Author: Jae, PANews

As 2026 enters its summer phase, the crypto funding market has just experienced a severe "late spring chill."

According to Cointelegraph data, the cryptocurrency venture capital market cooled significantly in April, with total VC funding falling 74% month-over-month to $660 million. Only 63 deals were recorded, marking the lowest monthly funding level since July 2024. The chill permeated almost every sector, with investment institutions unanimously tightening their purse strings.

However, even in the depths of winter, there is always a force that rises towards the sun. In May, the on-chain derivatives sector defied the trend and experienced a surge, with three major protocols—PopDEX, Variational, and Liquid—receiving substantial institutional investment over two consecutive weeks. Besides top venture capital firms like Dragonfly Capital, they also attracted the attention of traditional growth fund Left Lane Capital.

The nearly $100 million bet not only reflects the consensus among investors on the high growth potential of the derivatives sector, but also marks the beginning of a new battleground for the next generation of Perp DEX (decentralized perpetual contract exchange).

Saying goodbye to false prosperity, PopDEX's $30 million investment leads the "return to value."

The outstanding performance of the crypto derivatives trading sector provides strong logical support for the successful fundraising of the three major protocols. CoinGecko's "2026 Crypto Perpetual Contract Market Report" points out that the market landscape of Perp DEX is undergoing a subtle marginal shift:

Perp CEX trading activity is facing a contraction: The average monthly trading volume of the top 11 Perp CEXs has declined by 34% year-on-year in the first four months of this year, shrinking from $7.11 trillion last year to $4.69 trillion currently.
Perp DEX's market share has surged: the average monthly trading volume of the top 12 Perp DEXs has increased from $531.65 billion last year to $611.57 billion currently. Even more remarkably, Perp DEX's share of open interest (OI) in the entire crypto derivatives market has skyrocketed from 3.6% at the beginning of last year to 13.5% at the end of April, representing a nearly fourfold increase.

Even JPMorgan Chase stated in a research report that Perp DEX is gradually encroaching on the market share of midstream CEXs.

This ebb and flow reveals that funds are rapidly migrating to Perp DEX, which offers "non-custodial, self-controlled asset ownership."

However, during its aggressive expansion in the last round, the Perp DEX platform lost its way: the protocol heavily relied on airdrops to "subsidize" liquidity, creating a false sense of prosperity. Once the airdrop expectations were met, liquidity vanished, the platform stagnated, and the token price steadily declined. On the other hand, the active trading users who actually contributed transaction fees to the platform were often at the end of the profit distribution chain.

PopDEX aims to break this vicious cycle. It seeks to restructure the value distribution system, directly and sustainably returning the ecological value captured by the platform to participating users who make actual contributions, transforming traders from "contributors" into "co-builders," and achieving consensus on the level of interests.

On May 22, PopDEX completed a $30 million strategic seed round of financing led by Foresight Ventures. Zac Tsui, a partner at the firm, stated that the future of on-chain trading belongs to platforms built around the actual needs of active traders, and PopDEX's uniqueness lies in its attempt to return platform value to those who truly contribute to its development.

According to disclosures, the $30 million will be used to inject initial liquidity, improve trading depth, accelerate product security audits, and expand the global team. PopDEX has already officially invited select elite traders to participate in closed beta testing. The team will focus on optimizing the cross-margin engine, controlling risk in extreme market conditions, and streamlining the trading process to prepare for the public launch.

In the current climate of rampant point airdrops and rampant "wool party" activities, PopDEX has chosen to embark on a path of "value return".

Capital pours into "on-chain brokers," Variational becomes the king of money generation.

Even though PopDEX's funding amount was already quite impressive, Variational took the crown as the top fundraiser in the Perp DEX sector in the first half of 2026.

On May 20th, Variational announced the completion of a $50 million Series A funding round led by Dragonfly Capital, with participation from leading institutions such as Bain Capital Crypto and Coinbase Ventures. Prior to this major investment, Variational had already secured $10.3 million in seed funding and $1.5 million in strategic funding, bringing its total funding to over $60 million.

Behind the massive funding is venture capital's bet on Variational's "on-chain broker" model. While it appears to be a DeFi protocol, it is essentially more like a centralized market maker built on an on-chain settlement platform.

Most Perp DEXs exploring RWA perpetual contracts have attempted to guide liquidity from scratch through an on-chain central limit order book (CLOB), but this has instead led to poor performance such as liquidity fragmentation, large spreads, and drastic price volatility.

Therefore, Variational abandoned the traditional Central Limit Order Book (CLOB) mechanism and instead introduced a peer-to-peer Request for Quotation (RFQ) system, similar to the brokerage model in traditional financial markets.

On Variational's retail application Omni, the internal liquidity unit OLP (Omni Liquidity Provider) acts as both a market maker and a counterparty for users, connecting in real-time with mainstream CEXs like Binance and Bybit, and traditional financial channels to hedge risks. Variational doesn't need to create order books out of thin air; instead, it directly aggregates and routes existing liquidity from traditional and on-chain markets. This ample liquidity allows Variational to confidently offer users zero-fee trading, with the platform profiting solely from the bid-ask spread.

The Variational team has a strong background in Silicon Valley and Wall Street, with most members coming from top market-making institutions such as Google, Meta, Virtu, IMC, and Jane Street. Co-founder and CEO Lucas Schuermann previously founded the quantitative hedge fund Qu Capital, which was later acquired by DCG, and served as VP of Engineering at Genesis Trading, a well-known cryptocurrency OTC giant.

Capital bets often coincide with significant business inflection points. This funding round coincides with Variational's launch of its first real-world asset (RWA) derivatives markets. Phase 1 will support on-chain perpetual contract trading for commodities such as gold, silver, copper, and WTI crude oil, and will stress-test cross-margin engines and on-chain settlement markets. Phase 2 is expected to launch this summer, with the protocol directly routing liquidity from traditional financial channels and introducing over 100 new markets.

Since the end of 2025, the protocol has processed nearly $130 billion in cumulative trading volume, with open interest (OI) exceeding $1 billion.

Liquid, with its AI assistant, is replacing manual operations with dialogue to capture front-end traffic.

Compared to the purely financial structures of the former two, Liquid tells its story at the intersection of Silicon Valley and Wall Street: AI-enabled trading.

On April 28, Liquid completed an $18 million Series A funding round, co-led by Neo and Left Lane Capital. Just last year, Paradigm also exclusively led Liquid's $7.6 million seed round, bringing the total funding treasury to $25.6 million.

Liquid started as a Perp DEX aggregator and has since expanded into a 24/7 trading platform supporting over 500 markets, including cryptocurrencies, US stocks, commodities, forex, prediction markets, and pre-IPO equity, with leverage up to 200x.

More importantly, Liquid maintains a non-custodial architecture. This means that users always retain absolute control over their assets.

In traditional financial markets, the user-friendly traffic entry point, namely the front-end interface, typically captures the most lucrative portion of the entire value chain's profits.

Liquid's product logic is a reflection of this principle in the crypto space. The protocol enhances its front-end control over retail order flow by deeply integrating an AI trading assistant.

Derivatives trading is inherently characterized by high leverage, high risk, and high complexity, posing a significant professional barrier for ordinary traders. Liquid, on the other hand, encapsulates complex leverage calculations, cross-asset risk control, and macroeconomic data research reports into conversational AI, allowing retail investors to enjoy institutional-level research depth and execution speed. It replaces complex operations with simple dialogue, thereby enhancing user stickiness.

Since its launch in August 2025, Liquid has recorded a cumulative trading volume of over $3 billion among its 40,000 active users.

The nearly $100 million investment proves that the Perp DEX protocol still has a strong ability to attract funds and users, but this is only the prelude to the next round of changes in the derivatives market.

PopDEX's corrective incentive allocation, Variational's integration with traditional finance, and Liquid's use of AI to connect users—these three approaches, from different dimensions, build bridges for funds to access the on-chain financial market.

As these three agreements move toward the next step of the roadmap, the landscape of the Perp DEX sector may be about to undergo a new round of reshuffling.

Coinbase will add support for Citrea (CTR).

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