DeFi & Perp DEXs
Hyperliquid, the on-chain derivatives market, DeFi protocol revenues, and the structural shift of trading volume from CeFi to DeFi.
Current Situation
Last updated: July 25, 2026
The DeFi sector is experiencing a stark divergence between traditional application revenues and high-growth narratives. Total revenue across all DeFi applications fell to its lowest level since 2024 during the last quarter, contrasting with record revenue levels in RWA Lending, Physical TCG, and Cedefi categories. This trend is underscored by the expansion of tokenized assets, with tokenized gold growing from $1.1 billion in 2025 to over $6 billion by early 2026, and over $6 billion in new capital entering RWAs year-to-date.
Market structure is shifting as legacy players collapse and institutional infrastructure expands. BitMEX is ceasing all operations, and a proposed merger between three cryptocurrency firms was scrapped, leading to a consolidation of power within a Tether-backed franchise. Conversely, institutional footprints are growing, evidenced by Coinbase planning to increase its Singapore headcount from 150 to 200 by year-end. On the network level, Ethereum remains the leader in total value locked and stablecoin supply, though it is now nearly tied with Solana in application fees and perpetual volume.
Investment implications center on a rotation away from general DeFi protocols toward AI-integrated infrastructure and tokenized real-world assets. IREN Limited highlighted this shift by signing $2.8 billion in new contracts with AI developers and raising its 2026 annualized run-rate revenue target to over $4 billion. This aligns with claims from CZ that AI will drive future cryptocurrency demand. Current capital efficiency is reflected in EVM stablecoin supply rates of 3.23% and borrow rates of 4.06%, with USDE offering the lowest borrow rate at 2.56%.
Key variable to watch: whether the growth in tokenized gold and RWA capital inflows can fully offset the multi-year lows in traditional DeFi application revenue.
Background
DeFi and Onchain Derivatives
Decentralised Finance (DeFi) is the attempt to recreate financial services — lending, trading, derivatives, insurance — using smart contracts on public blockchains, without intermediaries. At its core, DeFi replaces trust in institutions with trust in code: the rules are transparent, execution is automatic, and no central party can unilaterally change the terms.
Perpetual futures (perps) are the dominant DeFi derivative product. Unlike traditional futures contracts (which expire on a fixed date), perpetuals have no expiry — they trade continuously and use a funding rate mechanism to keep their price anchored to the underlying spot price. Every 8 hours, traders on the "wrong" side of market consensus pay a funding fee to traders on the "right" side. When longs dominate, they pay shorts; when shorts dominate, they pay longs.
Perps on centralised exchanges (Binance, OKX, Bybit) handle the majority of crypto derivatives volume — over $100B/day at peak. On-chain perps have historically been a fraction of this, constrained by transaction fees, capital inefficiency, and inferior UX. Hyperliquid has changed this calculus.
Hyperliquid
Hyperliquid is the defining DeFi perps story of 2024–26. Built as a purpose-built Layer 1 blockchain with a fully on-chain order book (rare — most DEXs use AMMs), Hyperliquid launched its mainnet in 2023 and has grown to handle $5–10B in daily notional volume. Its key innovations:
On-chain order book at CEX speeds: Traditional DEXs use automated market makers (AMMs) that don't require a central order book but are capital-inefficient for derivatives. Hyperliquid built a custom consensus mechanism (HyperBFT) that processes 100,000+ orders per second with sub-second finality — enabling limit orders, stop losses, and post-only orders at exchange-like speeds.
HYPE token: Hyperliquid launched its HYPE governance and fee-sharing token via airdrop in November 2024. The airdrop was notable for its size ($1.2B+ at launch prices) and its distribution exclusively to actual users — no VC allocation, no team reserve in the airdrop. HYPE has become one of the most traded tokens in DeFi.
HLP (Hyperliquidity Provider): A vault that provides liquidity to the exchange and earns fees. It functions as the market maker of last resort. The HLP vault attack in March 2025 — where a whale manipulated a low-liquidity memecoin to extract funds from the HLP — was the most significant stress test of the protocol's risk management.
The Broader DeFi Derivatives Landscape
dYdX: The original on-chain perps leader, rebuilt as its own Cosmos-based chain in v4. dYdX has significant volume but has lost market share to Hyperliquid.
GMX: A perps DEX on Arbitrum that uses a multi-asset liquidity pool as the counterparty to all trades. Simpler architecture than Hyperliquid but capital-inefficient for large positions.
Drift Protocol: The primary perps DEX on Solana, benefiting from Solana's high throughput and low fees. A direct competitor to Hyperliquid for Solana-native users.
Uniswap v4 / Concentrated Liquidity: While not a derivatives platform, Uniswap's concentrated liquidity mechanism allows LPs to provide liquidity in specific price ranges, enabling more capital-efficient trading and providing an infrastructure layer for options protocols building on top.
Market Exposure
HYPE: The most direct expression of Hyperliquid's growth. HYPE token captures a portion of exchange fees (through buyback-and-burn and staking) and appreciates with platform volume. It is one of the cleaner "fee revenue" tokens in DeFi.
ETH and L2 tokens: Most DeFi activity settles on Ethereum or L2s. High DeFi volumes are positive for ETH (gas fees, burned supply) and for L2 tokens that capture activity on their networks.
Protocol Tokens: DYDX (dYdX governance), GMX (GMX protocol), DRIFT (Drift Protocol on Solana) — all provide fee-sharing or governance rights with exposure to their respective platform volumes.
Stablecoins: DeFi activity requires stablecoins for collateral and settlement. USDC and USDT are dominant; DAI/USDS (MakerDAO), GHO (Aave), and protocol-native stablecoins provide alternatives. Stablecoin market cap growth tracks DeFi adoption.