Perp DEX airdrop strategy: How to get profits from airdrops

Author: The DeFi Investor, compiled by: Shaw bitchain vision

One thing I have learned repeatedly in the cryptocurrency space is never to give up on trends.

Currently, Perp DEX is the hottest topic on crypto social media.

Everyone involved in Hyperliquid, Aster and Avantis airdrops will tell you that they make far more money than they expected.

This makes me feel that you can still make a lot of money from Perp DEX.If you have followed me for a while, you will know that I am optimistic about Lighter.

In this post, I want to show the exact strategies I use to earn perpetual contract returns on Perp DEX, the protocols I mainly engage in, and why I chose them.

Even if you are not a perpetual contract trader, you can easily apply it.

Lighter and longer-lasting – Perp DEX I focus on

Before digging into my actual strategy, I want to talk about why I chose to focus on the specific way of benefit “lighter and longer.”

The truth is, 99% of airdrops today are not worth your time.

Therefore, choosing the right airdrop project is crucial.Before writing this article, I spent a lot of time studying the entire Perp DEX field.

I’m trying to find some projects that remind me of the early days of Hyperliquid.

Speaking of Lighter, there are a few things that make me confident in it:

• First-mover advantage——Lighter was the first Perp DEX to introduce zero transaction fees for retail investors. This move proved to be so successful that other DEXs are following suit.

Why is this important?Because projects that bring new things to the market are usually valued higher.Higher valuation = higher airdrop value

Now, some people (myself included) question the sustainability of zero fees, because any product requires income to survive.Lighter founder Vladimir Novakovski clarified that Lighter will still earn income by charging only market makers.

This is similar to Robinhood’s model, which does not charge any fees for retail investors, and despite this, it remains one of the most successful companies in the world.

• Points become increasingly scarce over time——A fixed number of 250,000 points are distributed to Lighter users every week.

This is similar to Hyperliquid’s approach, and I think it’s a very good thing because it means that as the protocol evolves, Lighter points will become increasingly difficult to obtain, which will reward early adopters who use it early.

• A strong community——This is exactly why I am most optimistic about its airdrop.I’ve seen dozens of posts about Lighter, each with hundreds of likes.

The reason HYPE’s full dilution valuation (FDV) reaches $47 billion (as of this writing) is not just because Hyperliquid has created a great product.Dozens of excellent products failed.But the difference is that Hyperliquid has a strong community that is constantly promoting it.

In the cryptocurrency space, attention is crucial.Given the community activity of Lighter tokens, I expect FDV will be high once it is launched.

• 30%-50% of token air-invested have been confirmed——The Lighter team confirmed a few months ago during the AMA event that they plan to airdrop 30%-50% of Lighter’s future token supply to early users who are now using it (TGE is scheduled to be conducted by the end of the fourth quarter).

Next, my second airdrop project with a firm belief is Extended.

I’ve only discovered this recently, but after some research, I think it’s definitely worth participating in.

Extended is not very popular, but it is developing very rapidly.The main reasons why I chose Extended are as follows:

• 30% token air-invested has been confirmed——The team announced plans to airdrop 30% of its token supply to early adopters (TGE is scheduled to be conducted in the first half of 2026).

• Extended pays about 1 million to 1.1 million points per week, regardless of the total transaction volume.This means that as Extended’s trading volume grows, points will only become increasingly scarce and increasingly difficult to obtain, just like Lighter.

• Excellent user experience——In terms of user experience, my experience is very good.Although it is not much different from other Perp DEXs, I like the project’s attention to detail.For example, I found its implemented profit and loss pages very useful.

• A strong team——Extended was created by former Revolut team members.

• Ambitious roadmap—One of the most notable features its team plans to launch is a unified margin across assets.This will allow any asset to be used as collateral to open positions, including earning assets like wstETH.

That being said, if I could only choose one Perp DEX airdrop to participate, I might choose Lighter because its success is almost certain at this time.

Lighter is the fastest growing tokenless Perp DEX, with a very strong community with all the elements needed to conduct large-scale airdrops.

Extended is still at a disadvantage.But their team is very solid, the user experience of the app is great, and they promise to provide up to 30% of the token allocation for this airdrop.

I decided to participate in both projects airdrops as my strategy also requires using two exchanges.

It should be noted that this article only represents my personal opinion and has not received any compensation from any DEX mentioned in the article.All I share is the income farming situation I have done with my own funds.

Now let’s take a deeper look at how I got these airdrops:

Fund rate arbitrage: how to operate and why

Let’s first explain some basic concepts.

The funding rate is a mechanism that every Perp DEX has.It is a regular fee paid between short and long positions traders.

• If too many people short an asset at the same time, the capital rate will become negative, and the trader who holds short positions will pay the trader who holds long positions;

• If too many people are long for an asset at the same time, the funding rate will be positive, and the trader who holds long positions will pay the trader who holds short positions.

The capital rate exists to keep the price of the perpetual futures contract consistent with the spot price.

The funding rates for each asset on different exchanges vary.In Perp DEXs like Lighter and Extended, the funding rate is paid/collected every hour.

This brings some very interesting opportunities.

Fund rate arbitrage is essentially a delta neutral strategy that allows profits by opening long and short contracts for the same asset on different exchanges, respectively.

I conduct this arbitrage transaction to make profits from the capital rate, and also generate a large amount of trading volume on the exchange to obtain airdrops of Perp DEX.

It may sound a bit complicated at first, but you will find that it is actually very simple.

To arbitrage the capital rate, what I do is:

1. Go to loris.tools → Click on “Exchange” and select only Lighter and Extended;

2. Click “MAX ARB” to sort the arbitrage opportunities displayed by the difference in capital rate (the larger the difference, the higher the return);

3. Then go to Lighter, Extended, and go long and short on both exchanges with arbitrage opportunities that you see on loris.tools.

that’s all.After that, monitor your leveraged contracts on both exchanges from time to time to ensure that you will not be closed.

When the fund rate difference disappears for more than 3-4 hours, close the position and conduct the next arbitrage transaction.

There is a suitable example of this:

In the Loris Tools chart above, you can see that the best fund rate arbitrage opportunity available between Extended and Lighter is the AVNT trading pair.

The platform will even tell you exactly what to do:

Sell ​​(short) AVNT in Extended and buy (short) AVNT in Lighter.

All you have to do is follow these instructions.

After that, when the basis point of the arbitrage opportunity you selected (in this example, the AVNT trading pair) (shown under “MAX ARB” on Loris Tools) falls below 3 basis points in 3-4 hours, close the position and continue with the next trade.

Don’t expect to make a lot of money through this strategy.

But the profits obtained from the capital rate should definitely cover the transaction fees you pay and the slippages generated, and also bring some benefits.

This is by far the best way to harvest Perp DEX airdrops.

Things to keep in mind

First, here are some general tips to help you maximize your points:

• Keep all trading positions for more than 10 minutes——If you can keep it for a few hours, you may get more points.Trading volume is the most important, but the duration of the transaction is also important.

• Do not short and long the same asset at the same time on the same exchange— You may be marked as a “robot account” and no longer get airdrops, even if you use different accounts (my suggestion is to use 2 different exchanges for fund rate arbitrage. I’m using Lighter and Extended)

• Avoid trading of BTC/ETH pairs——Although they are the most liquid, on platforms like Lighter, such as trading altcoins with lower liquidity such as KAITO, ENA, JUP, and BERA, can earn 2 to 3 times more points on average.

The advantage of capital rate arbitrage is that it does not require directional market exposure to a certain asset.

Even if you are probably the worst trader, you can make a profit because you basically open a delta neutral contract position.

But the strategy still has liquidation risks.

If you arbitrage of capital fees on a certain asset with high volatility, it is easy to be forced to close the position, causing you to lose some of your principal.

I have 4 suggestions to minimize this risk:

• Check trading positions at least twice a day to ensure they are not liquidated——If the position is close to the liquidation price, please close the position part/all, or add more margin.

• Do not use too high lever——Generally speaking, ensure that when establishing a new position, the liquidation price of short positions is at least twice the price of entry.For example, if you short ENA at a exchange so the price of $0.7, first make sure the clearing price is above $1.4 (you should be able to see it on every exchange)

• Avoid trading tokens with high volatility.Meme coins are a good example.I usually avoid using these token pairs for fund rate arbitrage because their high volatility also brings higher risk of liquidation.

• Always use stop loss and stop profit.I mainly use stop loss for short positions, because short positions are usually more likely to be closed.Stop loss is very useful, especially when the market is volatile.

For example, if I short ENA at $0.7 and my liquidation price is $1.4, I will set the stop loss to $1.35 to avoid being liquidated (stop loss needs to be slightly below the liquidation price)

Then on another exchange, I will be longing ENA to arbitrage the capital rate and implement delta neutral positions, and I will set up a take-profit order at $1.35.

By doing this, you can avoid being liquidated in 95% of the cases.

I have another suggestion for you.

When you arbitrage with a capital rate, the maximum cost you pay is not the transaction fee (the transaction fee is zero on Lighter), but the spread.

The spread is the difference between the highest price (buy price) the buyer is willing to pay and the lowest price (sell price) the seller is willing to accept.

For major assets such as BTC, the price difference can be ignored.

But for altcoins with high volatility, the ratio may sometimes be between 0.03% and 0.15%, and will affect the profitability of the capital rate arbitrage strategy.

How can I minimize the spread paid (like a hidden fee)?

By using limit orders.For example, if you arbitrage the capital rate of an asset between Lighter and Extended, you can do the following:

• Limit orders for short or long positions at the mid-price between the buy and sell prices on Extended;

• After the limit order is completed, the market order will be placed immediately on Lighter.

This way, you can arbitrage the capital rate at a lower fee.

Other Perps DEXs that can participate in earnings farming

As I said, the main airdrops I’m participating in are Lighter and Extended.

But if you want to get more opportunities, I also find some other interesting Perp DEXs.

If interested, I will write a complete overview in the coming weeks to compare them.

• Pacifica——Perp DEX (currently in the invitation phase) created by FTX Chief Operating Officer and founder of Nftperp;

• Paradex——A decentralized exchange with zero fees, deep liquidity, over 250 markets and privacy, supported by Paradigm and Jump Capital;

• EdgeX——Perp DEX, the second largest transaction volume, is also one of the most profitable DeFi protocols.You can trade on your computer and mobile phone using EdgeX’s mobile app;

• Based——A popular trading platform built on Hyperliquid, powered by Ethena, Hashed, Delphi Digital and Spartan Group.