The Future of On-Chain Derivation: From Imitation to Innovation

The on-chain derivation market has recently shown interesting changes. On one hand, projects like dYdX and GMX, which once dominated the scene, are rapidly declining; on the other hand, Hyperliquid has emerged as a new leader. This change reflects that the on-chain derivation industry is undergoing a transformation from simply mimicking centralized exchanges to truly leveraging the advantages of blockchain.

For a long time, on-chain derivation projects have remained at the stage of replicating centralized platforms. Although they have decentralized characteristics, there are still significant gaps in user experience, liquidity depth, and other aspects compared to centralized exchanges. This is also a major reason why projects like dYdX and GMX struggle to continuously attract users.

The rise of Hyperliquid marks the beginning of on-chain derivation exploring product forms more suited to decentralized characteristics. By deeply integrating the order book engine with smart contracts, Hyperliquid has achieved direct competition with centralized platforms in aspects such as trading speed and costs, while retaining blockchain-native advantages such as auditability and composability. This innovation brings new vitality to on-chain derivation.

Looking to the future, the development direction of on-chain derivation may not be to continue optimizing the existing model, but rather to develop more differentiated products based on the openness of blockchain and the characteristics of long-tail assets. Options may be a direction worth paying attention to. Compared to perpetual contracts, the non-linear income characteristics of options are more aligned with the high volatility of cryptocurrencies, while the "small upfront premium" mechanism also better meets the needs of ordinary users.

Some innovative projects are exploring a brand new on-chain options model. For example, the "coin-based perpetual options" concept allows users to directly use any token as collateral to participate in trading, greatly improving capital utilization efficiency. At the same time, by eliminating fixed expiration dates and introducing dynamic funding rates and other innovations, the options products are made more aligned with user needs. This innovation not only lowers the participation threshold for users but also maximizes the advantages of blockchain.

Overall, the on-chain derivation industry is at a turning point from simple imitation to native innovation. The future winners are likely not the projects that replicate centralized exchanges, but those that can fully leverage the characteristics of blockchain to create new demand products. This process may have already begun, and we look forward to seeing it.