Author: Haotian

Most people are probably still confused. Why has Perp Dex suddenly exploded in popularity? Is it really because of CZ's dominance as the world's top caller, or is it just a play to counter Hyperliquid? Yes, but it's not that simple:

Following the logic of the previous article, I would like to add another insight: Perp Dex, led by Hyperliquid, is not revolutionizing centralized CEX in the way of decentralized DEX, but inventing a brand new species: Neutral Exchange.

Hey, I made up a new word again. Why does it sound so much like "neutral person"? Yes, in the context of Crypto, it means an exchange that is "neither purely decentralized nor so nakedly centralized."

Why do you say that?

For example, Hyperliquid is very decentralized, with on-chain asset custody, a separation of the execution engine from the consensus layer and the application layer, all verifiable on their own independent chain, user-controlled private keys, no KYC required, and open source code, all very Web3-esque.

But to be honest, there are a group of fundamentalists who criticize it for having too few verification nodes and centralized control, and for the fact that in order to optimize transaction execution speed, many operations at the execution layer do not require complete consensus confirmation, etc. This is very different from traditional on-chain transaction settlement concepts such as finality and block synchronization.

Other imitation platforms that are still in their infancy, such as Perp Dex, have even more prominent contradictions in this regard. In addition to the technical characteristics that I mentioned above, which are still black boxes, there are many strange features, such as closed source, no blockchain browser, only partial status update data synchronized to L1, and not even complete on-chain records.

Of course, there are precedents for this type of variant in some other high-performance L1 and Layer2, all of which aim to achieve a triangular trade-off between decentralization, performance, and security.

But this wave of Perp Dex variants is more radical. For example, Ethereum layer2 replaces decentralization with a centralized sequencer, but has also been working on the technical routes of Fault Proof and Stage0-2 for a long time. The new force Perp Dex takes transaction efficiency as the first principle, and even boldly criticizes them for not being a blockchain.

At this point, you might be wondering where I stand. I embrace the market.

Because this is the "spirit fusion skill" produced by the long-lasting liquidity tug-of-war between CEX and DEX.

In other words, this "neutral" characteristic is actually an inevitable trend evolution:

1) The user experience of purely decentralized DEXs has been plagued by slippage, MEV, gas fees, complex liquidity management, component stacking security risks, etc., which has seriously slowed the large-scale popularization of Crypto infrastructure;

2) Traditional centralized CEXs are plagued by regulation, compliance, trust crises, and a combination of product, operations, and marketing strategies that exploit attention-grabbing strategies to drain liquidity across the industry. In other words, they stifle any on-chain innovation in its infancy.

You see, "neutral" exchanges hit the sweet spot, retaining a CEX-level user experience while also making certain compromises and innovations in asset security and transparency. Their emergence can actually signal a reconciliation of the long-standing feud between CEXs and DEXs.

Therefore, the emergence of Hyperliquid did not threaten Binance at all. On the contrary, it made Binance successful like a catfish and helped push $BNB to break through 1,000.

At this moment, CEX exchanges that are busy working on Alpha, wallets, and trading chains finally don’t have to worry about the moral kidnapping of the so-called "decentralized fundamentalism". They can blow bubbles and indulge themselves in the name of "neutral exchanges".