Original Author: Eric, Foresight News
Starting from August 20th, LIT, the token of perp DEX Lighter which boasts a former Citadel quant team background, has been continuously reaching new all-time highs. By August 26th, LIT had touched a high of $3.8, a nearly 5x increase from its low of around $0.78 recorded on March 30th of this year.
First, it's important to note that the current circulating supply of LIT is only about 25% of the total. Portions allocated to the team and investors are locked until December 30, 2026. The current selling pressure on LIT comes only from staking rewards, which are not substantial. During price increase phases, users have a stronger incentive to stake and are more inclined to hold.
Given the limited circulating supply, the buyback and burn intensity of LIT is also significant. According to the official dashboard, the current amount of LIT bought back has reached 17.3 million, accounting for 1.73% of the total supply and 6.92% of the circulating supply.
In July, in our article "Joining Robinhood in the Race for Market Share, Is Lighter Playing a Big Chess Game?" (https://foresightnews.pro/article/detail/98462), we analyzed the reasons behind LIT's sustained rise, combining factors including the buyback-and-burn mechanism and the collaboration with Robinhood. In addition to these operational stimuli, Lighter has also introduced unique innovations at the chain level.
Before Lighter, on-chain derivatives essentially faced an impossible triangle. General-purpose L2s like Arbitrum have transaction fees and latency unsuitable for high-frequency order placement. Independent chains like dYdX v4 and Hyperliquid somewhat sacrifice security. Hybrid order books in the style of StarkEx rely on centralized matching engines, carrying risks of censorship and MEV.
Hyperliquid's self-built L1 uses HyperBFT consensus to run the matching engine directly within the validator set, achieving sub-second finality and over 200k TPS. The trade-off is a security model that relies entirely on itself, with a few dozen validator nodes supporting the entire chain, and cross-chain asset transfers dependent on bridges.
Lighter chose a different direction. It is a ZK Rollup dedicated solely to trading. Matching, liquidation, and risk control are all encapsulated within its proprietary Lighter Core, using a customized proof engine to generate zk-SNARK proofs, then submitting compressed state to the Ethereum mainnet. Compared to general-purpose zkVMs, this approach sacrifices generality in exchange for proof speed, latency stability, and execution efficiency for high-frequency order books. Official metrics show matching latency below 5 milliseconds, with a single block capable of packing 20,000 orders and cancellations.
According to L2BEAT data, as an independently developed L2 that doesn't use existing ZK Rollup stacks, Lighter's TVL exceeds $1.1 billion, ranking fifth, just behind Base, Arbitrum, OP Mainnet, and Mantle.
Lighter's system consists of three roles. The sequencer orders transactions first-in-first-out and provides soft finality. The prover generates a proof for each block. Smart contracts on Ethereum host user funds, store state roots, and verify each proof.
The real differentiation lies in what the circuit proves. Most Rollups only prove that state transitions are valid. Lighter's circuits encode the exchange rules themselves as zk constraints. Using a structure called Order Book Tree, a binary prefix tree, it encodes the price-time priority rule into leaf indices, resulting in a proof complexity of only logarithmic order. This means the protocol can cryptographically prove that the highest priority order was filled first, that funding rate caps were correctly enforced, and that liquidations used the correct formulas.
This is particularly crucial for perpetual contracts. Leveraged positions are margin-based, and liquidations are automatic and mechanical. If you cannot verify whether a liquidation was executed correctly, you are choosing to trust the platform at the moment it has the least incentive to be honest with you. Verifiable liquidation is not marketing jargon; it is the core significance of this architecture.
As an Ethereum L2, Lighter inherits two things that independent L1s cannot offer.
The first is exit guarantees. If the sequencer persistently censors transactions, users can directly force-submit transactions on L1. If not processed for over 14 days, the system freezes and enters Desert Mode, allowing users to reconstruct state using on-chain data and submit balance proofs to withdraw funds. This entire process requires no cooperation from the operator. L2BEAT has even practically reproduced this process, reconstructing the state root from L1 blob data and verifying the chain head. All state data required to build proofs is published on-chain, which is the prerequisite for this escape hatch to function.
The second is liquidity network effects. Lighter's funds are custodied in Ethereum contracts. Users can deposit directly from multiple chains like Ethereum, Arbitrum, Base, Solana, etc., and can also reuse assets from ecosystems like Aave, Uniswap, and Ethereum stablecoins, without needing complex cross-chain bridges. In contrast, Hyperliquid's composability is confined within HyperEVM and cannot directly access the hundreds of billions of dollars in TVL on Ethereum.
Another notable feature is LighterEVM's horizontal architecture. The core trading engine runs on custom ZK circuits, while general-purpose smart contracts run in a parallel zkVM environment. The two are logically separated but can atomically share state. Even if on-chain lending protocols become congested, the core order book's matching speed is unaffected. Developers can also build structured products on the EVM side that directly read the order book.
Just yesterday, Lighter published an article introducing its latest progress in the verification system. Over the past month, Lighter's average block verification time has decreased from about 5.3 minutes to about 1 minute, primarily achieved through two independent improvements: first, "heavy/light decomposition," which splits the verification circuit based on transaction complexity, allowing over 98% of simple transactions to pay lower verification costs, cutting verification time in half; second, the results of a prover optimization competition co-hosted with Eigen Labs, focusing on pure infrastructure-level optimizations for the Plonky2 prover, with the first batch of results deployed on August 23rd, halving verification time once again.
Here's a lesser-known fact: when tokenized RWA was just beginning to gain traction, the chain with the most on-chain RWA assets was ZKsync.
There was only one reason: security.
Even today, ZKsync can still rank in the top ten, higher than chains like Arbitrum, Polygon, Base, which may seem stronger on paper. The advantage of ZK proofs lies in the fact that while finality strictly speaking still requires confirmation on the Ethereum mainnet, the validation of transaction credibility is already completed on the L2. For institutions, even if it's a bit slower than other L2s or self-built L1s, or slightly more expensive, it's entirely acceptable.
Compared to general-purpose ZK Rollups like ZKsync and Starknet, or even dedicated L2s developed based on these general-purpose ZK Rollup stacks, Lighter's biggest advantage is that it encodes trading, liquidation, and other logic directly into its circuits, coupled with Ethereum mainnet-level security. This mechanism, potentially even more secure than traditional clearing institutions, gives it the full capability to stand firm in the fiercely competitive perp DEX market.
The collaboration with Robinhood is a case in point. Beyond shared traits like Payment for Order Flow usage and a strong team background, the mechanisms Lighter provides give it unique advantages in security and compliance. The market's willingness to give this architecture a premium is logically clear. For projects aiming to sell perpetual contracts to Robinhood users or traditional financial institutions, "matching rules written in circuits, fund security backed by Ethereum" is a story that can be told to compliance departments and auditing institutions.
Hyperliquid proved that performance can come from consensus. Lighter is proving that trust can come from proofs. While other perp DEXs rack their brains over operations and business, Lighter is carving out a new "path."
