Lighter: How incentive exhaustion cut LIT’s dominance to 8.1%

Lighter’s [LIT] dominance in DeFi perpetuals peaked close to 60% in mid-December 2025, reflecting robust post-launch momentum. That surge adopted its airdrop-driven exercise spike and aggressive liquidity incentives.

Nevertheless, as incentives normalized, participation cooled, and volumes retraced sharply. By January 2026, sector-wide contraction intensified strain, whereas complete each day perp quantity fell towards $15–20 billion, down roughly 30% year-over-year.

Supply: Laevitas/ X

As Lighter’s share declined, Hyperliquid [HYPE] regained floor, climbing again towards 40–50% management. This rotation reshaped aggressive dynamics, whereas Paradex and DYDX captured incremental flows throughout volatility spikes.

Though Lighter briefly recovered in early February, its share slipped once more towards 25%, signaling fading speculative momentum.

Even so, Lighter maintains structural depth in Bitcoin [BTC] and Ethereum [ETH] contracts, holding over 50% of Open Curiosity in key pairs.

Thus, whereas headline quantity softened, its core liquidity base stays resilient amid tightening macro circumstances and lowered incentive-driven buying and selling.

Hyperliquid’s rise by way of Lighter’s liquidity drain

Lighter captured practically 60% share in late 2025 due to zero charges and a looming airdrop concentrated circulation on one venue. That incentive stack pulled in short-horizon merchants, so volumes surged as leverage urge for food expanded.

As 2025 closed, sector turnover hit $7.9 trillion, and Lighter briefly displaced Hyperliquid in each day exercise. Then the catalyst flipped. The  LIT airdrop on the thirtieth of December transformed “commerce for factors” demand into “promote and depart” habits.

As LIT dropped 45% by mid-January, yield-driven wallets unwound, which lowered repeat quantity and thinned sticky participation. As that cohort exited, Lighter’s share compressed towards 25% and later slid to about 8.1% by mid-February as rankings reshuffled.

On the similar time, the market expanded quicker than Lighter may retain circulation. Complete perps quantity doubled to $14 trillion in six months, so any slowdown translated into speedy share dilution.

Hyperliquid absorbed the migration with a 23.4% share and a 70% Open-Curiosity grip, whereas Aster and EdgeX siphoned further circulation by way of latency, rebates, and recent incentives.

Liquidity outflows had already weakened Lighter’s place when giant token actions started to floor. After the airdrop, quantity fell, and market share dropped from 60% to single digits. As that decline unfolded, focus shifted from trade competitors to token positioning.

That shift turned clearer when Tron’s founder, Justin Solar, moved practically 10 million LIT into trade scorching wallets. Arkham information reveals 7.212 million LIT was despatched by way of one route, adopted by one other 5 million by way of a second deposit path.

Supply: X

Across the similar time, different wallets added 1–2 million LIT into the identical infrastructure. This clustering signaled preparation for quick execution if volatility elevated. As soon as funds reached scorching wallets, transparency lowered whereas sell-side optionality elevated, which pressured sentiment.

In the meantime, Wintermute constructed LIT stock, reinforcing expectations of upper exercise. In distinction, HTX routed 6.5 million LITs into the zkLighter infrastructure, indicating ecosystem provisioning fairly than speedy promoting.

Supply: X

Taken collectively, Solar’s positioning displays strategic flexibility, supporting Lighter’s restoration narrative whereas retaining execution readiness if market circumstances deteriorate.

Remaining Abstract

• Incentive exhaustion and post-airdrop exits drained Lighter’s speculative circulation, enabling Hyperliquid to soak up liquidity and seize structural derivatives management.

• Whale routing and market-maker stock builds sign hedged positioning, balancing ecosystem assist with execution readiness amid Lighter’s fragile restoration part.