Crypto is dead, Perp lives on.

Author: MandyWang Source: X, @mandywangETH

Even the most naive person can sense that the crypto industry is undergoing a transformation.

For the past decade, the core capability of the crypto world has been asset issuance. Issuing a blockchain, a coin, a governance token, an economic model, using narratives, airdrops, liquidity incentives, and community consensus to push it to the market, a game of musical chairs.

We also boldly hypothesized that blockchain would create a completely new asset system: new currencies, new financial protocols, new game assets, new social networks, even new organizational forms.

However, now, these native assets are slowly dying, making every attempt to buy the dip a futile endeavor.

The assets that are siphoning liquidity and attention are old assets: US stocks, US bonds, gold, crude oil, indices... Saying goodbye to all native assets and saying hi to traditional assets. The protagonists on the blockchain have changed; native assets are ignored, while mapped assets are thriving. Every bear market sees people saying "ETH is finished," "Nobody's buying altcoins anymore," and "Nobody's playing DeFi anymore," but why is ETH at $2000 more disheartening than it was at $200? Because the complaints are no longer about price cycles or shifting narratives, but rather a shift in the industry's function. The crypto industry is transforming from a "new asset factory" into a "global asset conduit." Stablecoins are the earliest and most successful example. The large-scale adoption of USDT and USDC clearly doesn't mean cryptocurrency defeated the dollar, but rather that the crypto community found a more efficient way for the dollar to circulate on-chain. Over the past decade, countless projects have proclaimed the goal of "creating a new monetary system," but only stablecoins have achieved widespread global adoption. This is because, aside from gamblers like us, ordinary users aren't obsessed with discovering a new global currency; they only care that the dollar runs faster, is cheaper, and is less restricted by time and location. Looking back, this already foreshadowed the fate of native crypto assets. The ultimate, widely validated capability of blockchain isn't value storage, governance, or any complex financial innovation, but rather the initial peer-to-peer transfers and global settlements. Long live Satoshi Nakamoto! Aside from Bitcoin, the value storage function of other cryptocurrencies has been disproven. These assets are highly volatile, have thin cash flow, ambiguous governance, and demand stems entirely from speculation. Ultimately, the market returns to the basic functions of blockchain: transfers, settlements, cross-border flows, collateralization, and trading. The awkward position of altcoins—the native assets of the crypto world—becomes clear within this logic. When hot money floods in, we compare assets within the crypto world and go all in on what we like. We compare TPS between public chains, TVL between DeFi chains, and community activity between memes. Everyone was immersed in the same narrative pool, lacking real-world anchors. Each story had room for imagination, and as long as it was packaged grandly enough, a new token could pre-emptively inflate its valuation by ten years. However, now, internal narratives have dried up, while external wealth effects abound; burying one's head in the sand is useless. On one hand, real-world assets like US stocks, gold, and crude oil are being traded on the same blockchain; on the other hand, AI is intruding into everyone's lives in a way that's almost science fiction becoming reality. The crypto world used to excel at talking about the future, using "futuristic" concepts to gain valuation premiums, talking about new networks, new finance, new organizations, and new production relations. But years later, the narrative remains confined to white papers, roadmaps, funding news, and token prices. AI, beyond its powerful narrative, has become a tool that's always on everyone's computer and phone. Previously, an altcoin only needed to tell a more compelling story than another. Now, however, it faces two types of external competitors: traditional assets with genuine cash flow, asset backing, and a global pricing system; and new technology cycles in AI, which offer both futuristic narratives and real-world products. These worthless coins, lacking revenue, demand, and value capture, look truly pathetic standing next to giants like Nvidia, Micron, crude oil, and AI applications. Ethereum is failing. The recently frequently discussed "Ethereum problem" should also be viewed within this framework. Ethereum faces not only short-term pressures on its path and liquidity, but also the complete erosion of the "native asset worldview" it once represented. On one hand, traditional mapped assets are entering the blockchain, while on the other hand, AI is monopolizing the global technology narrative. Ethereum remains a crucial infrastructure for on-chain finance and asset issuance, but without the innovative universe of the "native crypto world" and the faith-based worldview it carries, ETH's ability to capture ecosystem value is quite weak. Users can make payments on Base, trade on Arbitrum, transfer assets between Rollups, and even trade US stocks on-chain, but certainly don't need to hold ETH for these purposes. The same applies to DeFi. Its initial grand narrative was to rebuild the financial system, but the actual tangible demand it has generated is limited. Users don't need a complete on-chain banking system; what they need are cheaper USD transfers, faster settlements, deeper liquidity, and tradable price volatility. Lending, DEXs, and yield aggregation still exist, but they are increasingly becoming part of the infrastructure and can no longer independently support the industry's imagination. The narrative of financial Lego has become a legacy of the previous cycle. The protagonist has become the assets themselves. The crypto world has to admit that on-chain finance doesn't need to reinvent Nvidia, much less the US dollar—of course, we don't have that capability. We only need to strive to make these assets more freely transferable, tradeable, collateralized, shorted, leveraged, and combined into new financial structures. Therefore, saying the crypto world is dead refers to the end of the era of continuous expansion relying on native assets. No one dares to say that the crypto industry will disrupt old finance anymore; now, practitioners are busy installing new transmission layers for traditional finance. US stocks are still US stocks, but through new infrastructure, they can offer 24-hour trading, global liquidity, on-chain settlement, permissionless access, and composability. The industry is working hard to create a new API for the old world. In fact, whether it's US stocks on-chain, RWA, or on-chain perpetual contracts, these are not new concepts. This industry didn't just start thinking about moving traditional assets on-chain, nor did it just start thinking about trading everything with perpetual contracts. Years ago, the market saw wave after wave of Perp DEXs, synthetic assets, on-chain stocks, and projects attempting to move traditional assets on-chain. Looking back at the design of some early protocols, you'll find that their underlying mechanisms are not fundamentally different from those of many of today's popular projects. This is why some veteran players looked down on Hyperliquid and missed opportunities; Kyle Samani's persistent pessimism about Hyperliquid is a prime example. It's not that he hadn't seen it before, but rather that he saw it too early and too often, becoming tired of it. Five, eight years ago, or even earlier, many in the industry tried to create on-chain contract exchanges, decentralized derivatives, and full-asset trading, but all failed. I recently came across an article we published on Odaily in 2020 about the PerpDEX project; frankly, the mechanism is virtually identical to the current one.

The problem isn't in the direction, it's always in the timing.

The problem isn't in the direction, it's always in the timing.

Hyperliquid: A Beacon of Industry Excellence

Hyperliquid, in its early days, also suffered from a rough user experience, mediocre liquidity, and significant regulatory risks. However, it consistently rode the wave of change, becoming the biggest beneficiary, leaving later entrants only able to look on in awe.

The first wave was the CEX-ization of on-chain Perp. Hyperliquid's earliest highlight wasn't creating another Perp DEX, but rather making on-chain contract trading resemble a centralized exchange rather than DeFi. Order book, low latency, API, rebates, ecosystem front-end, HYPE airdrops, no VC funding, and community wealth effect—these combined to transform it from an on-chain protocol into a trading arena. This stage wasn't exactly glamorous, but it was crucial. The most difficult thing for a trading platform is securing initial liquidity; only when there are traders can market making take place, and only then can it be qualified to handle larger asset volumes.

The second wave was the trust shift following 10.11. The black-box risks of centralized exchanges were exposed again. From then on, many whales preferred to compete openly on-chain with everyone rather than be suffocated in a dark forest system where they couldn't see their opponents' true faces. "Decentralization" was not just a slogan, but also a real need for traders to "understand their losses" in extreme market conditions. The third wave was the volatility of macro assets such as gold and crude oil. Wars and geopolitical conflicts brought global markets back into the macro narrative, and users began to need a place to trade global assets 24 hours a day. Traditional markets have opening and closing times, regional restrictions, and account restrictions, while on-chain perpetual markets are free of these burdens. The fourth wave was the explosion of US stock trading, which needs little explanation. When popular assets are placed in a 24/7, global, low-barrier-to-entry perpetual market, the assets themselves generate traffic, which in turn attracts B-end market makers and ecosystem front-end developers. These market makers and front-end developers, in turn, enhance liquidity, creating a snowball effect. Therefore, understanding this early on doesn't guarantee great results. We all know that previously, there weren't enough on-chain users, wallet experiences weren't mature enough, market-making infrastructure wasn't perfect, and asset volatility didn't offer sufficient external opportunities. Building a large ship when there's no wind means it can't go anywhere; it can only run aground. The wicked yet alluring perpetual contracts! Finally, let's talk about the greatest invention in the crypto world—perpetual contracts. If you're trading spot US stocks, you'll face a whole host of complex issues, including compliance, custody, underlying asset mapping, trading hours, clearing, equity interests, dividends, and corporate actions. Each step involves the old financial system, and each step can potentially become a bottleneck. However, if you're trading US stocks through Perp, the platform only needs to build a contract pool around the price. Liquidity can be provided by ecosystem partners. Users trade price exposure and don't directly hold the underlying equity. It bypasses the heaviest part and focuses on the part with the highest trading demand. This is, of course, its insidious aspect. Perp simplifies assets into a price symbol that can be bet, compressing complex ownership relationships into long/short directions and leverage ratios. It doesn't care whether you own the stock or understand the company's value; it only cares about price fluctuations, whether anyone is willing to go long, and whether anyone is willing to go short. This is also its most enduring and captivating aspect. People don't necessarily want to own Nvidia, but they want to trade its volatility; people don't necessarily want to hold gold, but they want to bet on its direction; people don't necessarily need crude oil, but they might need the risk exposure offered by crude oil prices. Perp has refined this demand to its extreme. It doesn't create new assets, only new casinos; it doesn't provide ownership, but it provides risk exposure; its goal isn't to reshape the financial world, but to turn all assets into a "price" that can be traded 24/7. Therefore, if we look back at the entire history of crypto in the future, the product that will truly remain is probably Perp. From a financial perspective, it's even somewhat absurd. Futures contracts have settlement dates because assets ultimately need to return to the real world. Perpetual contracts eliminate settlement, turning a product with a limited lifespan into one that exists forever. This is perhaps the ultimate lesson learned from the proliferation of junk assets in the crypto world. Traditional exchanges have opening and closing times because the market needs rest; perpetual contracts eliminate rest periods, keeping the market always online. Traditional finance relies on brokers, clearinghouses, and regional regulatory systems, while the perpetual market naturally transcends national borders. Perpetual contracts are perhaps the most successful and also the most dangerous financial innovation in the entire history of crypto; they truly resemble a financial monster unleashed by the devil. (Arthur Hayes: My fault?) Countless people have been liquidated because of them, and countless fortunes have evaporated; they have amplified the most greedy side of humanity. But at the same time, they have also created unprecedented liquidity and price discovery efficiency. Conclusion Looking back, several years have passed in the blink of an eye. The most successful currency in the crypto world is the US dollar, the most successful asset is Bitcoin, and the most successful application is trading. Now, the most "promising new growth" comes from the US stock market. This is the failure of idealists, or more likely, the market has finally completed its selection process. The story of past glories is old news, but humanity's pursuit of wealth, its preference for risk, and its fascination with leverage have never changed. Therefore, today's crypto industry is no longer obsessed with inventing new assets, but rather attempts to transform existing assets into always-online, globally accessible, permissionless trading pairs. The crypto world is dead, Perp lives on.