Honeypot Finance: A New Full-Stack Perp DEX, Can It Challenge Hyperliquid?

Author: momo, ChainCatcher

The current decentralized perpetual contract (Perp DEX) market is undergoing a new round of reshuffling. Following Hyperliquid, protocols such as Aster and Lighter have entered the market one after another, breaking the original pattern, indicating that market competition is far from over before the infrastructure matures.

In this context, the emerging challenger Honeypot Finance provides an observational sample. It recently completed a new round of financing with a valuation of $35 million, gaining support from well-known institutions such as Mask Network.

Unlike mainstream solutions, Honeypot's differentiation lies in its "full-stack" approach, which combines AMM and order book models. It aims not only to optimize the trading experience but also to integrate token issuance, liquidity management, and derivatives trading into a collaborative system, with its perpetual contract trading volume exceeding $20 million shortly after launch.

This article will analyze Honeypot's products and mechanisms, exploring whether its full-stack integration model can establish a sustainable competitive advantage in the current market.

From Meme Launchpad to Full-Stack Perp DEX

Before entering the Perp DEX space, Honeypot's core battleground was the Meme Launchpad. The team aimed to address the core pain points of the Memecoin economy at the time by creating the star product Pot2Pump, specifically how to capture and retain real long-term value for the protocol during the frenzied but short-lived issuance cycles, rather than just one-time traffic.

Pot2Pump revolutionarily transformed early participants into native liquidity providers (LPs), allowing liquidity pools and tokens to be born simultaneously. This design changed the vicious cycle of early Memecoin "scientists" arbitraging and liquidity rapidly depleting, converting high volatility into sustainable fee income for LPs.

Through Pot2Pump, Honeypot successfully validated an important model: in the high-volatility, high-gambling asset domain like Memecoin, clever mechanism design can guide liquidity behavior, transforming market enthusiasm into stable revenue streams that can be shared by the protocol and the community.

However, Honeypot quickly realized that Memecoin was more of an entry point for liquidity experiments rather than the final form. The long-term viability of the protocol depends on whether capital can continuously trade, price, and settle within the system.

Based on this judgment, the team expanded its focus from single issuance to a complete structure encompassing market making, trading, and risk management, with perpetual contracts becoming the natural choice. Compared to spot trading or one-time issuance, Perp DEX can sustainably accommodate trading demand, generate stable fees, and convert volatility into manageable risk exposure.

Differentiation and Innovation of Honeypot Finance

When Honeypot Finance entered the perpetual contract space, it faced two mainstream paradigms, each with its flaws.

On one side is the order book model reliant on market makers, which excels in calm market conditions but can see liquidity evaporate instantly during heightened volatility, leading to price gaps and user liquidations under adverse conditions.

On the other side is the AMM model represented by GMX, which avoids information lag through oracle pricing but makes liquidity providers direct counterparties to all traders. In one-sided markets, these capital providers continuously suffer losses, resulting in funds often fleeing when the protocol needs support the most.

A deeper issue lies in the imbalance of risk and fairness: to ensure the system does not collapse, some protocols adopt automatic liquidation mechanisms that sacrifice the interests of some profitable users to cover losses in extreme cases, raising widespread fairness concerns; at the same time, placing all funds indiscriminately in the same pool hinders the entry of capital with different risk appetites, especially large funds seeking stability.

1. Building Full-Stack Liquidity: Order Book and AMM Working Together

To address these structural issues, Honeypot did not choose to patch the old paradigms but proposed a fusion approach. Its core is to build a "full-stack" perpetual DEX that allows the order book and AMM to work together, automatically adapting to different market conditions.

The order book is responsible for efficiency and depth: by integrating a high-performance on-chain order book in collaboration with Orderly Network, Honeypot provides traders with a low-slippage, high-speed trading experience similar to centralized exchanges during stable market conditions, meeting the needs of high-frequency and professional traders.

The AMM provides resilience and assurance: Honeypot's self-developed AMM mechanism is centered around a dynamic price band based on oracle prices. When the market experiences severe volatility or black swan events, and order book liquidity is depleted, the AMM becomes the final layer of executable assurance, ensuring trades can be executed at any time.

The system automatically selects the optimal execution path (order book or AMM) for users' trades based on market volatility and order book depth, allowing users to achieve the best experience without manual intervention. This truly realizes "efficient trading in calm times, predictable execution in storms."

2. Implementing Structured Risk Control: Layered Vaults and Fair Liquidation Processes

In the core aspect of risk management, Honeypot has also thought deeply.

They started with capital structure and introduced a layered vault system.

This allows conservative funds seeking stable returns (such as potential institutional capital) to enter the "priority vault," enjoying priority in fee distribution and ultimately bearing losses, achieving risk isolation. Meanwhile, crypto-native players can voluntarily choose to enter the "secondary vault," becoming the first line of defense absorbing losses in exchange for higher returns. This design transforms risk from a "passive, mixed burden" into an "active, clearly priced choice."

On this basis, they restructured the liquidation process, designing a "waterfall" sequence with multiple buffers. When a position is close to liquidation, the system does not directly liquidate but sequentially attempts "partial liquidation," marketizing the position through "mini-auctions," and having the secondary vault absorb losses; thereafter, the insurance pool intervenes as a protocol-level buffer to cover extreme tail risk events; only when all the above mechanisms are insufficient to stabilize the system will the minimally impactful and fully auditable ADL automatic liquidation be activated as a last resort. This transparent design, which postpones punitive measures, aims to genuinely fulfill its commitment to "process fairness."

From market feedback, this systematic design from liquidity foundations to risk layers is beginning to receive preliminary validation. According to industry information, its total platform trading volume has exceeded $120 million, with perpetual contract trading volume also surpassing $20 million after launch.

This data strongly confirms that its risk-tiered structure's appeal to stable capital has translated into real capital accumulation. Through this series of designs, Honeypot not only attempts to address existing pain points but also explores building a next-generation on-chain derivatives infrastructure capable of accommodating more complex capital and emphasizing fairness.

Token Economics and NFT Mechanism: How to Achieve a Revenue Closed Loop?

Honeypot Finance does not merely aim to enhance the trading experience but attempts to construct a self-operating revenue system. Its token and NFT designs revolve around the same core goal: to ensure that the real income generated by the protocol can be continuously recycled and redistributed, thereby supporting the ecosystem itself.

1. HPOT: A Tool for Revenue Carrying and Distribution

In many DeFi protocols, tokens primarily serve incentive or governance functions, with limited connection to the protocol's actual income. Honeypot's token $HPOT, with a fixed total supply of 500 million, is designed as a central hub connecting trading activities and value distribution.

The trading fees generated by the protocol in products like perpetual contracts will partially enter the All-in-One Vault, which is managed uniformly by the vault and participates in on-chain strategies, thus transforming into sustainable real income. These earnings are not simply retained but are explicitly allocated, with part used for repurchasing and burning $HPOT, creating a continuous supply contraction; another part is distributed to users participating in the vault in the form of claimable earnings.

Under this structure, $HPOT is not just a speculative target waiting for price fluctuations but a value carrier linked to the protocol's actual operational results, with its role more akin to a "revenue relay" rather than a one-way incentive tool.

2. NFT: Transforming Long-Term Participation into Revenue Weight

Honeypot's HoneyGenesis NFT is not merely an identity or membership credential but a revenue component designed around "long-term participation."

Holders can choose to stake their NFTs, accumulating revenue weight over time; or they can choose to burn their NFTs in exchange for a permanent, higher yield coefficient. This design essentially guides users to exchange time and commitment for higher long-term returns rather than short-term arbitrage.

In this context, NFTs do not emphasize collectible attributes but serve as "revenue weight amplifiers," making participation itself a quantifiable and upgradeable capital investment.

In summary, Honeypot attempts to avoid an "incentive-consuming" model and instead builds ecological growth on real usage and income. The final outcome is not a one-way subsidy but a positive feedback system revolving around revenue recycling and redistribution.

Conclusion:

As the token is about to launch, Honeypot Finance is transitioning from a project driven by early adopters and ecosystem builders to a broader and more complex public market.

Currently, Honeypot's practices have provided a profound sample of structural, risk, and fairness considerations for the on-chain derivatives track. Its core value lies not in the deepening of a single function but in a series of coherent design philosophies:

First, there is the compatibility and scalability of the structure. The "full-stack" model is not just a hybrid solution born to cope with market volatility but reserves underlying interfaces for accommodating longer-term and more diverse capital and trading scenarios. The layered vault design transforms risk from "passive sharing" to "active choice," paving the way for attracting traditional conservative capital.

Second, there is the long-termism orientation of the economic mechanism. Whether through token buybacks and destruction to feed back to users or designing NFTs as upgradeable "revenue positions," the goal is to build a value closed loop where "participation equals accumulation." This logic aims to reduce dependence on one-time liquidity mining incentives and explore the possibility of continuing operations based on real use cases and sustainable revenue distribution after incentives taper off.

Third, there is the collaborative potential of the ecosystem. Honeypot's Perp DEX is not an isolated product but a key link in the full liquidity chain from asset issuance, spot trading to derivatives hedging. This deep integration means that different products are expected to form a positive cycle of capital and user behavior, building a deeper moat.

However, after the initial excitement, can Honeypot convert its meticulously designed structural advantages into stable capital accumulation, sustained real trading demand, and healthy protocol income? Can it prove that its advocated "process fairness" and risk layering can truly protect users and maintain system stability in extreme market conditions? This still needs to be validated by the market.