Author: momo, ChainCatcher
The current decentralized perpetual contract (Perp DEX) market is in a new round of reshuffling. Following Hyperliquid, protocols such as Aster and Lighter have entered the market one after another, breaking the original pattern, indicating that market competition is far from over before the infrastructure matures.
In this context, Honeypot Finance, as a new challenger, provides an observation sample. It recently completed a new round of financing with a valuation of 35 million dollars, receiving support from well-known institutions such as Mask Network.
Unlike mainstream solutions, Honeypot's differentiation lies in its 'full-stack' approach, which combines the AMM and order book models. It goes beyond optimizing the trading experience and attempts to integrate token issuance, liquidity management, and derivatives trading into a collaborative system, with its perpetual contract trading volume exceeding 20 million dollars shortly after launch.
This article will analyze the products and mechanisms of Honeypot, exploring whether its full-stack integration model can establish a sustainable competitive advantage in the current environment.
From Meme Launchpad to full-stack Perp DEX
Before entering the Perp DEX, Honeypot's core battlefield was the Meme Launchpad. The team addressed and attempted to solve the core pain points of the Memecoin economy at that time, specifically how to capture and retain genuine long-term value for the protocol during a frenzied yet short-lived issuance cycle rather than just one-time traffic.
Pot2Pump revolutionarily transforms early participants directly into native liquidity providers (LP), allowing liquidity pools and tokens to be born simultaneously. This design changes the vicious cycle of early Memecoin 'scientists' arbitraging and rapid liquidity depletion, turning high volatility into sustainable fee income for LPs.
Through Pot2Pump, Honeypot successfully validated an important model: in the high-volatility, strong-gamble asset field like Memecoin, through clever mechanism design, liquidity behavior can be guided, transforming market enthusiasm into a stable revenue stream that can be shared by the protocol and the community.
But Honeypot quickly realized that Memecoin is more like an entry point for liquidity experimentation rather than its final form. What determines the long-term viability of the protocol is whether capital can continuously trade, price, and liquidate within the system.
Based on this judgment, the team expanded its perspective from single issuance to encompass a complete structure covering market making, trading, and risk management, with perpetual contracts becoming a natural choice. Compared to spot or single issuance, Perp DEX can sustainably accommodate trading demands, forming stable fees and transforming volatility into manageable risk exposure.
The differentiation and innovation of Honeypot Finance
When Honeypot Finance entered the perpetual contract sector, it faced two mainstream paradigms, each with its flaws.
On one side is the order book model relying on market makers, which excels in calm markets but easily sees liquidity evaporate when volatility increases, leading to price gaps and user liquidations under adverse conditions.
On the other side is the AMM model represented by GMX, which uses oracle pricing to avoid information lag but makes liquidity providers the direct counterparties to all traders. In a one-sided market, these funding-providing users will continuously suffer losses, resulting in funds often fleeing when the protocol needs support the most.
The deeper issue lies in the imbalance of risk and fairness: to ensure the system does not collapse, some protocols adopt automatic liquidation mechanisms that, in extreme cases, sacrifice the interests of some profitable participants to compensate for losses, raising widespread questions about fairness; at the same time, placing all funds indiscriminately in the same pool also hinders the entry of different risk preference capital, especially large funds seeking stability.
1. Build full-stack liquidity: order book and AMM working together
In response to these structural issues, Honeypot did not choose to patch up the old paradigms but proposed a fusion approach. Its core is to build a 'full-stack' perpetual DEX that allows the order book and AMM to work together and automatically adapt to different market conditions.
The order book is responsible for efficiency and depth: through the integration of high-performance on-chain order books in collaboration with Orderly Network, Honeypot provides traders with a low-slippage, high-speed trading experience similar to centralized exchanges during stable market conditions, meeting the needs of high-frequency and professional traders.
AMM provides resilience and guarantees: Honeypot's self-developed AMM mechanism is centered around dynamically constructed price bands based on oracle prices. When the market experiences severe fluctuations or black swan events, and order book liquidity is exhausted, AMM will become the final executable guarantee layer, ensuring trades can be executed at any time.
The system will automatically select the optimal execution path (order book or AMM) for users' trades based on market volatility and order book depth, allowing users to obtain the best experience without manual intervention. This truly achieves 'efficient trading in stable times and predictable execution in storms.'
2. Implement structured risk control: tiered vaults and fair liquidation processes
In the core aspects of risk management, Honeypot also thinks deeply.
They started from the capital structure and introduced a tiered vault system.
This allows conservative funds seeking stable returns (such as potential institutional capital) to enter the 'priority vault', enjoying priority in fee distribution and ultimately bearing losses, achieving risk isolation. Meanwhile, crypto-native players can voluntarily choose to enter the 'secondary vault', becoming the first line of defense for absorbing losses in exchange for higher yield returns. This design transforms risk from 'passive, mixed burdens' to 'active, transparently priced choices.'
On this basis, they restructured the liquidation process and designed a 'waterfall' sequence with multiple buffers.
When the position is close to liquidation, the system does not directly trigger a liquidation, but sequentially attempts 'partial liquidation', processes the position through 'mini-auctions' in a market-oriented manner, and absorbs losses by the secondary vault; after this, the insurance pool intervenes as a protocol-level buffer to cover extreme tail risk events; only when all the above mechanisms are insufficient to stabilize the system will the ADL automatic liquidation, which has a very small impact range and is fully auditable, be activated as a last resort. This design, which is transparent and postpones punitive measures, aims to truly fulfill its commitment to 'process fairness.'
From market feedback, this systematic design from the liquidity foundation to the underlying risks is beginning to receive preliminary validation. According to industry information, its total platform trading volume has exceeded $120 million, and the trading volume after the launch of perpetual contracts has also surpassed $20 million.
This data powerfully evidences that the attractiveness of its risk grading structure to robust capital has transformed into real funding accumulation. Through this series of designs, Honeypot not only attempts to solve existing pain points but also explores building a next-generation on-chain derivatives infrastructure that can accommodate more complex capital and place greater emphasis on fairness.
How can token economics and NFT mechanisms achieve a closed-loop of returns?
Honeypot Finance does not just aim to enhance trading experience but seeks to build a self-operating yield system. The designs of its tokens and NFTs revolve around the same core goal: to ensure that the real income generated by the protocol can be continuously recovered and redistributed, thereby supporting the ecosystem itself.
1. HPOT: As a tool for carrying and distributing yields
In many DeFi protocols, tokens bear more of the incentive or governance functions and have limited correlation with the actual income of the protocol. Honeypot's token $HPOT, with a fixed total supply of 500 million, is designed as a central hub connecting trading activities with value distribution.
The trading fees generated by the protocol in perpetual contracts and other products will have a portion entering the All-in-One Vault, managed uniformly by the vault and participating in on-chain strategies, thus transforming into sustainable real income. These revenues are not simply retained but are explicitly allocated, with part used for repurchasing and destroying $HPOT, leading to a continuous supply contraction; another part is distributed to users participating in the vault in the form of claimable yields.
Under this structure, $HPOT is not just a speculative target waiting for price fluctuations, but a value carrier linked to the actual operational results of the protocol, its role being closer to a 'yield relay' rather than a one-way incentive tool.
2. NFT: Transforming long-term participation into yield weight
Honeypot's HoneyGenesis NFT is not merely an identity or membership credential, but a yield component designed around 'long-term participation'.
Holders can choose to stake NFTs, accumulating yield weight over time; or they can choose to burn NFTs in exchange for a permanent, higher yield coefficient. This design essentially guides users to exchange time and commitment for higher long-term returns rather than short-term arbitrage.
NFTs here do not emphasize collectible properties, but instead serve as 'yield weight amplifiers', making the act of participation itself a quantifiable and scalable capital input.
Overall, Honeypot attempts to avoid the 'incentive consumption' model and instead builds ecological growth on real usage and income. The end result is not a one-way subsidy but a positive feedback system revolving around revenue recovery and redistribution.
Conclusion:
As the token is about to go live, Honeypot Finance is transitioning from a project driven by early adopters and ecological builders to a broader, more complex public market.
Currently, Honeypot's practice has provided a profound thinking sample on structure, risk, and fairness for the on-chain derivatives track, with its core value lying not in the deepening of a single function, but in a series of coherent design concepts:
Firstly, it is the compatibility and scalability of the structure. The 'full-stack' model is not just a hybrid solution born to cope with market fluctuations, but also reserves underlying interfaces for accommodating more long-term and diverse capital and trading scenarios. The design of tiered vaults transforms risk from 'passive sharing' to 'active choice', paving the way for attracting traditional conservative capital.
Secondly, it is the long-termism orientation of the economic mechanism. Whether it is to return protocol income to users through token buybacks and destruction or to design NFTs as upgradable 'yield positions', the goal is to construct a value closed loop where 'participation equals accumulation'. This logic aims to reduce reliance on one-time liquidity mining incentives and explore the possibility of continuing operations based on real use cases and sustainable revenue distribution after the incentives taper off.
Thirdly, it is the potential for ecological synergy. Honeypot's Perp DEX is not an isolated product but a key link in the full liquidity chain from asset issuance, spot trading to derivatives hedging. This deep integration means that different products are expected to form a positive cycle of capital and user behavior, building a deeper moat.
But after the initial excitement, can Honeypot convert its meticulously designed structural advantages into stable funding accumulation, sustained real trading demand, and healthy protocol revenue? Can it prove that its advocated 'process fairness' and risk layering can truly protect users and maintain system stability in extreme market conditions? This still needs to be verified by the market.
