Searching for Alpha: Hyperliquid

Onchain perps protocols continue to iterate and proliferate throughout DeFi. Despite growing interest and a continuous stream of new entrants, volume on onchain perps protocols is relatively stagnant relative to centralized exchanges (Figure 1). While many aspects of the onchain user experience continue to converge with that of centralized exchanges, some of the most significant persistent gaps stem from limited throughput onchain. 

At a high level, onchain perps protocols can be generally classified as either peer-to-pool AMMs or limit order books (LOBs). In order to attract high-frequency trade flow and scale to volumes comparable to centralized exchanges, throughput for both order creation and settlement needs to increase by multiple orders of magnitude over what is available today. A number of protocols (including dYdX, ZigZag, and Vertex) are aiming to close this gap with different approaches and degrees of progress towards fully onchain matching and settlement.