The incentive mechanism of Perp DEX requires a second answer

Author: Foresight Ventures

The growth of Perp DEX is largely attributed to token incentives.

Cold starts require incentives; traders, liquidity providers, and order flow channels create value for the market and should be rewarded. The real discussion is not about "whether to incentivize," but rather in what form the incentives occur and whether the rewards truly correspond to contributions.

Before the TGE, platforms typically attract current trading volume and liquidity through points, airdrops, and trading mining, using future token expectations. Such mechanisms can quickly acquire customers, but the fees paid by users are real, while the rewards obtained still depend on future token distribution and market pricing. After the TGE, fees begin to be used for buybacks, burns, and staking rewards, with value gradually returning to the ecosystem, but primarily still through platform tokens.

Thus, the issue is not the incentives themselves, but whether they overly rely on future expectations. Traders create trading demand and fee income; liquidity providers offer depth and execution; wallets, trading terminals, and communities bring continuous order flow. However, existing mechanisms reward the ability to acquire points and hold tokens more than who truly makes the market operate.

This is also a key issue discussed by Foresight Ventures during the investment and incubation of PopDEX: Can the platform establish a more direct and sustainable value return path, making rewards closer to real market contributions?

1. Early Growth and Demand Validation Under Token Incentives

1. Why Tokens Became the Default Tool

The cold start of Perp DEX requires simultaneously acquiring traders, liquidity, and distribution channels, while early platforms often lack stable income and find it difficult to sustain high cash subsidies in the long term.

Tokens provide a more efficient coordination method: platforms can unify the contributions of traders, market makers, and early participants into future rights, exchanging future value for current trading volume, liquidity, and market attention.

dYdX represents an early complete token incentive model. In its initial token supply, 25% was allocated for trading rewards, 7.5% was distributed to historical users, and 7.5% was used for liquidity rewards. Trading rewards are calculated based on fee contributions and open interest, while liquidity rewards consider quoting online rates, bilateral depth, bid-ask spreads, and the number of covered markets. Customer acquisition, market-making subsidies, and early ownership distribution are thus included in the same token system.

Subsequent platforms made different adjustments within this framework:

• Hyperliquid combines points, referrals, and HLP to attract traders, expand order flow, and establish protocol liquidity;

• Aster: adopts multi-season trading mining, maintaining trading participation and user activity through continuous point cycles and phased token distribution.

• Lighter lowers trading thresholds through zero fees and sets separate retail points and market-making points to distinguish trading activity from liquidity quality;

These platforms do not rely solely on tokens, but tokens remain the core coordination tool in the cold start system. Its advantage is not just "issuing rewards," but the ability to convert the contributions of different participants into future rights, deferring most customer acquisition and liquidity costs until the TGE. The specific mechanisms vary, but the exchange relationship is fundamentally the same: the platform first uses future rights and early subsidies to exchange for current trading volume, liquidity, and market attention.

2. Points Attracting Users May Not Be Long-Term Traders

Point airdrops not only change whether users enter the platform but also alter why users trade.

Under normal circumstances, when traders choose a platform, they focus on liquidity, execution stability, fees, asset coverage, and risk management. After the introduction of point airdrops, these standards do not disappear, but the weight of user decision-making changes: in addition to the trading experience itself, users will also calculate how many points can be earned per unit trading cost, whether potential airdrops can cover fees and capital occupation, and when rewards will be realized.

This does not mean that users participating in points are not professional traders. On the contrary, many professional traders will rationally assess point returns. The issue is that when points become an important variable in trading decisions, the trading volume obtained by the platform no longer reflects only product competitiveness but also includes users' pricing of future rewards.

Two types of trading behaviors can contribute to trading volume, but their retention logic differs.

One type of trading behavior comes from sustained product demand: users stay because the platform's liquidity, execution, cost, and asset coverage can meet trading needs. The other type of trading behavior is more driven by reward expectations: whether users continue to trade depends on whether points still have value, whether airdrops still have imaginative space, and whether the input-output ratio still holds.

In a previous retail survey conducted by Foresight Ventures on Perp DEX, 69% of respondents listed points or airdrops as important factors in choosing a trading platform, higher than reliability (61%), liquidity and depth (58%), and fees (47%). Points and airdrops are no longer just additional rewards outside the product but are directly competing with reliability, liquidity, and fees, becoming core variables in users' platform choices.

This will change the nature of how platforms acquire order flow. When users first enter based on reward expectations, the platform does not establish a high switching cost based on product habits but rather a trading relationship that requires continuous subsidies. Rewards can lower the threshold for users to enter the platform, but they also lower the threshold for users to leave the platform.

3. The TGE is the First Stress Test for Trading Demand

During the points cycle, the platform acquires not just trading volume but also users' waiting for future rights. As long as airdrops still have imaginative space, users are willing to trade, pay fees, occupy capital, and accept a product experience that is not yet fully mature.

However, the data from the points period is not pure. A transaction may come from real market demand or from expectations of airdrops; a new user may form a long-term order flow or may stop trading after completing tasks.

From the surface data, they all belong to growth.

When these different motivations are placed into the same token and points system, it becomes difficult for the platform to determine what it ultimately obtains. Therefore, post-TGE data should not only look at rises and falls but is more importantly about three things:

• Whether the trading volume remains after rewards exit or is maintained by a new round of incentives;

• Whether market share increases, rather than just following the overall fluctuations of the Perp DEX market;

• Whether the platform has entered a natural retention stage or is still in a new incentive cycle.

|--------------------------------------------------------------------| | Note: The table only includes platforms that can obtain unified trading volume and market share metrics for 30 days before and after TGE. Aster is not included in this comparison due to incomplete current public data metrics. |

What this set of data really aims to observe is not which platform has higher trading volume after TGE, but which platform has successfully transformed the attention brought by airdrops into a sustained trading relationship.

If there is still a new round of points, mining, or subsidies after TGE, the trading volume still contains incentive components and cannot simply be equated with demand sedimentation. The true watershed is whether users are still willing to continue trading based on the platform itself when the marginal attractiveness of reward expectations declines.

In other words, the pre-TGE validation is whether the platform can attract users to enter; the post-TGE validation is whether the platform can retain users. The former can be achieved through incentives, while the latter ultimately depends on product capability and value distribution mechanisms.

2. Value Begins to Flow Back, but Still Revolves Around Platform Tokens

1. From Issuing Tokens to Supporting Tokens

After the TGE, incentive mechanisms typically shift from "issuing tokens" to "supporting tokens." Platforms usually use fee income for buybacks, burns, staking rewards, and token discounts. Value begins to flow back, but the distribution basis shifts from trading contributions to token holdings.

This means that traders first create income through trading and then qualify for sharing income by purchasing or staking platform tokens. As a result, platforms need to maintain two markets simultaneously: the trading market and the platform token market.

The two can reinforce each other but do not always align. Professional traders may contribute fees over the long term but may not be willing to take on the risks of platform tokens. Thus, the rewards from the platform gradually include not just trading itself but also users' capital investment in platform tokens.

This shift is realized differently across platforms. What is truly worth comparing is not just whether buybacks occur but how much income enters the token system, how the tokens are handled after buybacks, and who ultimately bears this portion of value.

2. Platform Tokens Expand Participation but Do Not Equate to Trading Demand

Platform tokens can expand ecosystem participation, but the address growth they bring does not necessarily translate into contract trading demand. To observe this difference, we conducted a cross-analysis of Hyperliquid's HYPE holding addresses, wealth management user addresses, and contract trading user addresses.

The results show that among the three types of users, HYPE holding addresses account for 89%, wealth management users account for 27%, and contract users only account for 20%; users participating in holding, wealth management, and contract trading simultaneously account for only 5% of the total.

Further breakdown reveals:

• Among contract users, 62% hold HYPE, but over 70% have not participated in wealth management;

• Among HYPE holding users, 86% have never engaged in contract trading;

• Among wealth management users, 85% hold HYPE, but the proportion participating in contract trading is only 19%.

This set of data indicates that platform tokens can bring broader asset holding and ecosystem participation, but holding, wealth management, and trading do not correspond to the same demand. Holding may stem from asset allocation and price expectations, wealth management corresponds more to yield strategies, while contract trading directly reflects trading demand and order flow.

When holding addresses, asset scales, and wealth management users are uniformly counted as ecosystem growth, capital participation can easily be misinterpreted as trading market growth. However, for Perp DEX, what truly determines market quality remains sustained trading, effective liquidity, and real fee income.

Platform tokens can expand ecosystem participation but cannot replace trading demand itself.

3. One Platform, Two Sets of Growth Goals

When income distribution, fee discounts, and product permissions are all tied to platform tokens, Perp DEX effectively needs to operate two markets simultaneously: the trading market and the token market. This creates a fundamental tension: What does the platform prioritize serving, the trading product itself or the value cycle established around the platform token?

These two sets of goals do not always synchronize. The trading market focuses on execution quality, liquidity, and costs, relying on long-term product capabilities; the token market focuses on demand, scarcity, and price expectations, relying on continuously creating reasons to hold tokens.

The risks arising from this are not only the dispersion of resources but also a shift in evaluation standards. Trading volume, fees, and user growth are no longer solely used to measure whether the trading product is healthy but also begin to serve the narrative supporting the token. What the platform pursues may no longer be just more real trading but more data that can reinforce token demand.

3. PopDEX: Another Answer to Incentive Mechanisms

From the investment perspective of Foresight Ventures, what is worth noting about PopDEX is not merely the discussion of whether platform tokens exist, but that the team has not made token expectations the starting point for growth, nor has it made holding tokens a necessary prerequisite for trading rights. Compared to gathering platform value into platform tokens first and then redistributing through platform tokens, PopDEX directly starts from real market contributions: Who creates value should have value returned to them.

Based on this idea, PopDEX has established a 100% value return system.

Here, the 100% refers to the distributable value formed by trading fees, rather than returning every fee directly to traders. Its core lies in that the distributable value formed by trading fees is no longer prioritized for supporting platform tokens but enters a return framework designed around real contributions.

Within this framework, PopDEX's value return will cover two types of participants: ecosystem contributors and real trading users. The former includes roles that continuously bring users, order flow, and market attention, such as referrals, affiliates, trading activities, and joint campaigns; the latter explores more direct, periodic, transparent, and verifiable value return methods based on real trading contributions.

As for how this portion of value will ultimately be distributed, PopDEX will gradually disclose this in subsequent product phases.

For PopDEX, this is not a denial of existing models but a different attempt at incentive mechanisms: incentives can be used not only to acquire growth but also to become a way for the platform to continuously give back to the ecosystem.

There is no standard answer for how incentive mechanisms should evolve; the market will ultimately provide its own judgment. However, we believe that as the Perp DEX industry continues to mature, its incentive mechanisms should not have only a single path and are worth exploring for more answers.