The post Lighter: How incentive exhaustion cut LIT’s dominance to 8.1% appeared on BitcoinEthereumNews.com.

Lighter’s [LIT] dominance in DeFi perpetuals peaked near 60% in mid-December 2025, reflecting strong post-launch momentum. That surge followed its airdrop-driven activity spike and aggressive liquidity incentives. However, as incentives normalized, participation cooled, and volumes retraced sharply. By January 2026, sector-wide contraction intensified pressure, while total daily perp volume fell toward $15–20 billion, down roughly 30% year-over-year. Source: Laevitas/ X As Lighter’s share declined, Hyperliquid [HYPE] regained ground, climbing back toward 40–50% control. This rotation reshaped competitive dynamics, while Paradex and DYDX captured incremental flows during volatility spikes. Although Lighter briefly recovered in early February, its share slipped again toward 25%, signaling fading speculative momentum. Even so, Lighter maintains structural depth in Bitcoin [BTC] and Ethereum [ETH] contracts, holding over 50% of Open Interest in key pairs. Thus, while headline volume softened, its core liquidity base remains resilient amid tightening macro conditions and reduced incentive-driven trading. Hyperliquid’s rise through Lighter’s liquidity drain Lighter captured nearly 60% share in late 2025 because of zero fees and a looming airdrop concentrated flow on one venue. That incentive stack pulled in short-horizon traders, so volumes surged as leverage appetite expanded. As 2025 closed, sector turnover hit $7.9 trillion, and Lighter briefly displaced Hyperliquid in daily activity. Then the catalyst flipped. The  LIT airdrop on the 30th of December converted “trade for points” demand into “sell and leave” behavior. As LIT dropped 45% by mid-January, yield-driven wallets unwound, which reduced repeat volume and thinned sticky participation. As that cohort exited, Lighter’s share compressed toward 25% and later slid to about 8.1% by mid-February as rankings reshuffled. At the same time, the market expanded faster than Lighter could retain flow. Total perps volume doubled to $14 trillion in six months, so any slowdown translated into rapid share dilution. Hyperliquid absorbed the migration with a 23.4%…

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Filed under: News - @ February 21, 2026 10:15 pm