Is It Time to End the Era of Perp DEXes Burning Cash for Growth?

Author: Foresight News

The growth of Perp DEXes has largely benefited from token incentives.

Cold starts require incentives; traders, liquidity providers, and order flow channels create value for the market and deserve rewards. What's truly worth discussing is not "whether to incentivize," but rather in what form the incentives occur and whether the rewards truly correspond to the contributions.

Before TGE (Token Generation Event), platforms typically use future token expectations to attract current trading volume and liquidity through points, airdrops, and trading mining. Such mechanisms can quickly acquire users, but the fees users pay are real, while the rewards they receive still depend on future token allocation and market pricing. After TGE, fee revenue begins to be used for buybacks, burns, and staking rewards, gradually returning value to the ecosystem, but still primarily managed and distributed through the platform token.

The problem, therefore, is not the incentives themselves, but whether the incentives are overly reliant on future expectations. Traders generate trading demand and fee revenue; liquidity providers offer depth and execution; wallets, trading terminals, and communities bring sustained order flow. However, existing mechanisms tend to reward the ability to accumulate points and token holdings, rather than those who truly make the market function.

This is also a key issue discussed by Foresight Ventures during its investment in and incubation of PopDEX:Can a platform establish a more direct, more sustainable path for value to flow back, bringing rewards closer to real market contributions?

I. Early Growth and Demand Validation Under Token Incentives

1.Why Tokens Became the Default Tool

The cold start of a Perp DEX requires simultaneously attracting traders, liquidity, and distribution channels, while early-stage platforms usually lack stable revenue and can hardly bear high cash subsidies for long.

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

dYdX represents a relatively complete early token incentive model. In its initial token supply, 25% was allocated to trading rewards, 7.5% to historical users, and 7.5% to liquidity rewards. Trading rewards were calculated based on fee contributions and open interest, while liquidity rewards considered quote uptime, two-sided depth, bid-ask spread, and number of markets covered. User acquisition, market maker subsidies, and early ownership distribution were thus integrated into the same token system.

Subsequent platforms have made various adjustments to this framework:

●Hyperliquid combines Points, Referrals, and HLP to attract traders, expand order flow, and build protocol liquidity respectively;

●Aster: adopts multi-season trading mining, maintaining continuous trading participation and user activity through successive point cycles and staged token distributions.

●Lighter reduces trading barriers with zero fees and sets separate points for retail traders and market makers, distinguishing 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. Their advantage is not just "issuing rewards," but the ability to unify the contributions of different participants into future equity and defer most user acquisition and liquidity costs until TGE. Specific mechanisms vary, but the exchange relationship is largely consistent:The platform first uses future equity and upfront subsidies to exchange for current trading volume, liquidity, and market attention.

2.Points Attract Users Who Aren't Necessarily Long-Term Traders

Points airdrops not only change whether users join a platform, but also why they trade.

Normally, traders choosing a platform focus on liquidity, execution stability, fees, asset coverage, and risk management. After points airdrops are introduced, these criteria don't disappear, but users' decision-making weights change: besides the trading experience itself, users also calculate how many points they can earn per unit of trading cost, whether potential airdrops can cover fees and capital lock-up, and when rewards will materialize.

This doesn't mean users participating for points aren't professional traders. On the contrary, many professional traders also rationally assess point rewards. The issue is that when points become a significant variable in trading decisions, the volume a platform acquires no longer solely reflects product competitiveness but also includes users' pricing of future rewards.

Both types of trading behavior contribute volume, but their retention logic differs.

One type stems from sustained product demand: users stay because the platform's liquidity, execution, cost, and asset coverage meet their trading needs. The other type stems more from reward expectations: whether users continue trading depends on whether points still hold value, whether airdrops still have upside potential, and whether the input-output calculation still holds.

This changes the nature of the order flow a platform acquires. When users enter primarily based on reward expectations, the platform builds not a high-switching-cost relationship based on product habits, but a trading relationship requiring continuous subsidies.Rewards can lower the barrier for users to enter a platform, but they also lower the barrier for users to leave.

3.TGE is the First Stress Test for Trading Demand

During the points cycle, what a platform buys is not just trading volume, but also users' wait for future equity. As long as airdrops retain upside potential, users are willing to trade, pay fees, lock up capital, and accept a not-yet-fully-mature product experience.

But data from the points period is not pure. A trade might stem from real market demand or from airdrop expectations; a new user might generate long-term order flow or stop trading after completing tasks.

On the surface, they all count as growth.

When these different motivations are placed into the same token and points system, it becomes difficult for a platform to judge what it has ultimately gained. Therefore, post-TGE data shouldn't be viewed just in terms of rise or fall; three things are more important:

●Whether trading volume remains after rewards are phased out or is maintained by a new round of incentives;

●Whether market share increases, not just fluctuating with overall Perp DEX market trends;

●Whether the platform has entered a phase of natural retention or is still in a new incentive cycle.

Note: This table only includes platforms for which consistent 30-day volume and market share data before and after TGE are available. Aster is not included in this comparison due to incomplete current public data.

What's truly important in this data is not which platform had higher volume after TGE, but which converted the attention brought by airdrops into a sustained trading relationship.

If there are still new rounds of points, mining, or subsidies after TGE, trading volume still contains incentive components and cannot be simply equated with demand crystallization. The real watershed is whether users are still willing to continue trading on the platform itself after the marginal appeal of reward expectations declines.

In other words, pre-TGE validates whether a platform can attract users; post-TGE validates whether a platform can make users stay. The former can be accomplished by incentives; the latter ultimately depends on product capabilities and value distribution mechanisms.

II. Value Begins to Flow Back, But Still Revolves Around the Platform Token

4.From Issuing Tokens to Supporting Tokens

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

This means traders first generate revenue through trading, then gain the qualification to share that revenue by purchasing or staking the platform token. Consequently, the platform needs to maintain two markets simultaneously: the trading market and the platform token market.

The two can reinforce each other, but are not always aligned. Professional traders may consistently contribute fees but be unwilling to take on additional platform token risk. Thus, what the platform gradually rewards is not just trading itself, but also users' capital commitment to the platform token.

This transition is implemented differently across platforms. What's truly worth comparing is not just whether buybacks occur, but how much revenue enters the token system, how tokens are handled after buyback, and who ultimately receives this value.

5.Platform Tokens Expand Participation, But Don't Equal Trading Demand

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

The results show that among the union of the three user types, HYPE holders account for 89%, wealth management users 27%, and futures users only 20%; users participating in holding, wealth management, *and* futures trading make up only 5% of the total.

A further breakdown reveals:

●Among futures users, 62% hold HYPE, but over 70% do not participate in wealth management;

●Among HYPE holders, 86% have never engaged in futures trading;

●Among wealth management users, 85% hold HYPE, but only 19% participate in futures trading.

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

Platform tokens can expand ecosystem participation, but cannot substitute for trading demand itself.

6.One Platform, Two Sets of Growth Goals

When revenue distribution, fee discounts, and product privileges are all tied to the platform token, a Perp DEX essentially 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 built around the platform token?

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

The resulting risk is not just resource dispersion, but a shift in evaluation standards. Trading volume, fees, and user growth no longer solely measure the health of the trading product; they also begin to serve the purpose of supporting the token narrative. What a platform pursues may no longer just be more real trading, but more data that can strengthen token demand.

III. PopDEX: Another Answer for Incentive Mechanisms

From Foresight Ventures' investment perspective, what makes PopDEX noteworthy is not a simple discussion of whether a platform token exists, but that the team did not use token expectations as the starting point for growth, nor set holding status as a necessary prerequisite for trading rights. Compared to converging platform value into the platform token first and then redistributing it through the token, PopDEX starts more directly from real market contributions:Whoever creates value should receive that value back.

Based on this idea, PopDEX has established a100% Value Back System.

Here, 100% refers to the distributable value formed from trading fees, not returning each fee directly to the trader. Its core lies in: the distributable value formed from trading fees is no longer prioritized to support the platform token, but enters a backflow framework designed around real contributions.

Under this framework, PopDEX's value backflow will cover two types of participants: ecosystem contributors and real trading users. The former includes Referrals, Affiliates, trading activities, joint campaigns, and other ecosystem roles that continuously bring users, order flow, and market attention; the latter, based on real trading contributions, explores more direct, periodic, transparent, and verifiable ways for value to flow back.

As for the specific form in which this value will ultimately be distributed, PopDEX will gradually disclose details in subsequent product phases.

For PopDEX, this is not a negation of existing models, but a different attempt at incentive mechanisms: incentives are not only used to acquire growth but can also become the platform's way of continuously giving back to the ecosystem.

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