting in early 2025. As of now (September 2025), the platform is still in the invitation-only testnet/beta testing phase and has not been fully opened to the public. The official timeline for the mainnet launch and token issuance has not yet been announced.

Due to the mainnet not being launched yet, the core code of Lighter has not been fully open-sourced, but the smart contract has passed the audit (ZK circuit audited by ZKSecurity). The code details may be released to the community for oversight when the mainnet is launched in the future.

2. Growth Data Performance

(Source: DefiLlama)

From the data performance, the growth of Lighter is indeed remarkable:

User scale: As of September 2025, the number of registered users has exceeded 56,000.

Fund size: Total Value Locked (TVL) surged from 2.5 million USD in March this year to over 700 million USD, growing by 280 times.

Trading Activity: The average daily trading volume has risen from several hundred million dollars during the summer to about 8 billion dollars recently, reaching as high as 18.9 billion dollars on September 25, 2025, quickly approaching Hyperliquid's market share. Recently, its daily trading volume has even surpassed Hyperliquid.

3. Data Anomaly Alert

On the other hand, Lighter's open interest is relatively low. Currently, Lighter's OI is around 1.3 billion USD, which is an order of magnitude less than Hyperliquid's 13 billion USD, and also lower than Aster's recent level of 1.5 billion USD.

This abnormal ratio strongly suggests that the two emerging popular platforms, Lighter and Aster, have a significant amount of frequent wash trading behavior. Under normal circumstances, the ratio of volume to open interest should be within 5 times; Hyperliquid is about 0.76 times, while Lighter is as high as about 27 times, far exceeding normal levels.

Lighter vs Hyperliquid vs Aster: Competitive Analysis

As a new generation ZK architecture perpetual DEX, Lighter is often compared with Hyperliquid (the star project that first ignited the perps craze) and Aster (the rising star backed by the Binance ecosystem). The following is a horizontal comparison from multiple dimensions.

1. Underlying Architecture and Decentralization

Hyperliquid: The customized Layer 1 has multiple validation nodes, which are theoretically decentralized. However, due to the small number of nodes and the fact that they are all controlled by the team, the actual degree of decentralization is limited.

Aster: Core matching is implemented off-chain, more centralized.

Lighter: As a Rollup, there is only a single Sequencer responsible for matching, which centralizes the execution layer. However, verifying ZK Proof consumes very few resources, allowing lightweight nodes to also verify, making the verification process highly decentralized and compensating for the shortcomings of “centralized execution.” Additionally, the asset ledger is on the Ethereum mainnet, so even if the Lighter team disappears, users are allowed to autonomously retrieve their funds, ensuring asset security.

2. Performance and Trading Experience

Hyperliquid: Processing hundreds of thousands of orders per second, maintaining stability even in extreme market conditions, without congestion or downtime.

Lighter: Achieving millisecond matching, zero-knowledge proof sub-second generation, experiencing close to centralized exchanges. Performance is usable, with slight stuttering in extreme situations.

Aster: Due to the 3-second block time of the BNB chain, its performance is relatively weak. To compensate for this performance gap, general users can execute trades with its automated market-making pool with one click, which is equivalent to directly consuming the liquidity of the AMM pool, saving the time of waiting for orders. In the future, Aster plans to launch its own ZK Rollup chain to improve performance and privacy, which will make its future architecture more similar to Lighter.

3. Product Features and Innovations

Hyperliquid: As a pioneer, it has relatively balanced and mature functions. It offers both spot trading and Perptual Futures trading. HIP-3 allows users to create contract markets on their own, which will undoubtedly promote the trading of RWA products such as U.S. stocks on Hyperliquid. HIP-4 proposes conducting “prediction markets” on Hyperliquid.

Aster: Leveraging Binance's influence to quickly acquire customers. There are three innovative features: multi-chain liquidity sharing, 1001x high leverage, and planned dark pool trading, attracting high-risk speculative traders. Additionally, Aster has launched perpetual trading for US stocks, including contracts for Tesla, Apple, and others, allowing users to trade US stock prices 24/7.

Lighter: As an Ethereum Layer 2, it is expected to achieve good compatibility with the Ethereum mainnet and other Rollup ecosystems, such as directly supporting users to use any mainstream Ethereum assets as collateral, and can be integrated with wallets and strategy protocols on Ethereum, leveraging the combined advantages of Ethereum DeFi. In addition, the LLP margin dual-use feature planned for Lighter is a potential innovation: it allows liquidity providers to earn market-making profits while also gaining the opportunity to participate in trading, effectively endowing LPs with a yield-bearing collateral property.

4. Liquidity Depth and Trading Costs

Hyperliquid: With massive market-making funds (HLP pool once reached over $1.5 billion + capital) and the participation of a rich variety of institutional market makers, the depth of buy and sell orders for its mainstream trading pairs even surpasses some second-tier CEXs, resulting in minimal trading slippage and implied spreads. Although the fees are not zero, the rates of 0.01% for limit orders and 0.03-0.05% for market orders are already very low among DEXs. Overall, Hyperliquid provides large capital traders with a low-cost environment close to that of CEXs.

Lighter: It adopts a zero-fee approach in exchange for a larger spread. Ordinary users do not need to pay fees, resulting in lower apparent costs, but market makers will increase the bid-ask spread to cover costs in order to profit. Therefore, the actual trading spread for Lighter users may be slightly higher than that of Hyperliquid. Especially for niche trading pairs, due to the lack of widespread market maker participation in Lighter, the liquidity depth is relatively insufficient, and some users have reported that the market thickness of Lighter on certain altcoins lags behind that of Hyperliquid.

Aster: The situation is more complicated. Its regular mode provides liquidity through the ALP automatic market-making pool, with depth depending on the scale of assets in the pool and the algorithm; the Pro mode, due to multi-chain reasons, has dispersed liquidity provider funds, and market makers associated with Binance are mostly concentrated on the BNB chain, resulting in generally lower depth for non-BNB chain targets.

Lighter Valuation Analysis

Valuation comparison analysis based on income forecasts:

Hyperliquid Reference Index

Income Estimate:

· Daily income conservatively estimated to exceed 3 million USD

· Annual income is approximately 1.1-1.2 billion US dollars.

· The current HYPE FDV is approximately 45 billion USD.

· Implied Price-to-Earnings (P/E) ratio of about 40 times

Lighter Valuation Forecast

Volume Assumption:

Lighter's recent volume has exceeded 8 billion dollars. However, considering that the current strong momentum of Lighter may not be sustainable, and coupled with the market's general belief that this volume includes too much wash trading, the author cautiously optimistically assumes a future stable daily average trading volume of 4 billion dollars.

Income Calculation:

Lighter currently does not charge fees for regular trading, and its income mainly comes from premium account rates.

Assumption Conditions:

· 20% of daily trading comes from paying users

· Average Fee Rate 0.01%

· Annual income = 4 billion × 20% × 0.01% × 365 = approximately 30 million USD

FDV Estimated:

Using a P/E similar to Hyperliquid's at 40 times, the author estimates Lighter's FDV to be around 1.2 billion USD.

Market Expectations:

Currently, the Polymarket prediction market gives an 80% chance that Lighter's listed valuation will exceed $2 billion, reflecting the market's optimistic sentiment towards Lighter. This high premium demonstrates the market's enthusiasm for the high-performance Orderbook DEX sector.

Valuation Reasonableness Analysis:

Risk Analysis: Four Major Concerns That Cannot Be Ignored

Although Lighter showcases many highlights, investors must rationally consider the risks and challenges involved.

1. Business model in question

Lighter has currently waived trading fees for users, which has indeed attracted a large number of users in the initial stage, but in the long run, where does the platform's profit come from? Whose money are they making?

Concerns of the Robinhood Model:

The “zero commission” strategy inevitably reminds people of traditional zero-commission platforms like Robinhood. Robinhood shifted its revenue source to “order flow auctioning,” which means charging fees to market makers/high-frequency trading firms, allowing them to execute trades at favorable prices. This essentially shifts costs to the spread: retail investors seemingly do not pay commissions, but may execute trades at worse bid-ask spreads, effectively being “eaten” by the market makers.

The founder of Lighter does not shy away from expressing his agreement with the Robinhood model in the podcast, believing that DeFi can learn from this idea of “the wool comes from the pig, and the cow pays the bill.” However, the structure of traders in the crypto market is different from that of U.S. stocks—crypto users are relatively niche and specialized, with a higher sensitivity to spreads; otherwise, there wouldn't be a technological migration from the vAMM to the CLOB model. If Lighter's zero fees lead to spreads significantly greater than competitors, seasoned traders will notice and leave.

API Service Contradictions:

Since paid access to the high-speed API is the main source of income for Lighter, Lighter should have optimized the experience for this user segment. However, some members of the community have reported that Lighter is slow in opening up to external interfaces, that the API documentation is lacking, and that the integration experience is poor, leading to questions about whether the team intends to keep retail order flow for its internal team, not wanting to let external high-frequency trading and market-making teams share the pie.

2. Issue of Authenticity of Trading Data

The eye-catching data behind Lighter may contain a lot of fluff. The most obvious abnormal indicator is the ratio of volume to open interest.

Abnormal Data Comparison:

This unusually high turnover rate strongly suggests the presence of a large amount of frequent wash trading on the platform.

Wash Trading Motivation Analysis:

As Lighter has not yet issued tokens, the main motivation for users to engage in wash trading is to compete for future airdrop points rankings. Zero transaction fees significantly reduce the cost of wash trading, allowing certain users to frequently trade between their controlled accounts, creating huge transaction volumes while incurring almost no losses.

On-chain data verification:

According to on-chain data analysis, many top addresses on Lighter open and close positions thousands of times within a day, but very few positions are held overnight, which completely aligns with the characteristics of mining airdrops and taking advantage of the situation. The low open interest further confirms that there has not been a large-scale addition of real liquidity in the market, and a significant amount of trading may be wash trading.

Airdrop Risks:

Once the airdrop distribution ends, the trading volume of this “false prosperity” is likely to disappear quickly, and the platform's activity faces a cliff-like decline.

3. LLP Reuse Risk

The future plan of LLP allows users to use their LP shares as collateral to participate in trading. This innovative “one money for multiple uses” approach may introduce complex systemic risks.

Extreme Scenario Simulation:

Market Making Loss: The Lighter team uses LLP funds for market making, and the market experiences extreme unilateral fluctuations. LLP, as the counterparty, incurs significant losses, resulting in a decline in the net value of each LLP share.

Trading Loss: Users who use LLP shares as margin for trading losses will have the number of LLP shares in their Margin account deducted.

Cascade liquidation: The combination of market making losses and trading losses leads to a simultaneous decline in LLP net value and the amount of LLP in the Margin account, amplifying the losses in the user's Margin account, which may trigger a cascade of forced liquidations, further exacerbating system instability.

Necessary Measures for Risk Control:

· Limit the maximum collateral rate for LLP

· Introduce dynamic risk parameter adjustments

· Establish a multi-tiered risk buffering mechanism

· Independent Operating Insurance Fund (refer to Hyperliquid)

It is precisely because of this kind of risk that the insurance funds of mature platforms like Hyperliquid operate independently and do not allow users to collateralize and reuse.

4. Team Governance Uncertainty

The success or failure of a startup project is closely related to the quality of the team. The founders and team of Lighter have a strong technical background (founder Vladimir has worked in the fields of AI and FinTech, and core members include former institutional quantitative engineers), but there are also some unfavorable rumors in the industry that raise concerns.

Project Timeline Concerns:

Lighter is actually not a new project that became famous overnight; its predecessor “zkLighter” was established as early as 2022, but it initially did not gain much attention. It was not until the end of 2023 when Hyperliquid gained popularity that the team accelerated its progress, giving the impression of “rushing to issue tokens and monetize while riding the wave.”

Founder Controversy:

There are rumors online questioning the founder's unstable style. According to a blogger named JulianKin, Lighter's founder Vladimir Novakovski has allegedly broken rebate promises to several partners and reneged on profit distribution; there are also rumors that he is obsessed with luxury lifestyles such as yacht parties in Miami and has an undisciplined private life.

Investment endorsement questioned:

Although many sources say that Lighter received investments from a16z and Lightspeed, there are also claims that a16z and Lightspeed invested in Novakovski's previous project, Lunchclub, an AI community platform. Therefore, Novakovski actually used the funds from the main business of Lunchclub to create a side project, Lighter, which unexpectedly became popular.

If the above statement is true, Lighter actually did not receive any endorsement from well-known institutions, but may instead be used by investors of the previous project as a channel for cashing out.

Risk Warning: The authenticity of the above rumors remains to be verified, but investors should remain cautious and pay attention to the team's subsequent actions and project transparency.

Summary: Opportunities and Risks Coexist

Lighter, as an emerging force in the perpetual futures DEX space, has indeed showcased several highlights: the innovative ZK Rollup architecture, zero transaction fee model, and rapidly growing user and capital scale. Against the backdrop of a new round of competitive climax in the DeFi derivatives market, Lighter is undoubtedly a project worth paying attention to.

Core Advantages of Lighter

Technical Innovation:

· ZK Rollup optimized for trading

· Sub-second proof generation

· Asset custody on the Ethereum mainnet ensures security

Business Strategy:

· Zero transaction fee to attract users

· Paid API service professional team

· LLP dual-use enhances capital efficiency

Data Performance:

· TVL grew 280 times in half a year

· Daily trading volume exceeds 8 billion USD

· 56,000 users quickly accumulated

· Risks that must be addressed

However, we must also rationally consider the risks and challenges involved:

Business model: The long-term sustainability of zero transaction fees is questionable, which may lead to increased spreads and ultimately harm user interests.

Data Authenticity: The current high volume is likely to contain a significant amount of false elements due to wash trading for airdrops, and a cliff-like decline may occur after the airdrop.

Technical Risks: The LLP reuse feature may pose systemic risks, requiring a comprehensive risk control mechanism.

Competitive Pressure: It remains uncertain whether Lighter can establish a true moat under the competition from strong rivals like Hyperliquid and Aster.

Governance Uncertainty: There are controversies regarding team background and investment endorsements, and transparency needs improvement.

For investors, Lighter could either become the next legendary Hyperliquid or fade into obscurity after the hype dies down. Its ultimate trajectory is worth our close attention.