Variational Rises to No. 4 On-Chain in Three Months with Zero-Fee Perp Contracts; Traders Paid $26.8 Million in Spreads Before Token Launch

Author: Alea Research

Compiled by: TechFlow

TechFlow Editor's Note:In a decentralized derivatives (Perp DEX) landscape dominated by leading platforms, Variational took a different path by building the Omni platform on Arbitrum. With a unique 'zero trading fee + single market maker (OLP) counterparty quote' model and traditional financial asset (TradFi) swap contracts, it achieved rapid growth in both trading volume and open interest in just three months, with open interest ranking No. 3 across all chains and trading volume ranking No. 4.

However, 'free' is often the most expensive price in business. Although traders saved on visible trading commissions, they left up to $26.8 million in spread profits for market makers and the protocol in Q3. While 20% of this was allocated to the protocol treasury as strong backing for future $VAR token buybacks, more than half of the profits were absorbed by market-making hedging costs.

Ahead of the Q4 TGE and the delivery of a professional trading API, an in-depth breakdown of its position turnover, spread revenue distribution, and token valuation logic is highly valuable for understanding the liquidity landscape of decentralized derivatives.

Bitcoin rose 43% in Q3, but overall trading volume on on-chain perpetual contract platforms fell 2.5% from Q2. Variational's average daily trading volume surged 80% in Q3 against the trend, and its ranking among peer platforms jumped from No. 8 to No. 4. Half of its September trading volume came from a product that did not exist in August: swap contracts covering equity indices, gold, and crude oil.

Chart: Variational's 7-day market share of on-chain perpetual contract trading volume surged from 4.6% on June 30 to 12.4% on September 30, successively surpassing edgeX, Aster, and Lighter. Leader Hyperliquid accounted for 38.6% of total Q3 trading volume, beyond the chart's axis range.

Key Takeaways

Rose from No. 8 to No. 4, and ranked No. 2 in late September.Total Q3 trading volume on on-chain perpetual contract platforms was $1.79 trillion, with Variational accounting for 6.4%, a significant increase from 3.4% in Q2; from September 17 to September 30, its trading volume was second only to Hyperliquid.

Open interest and trading volume grew in tandem.In Q3, Variational's trading volume and open interest (OI) both grew by about 80%, and daily turnover remained at 1.67x for every $1 of open interest. Among the top 10 platforms, no other platform achieved concurrent growth of more than 50% in both metrics.

Swap contracts contributed half of September's trading volume in their launch month.Eight swap contracts accounted for 50.3% of total September trading volume, with the Nasdaq 100 index swap alone representing 30.4%; the first listed gold and Nasdaq 100 index swaps opened for trading at the beginning of the month.

On par with trade.xyz in traditional financial markets.In the two weeks ended September 30, Variational's trading volume in equities, indices, metals, and crude oil was already on par with trade.xyz, while its open interest was only 17.6% of trade.xyz's.

Before the $VAR launch, one-fifth of spreads had already been allocated to the treasury.Traders paid $26.8 million in spreads in Q3, up 69% from Q2, and the protocol treasury reached 9.58 million USDC at the end of the quarter.

On September 24, Variational announced that it would issue the token $VAR in Q4, with 32% of the token supply allocated to points holders and treasury revenue planned entirely for token buybacks.

Chart: Five of the ten largest on-chain perpetual contract platforms ranked by Q3 trading volume are shown, displaying changes in average daily trading volume and average open interest relative to Q2. Variational achieved about 80% growth in both metrics. Hyperliquid's Q3 open interest grew 45.3% and trading volume grew 8.0%, while seven of the top 10 platforms had lower trading volume than in Q2.

Market context: Bitcoin up 43%, open interest rises, but trading volume falls 2.5%

In Q3, crypto traders showed a “more open interest, less trading” pattern. Bitcoin rose 42.6% in the quarter, while open interest on on-chain perpetual futures platforms surged 69% to $14.2B, with Hyperliquid alone contributing $3.5B of the increase.

However, trading volume on these platforms fell 2.5% in Q3 to $1.79T, with July alone shrinking 21% from June.

The cost of carrying long positions also rose sharply. Bitcoin funding rates on Hyperliquid averaged an annualized 8.9% in Q3, far above 2.7% in Q2, even as average implied volatility fell from 41.8 to 37.3.

The Federal Reserve held rates steady on July 29, with three officials voting for a rate hike; it then delivered its first rate hike since 2023 on September 16.

Chart: Each metric is indexed to June 30 (set to 100). Bitcoin ended Q3 at 143, perpetual futures open interest ended at 169, while the 30-day rolling perpetual futures trading volume dipped to 66 on August 16 before closing at 96.

Seven of the top ten trading platforms saw Q3 trading volume shrink, while most of Variational’s growth came from traditional financial assets outside crypto markets: its traditional finance trading volume surged $41.9B from Q2, compared with only $9.5B of growth in crypto assets.

The Nasdaq 100 index closed at an all-time high on September 22, just three weeks after Variational opened swaps on that underlying.

Trading volume and open interest: both grew by about 80%, while turnover remained stable at 1.67 times per day

Variational operates Omni, a perpetual futures and swaps trading platform, on Arbitrum. On Omni, the sole market maker, Omni Liquidity Provider (OLP), quotes every underlying market and acts as the counterparty to all trades, charging traders zero trading fees.

In contrast, category leader Hyperliquid uses an order book model to match traders and charges fees on each fill.

Variational’s Q3 trading volume reached $114.2B, up from $62.8B in Q2; its average open interest rose from $410M to $741M, ending the quarter at $1.01B.

Thanks to the simultaneous expansion of trading volume and position size, its daily turnover remained at 1.67 times (1.68 times in Q2), while Hyperliquid’s turnover fell from 1.60 to 1.19 times as open interest growth far outpaced trading volume.

Variational’s daily trading volume topped $2B for the first time on August 25 (one week before swaps launched), and it set its first $3B daily volume record on September 21, with more than half coming from swaps.

Chart: Daily trading volume, 7-day moving average, and one-sided open interest for four platforms from April 1 to September 30 (each on its own scale). Variational’s open interest grew from $573M on June 30 to $1.01B on September 30.

Hyperliquid and Lighter both expanded open interest faster than trading volume, while Variational’s trading volume and open interest grew in tandem.

Throughout Q3, even as monthly trading volume more than doubled, Variational kept its weekly points incentive pool unchanged at 150,000 points, and its open interest still grew by a net $441M in the quarter.

Market share: trading volume ranks fourth at 6.4%, while open interest rises to third at 6.8%

Variational's trading volume market share climbed from 3.4% in Q2 to 6.4% in Q3, while its open interest market share rose from 4.9% to 6.8%, putting it ahead of competitors in open interest size and lifting it to third place, behind only Hyperliquid and Aster.

In Q3, Hyperliquid's open interest market share reached 58.0%, and its trading volume market share was 38.6%. Including the Robinhood Wallet channel, Lighter held 7.6% of trading volume and 5.1% of open interest, respectively; counting only its standalone app, those figures were 6.7% and 4.5%.

Chart: Weekly trading volume market share vs. open interest market share, April to September 2026 (logarithmic scale). In the week ending September 27, Variational held 12.6% of trading volume and 6.6% of open interest; Hyperliquid held 35.4% and 58.6%, respectively.

During the same period, Variational captured growth in both trading volume and open interest share, whereas Hyperliquid mainly added to its open interest share and Aster's shares were nearly flat.

As swap contracts fully took over its trading flow, Variational's trading volume market share surpassed its open interest market share for the first time in the week ending September 13.

Swap Contracts: Eight Underlying Markets Captured Half of September Trading Volume

Swap contracts track equity indices or commodities, and Variational prices them directly based on quotes from its traditional finance liquidity partners. The product does not impose crypto-specific perpetual funding rates; positions only pay or receive financing costs anchored to benchmark rates such as the Secured Overnight Financing Rate (SOFR) once daily at the 17:00 ET close.

Market makers introduced the first traditional finance hedging partners for the gold underlying as early as July 23, a full five weeks before gold and the Nasdaq 100 index officially launched on September 1 as the first swap contracts.

Chart: Share of each swap contract type in total September swap trading volume and in total swap open interest as of September 30. Nasdaq 100 and S&P 500 index swaps together accounted for 77% of total September swap trading volume.

As of September 30, eight swap contracts had been listed for trading, contributing $29.8 billion in volume in September and accounting for 50.3% of the platform's total trading volume. On September 2, Variational raised the open interest cap for gold and Nasdaq 100 index swaps to $50 million, and from September 10 to 24, it hosted its first swap trading competition, attracting more than 2500 registered traders.

Gold contracts attracted a disproportionate share of open interest: as of September 30, gold contracts accounted for one-quarter of total swap open interest, while representing only one-seventh of September swap trading volume. Since September 3, swap trading volume has been counted with double weight in the weekly points pool, and as of September 30, swap open interest had reached $190 million.

Deployed on Hyperliquid, trade.xyz is the largest on-chain platform for traditional financial assets, with its traditional market trading volume falling by more than half from July to September. In July, Variational's traditional asset trading volume was only $7.1 billion, while trade.xyz reached $107.1 billion; by September, the gap narrowed sharply to $33.4 billion versus $51.2 billion.

Among total on-chain traditional financial asset trading volume across Variational, trade.xyz, and Aster, Variational's market share surged from 6.1% in July to 32.9% in September, while trade.xyz accounted for 50.4% and Aster for 16.7% in the same period.

Chart: 7-day rolling trading volume in traditional asset markets. trade.xyz peaked at $35.1 billion in the week ending August 2; in the week ending September 30, Variational reached parity with it at $10.7 billion when combining swaps and traditional perpetual futures. Ostium’s September trading volume was under $200 million.

Variational achieved this trading volume with far smaller open interest than its competitor: from September 17 to 30, its traditional-asset open interest averaged only 17.6% of trade.xyz’s.

On the evening of October 8, after the quarter ended, six sampled quote snapshots showed that a $1 million round-trip trade in the Nasdaq 100 index on Variational cost only $88 in pre-fee spread, while the same cost on trade.xyz’s order book reached $204.

Chart: Pre-fee $1 million round-trip trading cost in basis points, based on the median of six snapshots taken between 19:14 and 22:36 UTC on October 8. Variational offered better quotes for the Nasdaq 100, S&P 500, gold, and Brent crude; trade.xyz had the edge in silver and WTI crude.

Fees further cemented Variational’s lead across these four instruments: Variational charges no fees at all, while trade.xyz applies a base taker fee of 1.8 bps round trip for indices and as much as 18 bps for gold.

Aster, meanwhile, cut its taker fee for traditional markets to 1.25 bps on September 7, six days after swaps went live.

Perpetual Futures: Open Interest Grows by $252 Million, Led by Non-Major Crypto Assets

Perpetual futures still accounted for four-fifths of the platform’s open positions. Variational’s daily average crypto-asset trading volume in Q3 rose 15%, while Hyperliquid’s volume excluding trade.xyz grew only 2%.

Crypto open interest increased by $192 million, with two-thirds concentrated in long-tail tokens outside Bitcoin, Ethereum, Solana, and HYPE.

After Variational reached 100 traditional financial instruments launched within 90 days on August 17, traditional-asset perpetual futures positions increased by $60 million; however, traditional perpetual futures trading volume fell from $7.1 billion in July to $3.6 billion in September as swaps absorbed flows in indices and commodities.

Chart: One-sided open interest by segment at the end of each month from February to September. As of September 30: major crypto assets were $396 million, other crypto assets $229 million, traditional perpetual futures $199 million, and swaps $190 million.

All business segments recorded net growth in Q3, with swaps bringing incremental open interest on top of perpetual futures rather than cannibalizing existing positions.

Protocol Revenue: Traders Paid $26.8 Million in Spreads in Q3; the Treasury Captured One-Fifth

Market makers’ core revenue is the bid-ask spread, and Variational allocates 20% of the spread from each trade to the protocol treasury. The protocol treasury received $5.36 million in Q3, implying that traders paid a total of $26.8 million in spreads during Q3, up sharply by 69% from Q2.

Chart: Distribution of the $26.8 million in Q3 spread revenue flows: market-making costs accounted for 52.6%, market-maker net profit for 22.7%, the protocol treasury for 20.0%, and referral rebates for 4.8%. Treasury flow data is based on actual on-chain transfers; other segment breakdowns are estimated from six biweekly reports published by Variational between July 24 and October 2.

In terms of the take rate per $1 traded, Variational earns slightly less than Hyperliquid: its effective spread is equivalent to 2.35 basis points of trading volume, while Hyperliquid's average perpetual futures fee rate is 2.40 basis points.

However, Variational's daily average turnover rate of open interest reaches 1.67 times (versus only 1.19 times for Hyperliquid), which means its annualized revenue per $1 of open interest has surpassed Hyperliquid's.

Figure: Revenue capture rate per $1 of trading volume and per $1 of average open interest in Q3. The annualized spread paid by traders to Variational is equivalent to 14.3% of total open interest, while the annualized fee rate paid to Hyperliquid is only 10.4% of total open interest. Hyperliquid's fee statistics exclude the developer revenue share.

The one-fifth of the spread retained by the vault is equivalent to 2.9% of annualized open interest, while Hyperliquid's Assistance Fund withdrew as much as 9.2% of open interest to repurchase HYPE.

As swap contracts accounted for a larger share of total trading volume, the effective spread per $1 traded narrowed from 2.81 basis points in August to 2.09 basis points in September, and further declined to 1.64 basis points from October 1 to 14; however, thanks to a 99% month-over-month surge in September trading volume, total spread revenue generated in September still rose 48% month over month, reaching $12.40 million.

Figure: Change in the protocol vault's USDC balance from January 23 to September 30. The vault balance rose from 4.22 million USDC on June 30 to 9.58 million USDC on September 30, accumulating more rapidly after the launch of swap contracts.

Between January 23 and October 14, the protocol vault made no outbound transfers. Every trade execution triggers a real-time micro-transfer of funds to the vault; as of October 14, the total vault balance reached 10.89 million USDC.

Outlook: After Omni opens for public testing and the trading API launches, $VAR will launch in Q4.

On September 24, Variational announced that the launch of token $VAR is scheduled for Q4 2026, delaying the previous plan to launch at the end of Q3; the official explanation cited "a major strategic partnership reshaping Variational's development trajectory".

At the start of the token generation event, points holders will receive 32% of the total supply; team and investors hold 50%, "locked for 12 months after the TGE and released linearly over at least three years"; the foundation retains 18%.

Variational plans to use all protocol vault revenue to buy back and burn $VAR, while continuing to distribute 150,000 points weekly before the official token launch.

Figure: The $VAR token allocation announced by Variational on September 24: 32% allocated to points holders and unlocked at launch; 50% allocated to team and investors; 18% allocated to the foundation reserve. Variational has not yet announced the token's total supply.

Before the token launch, Variational plans to "end the closed beta and bring Omni to the public mainnet, expand the range of swap contract underlyings, release a professional trading API, and publish details on $VAR token buybacks and utility".

The trading API is its next core engineering effort; before its official delivery, all trades must be executed manually through the official front-end application.

Figure: Roadmap items delivered and announced from July 1 to December 31. Before the token launch: full public access to Omni, release of the trading API, and announcement of token buyback details. Items without a confirmed date: 24/7 swap contracts.

Swap contract underlyings continue to expand: eight more underlyings went live for trading between October 1 and 14, including cocoa, volatility indices, and even the Dow Jones Index, bringing the total number of swap underlyings to 16.

Variational also plans to launch 7x24 perpetual swap trading, eliminating daily fixed closing settlements and supporting cross-margin mode.

On September 30, Chief Executive Officer Lucas Schuermann listed three future revenue sources: order flow trading commissions, net interest income on open positions, and net interest income on USDC held on the platform.

Valuation estimate: benchmarking peers' tokenized revenue multiples, the $VAR valuation range is $2.6 billion to $5.1 billion.

The one-fifth of the spread retained by the treasury is substantive revenue for Variational's planned token buybacks, with its scale changing dynamically with trading volume and spread rates.

We selected three typical rates for estimation: using the Q3 daily average of $1.24 billion and a 2.35 bps spread, annualized treasury revenue is $21.3 million; using the September daily average of $1.97 billion and 2.09 bps, annualized revenue is $30.1 million; using the October 1-14 daily average of $2.84 billion and 1.64 bps, annualized revenue reaches $33.9 million.

Chart: Annualized treasury revenue under three different growth rates, each multiplied by comparable protocols' fully diluted valuations as of September 30 close and their Q3 annualized trading revenue multiples flowing to tokens: Aster at 124x, Lighter at 134x, and Hyperliquid at 152x (counting only Assistance Fund trading fees, excluding reserve interest income). The resulting fully diluted valuation matrix falls within the $2.6 billion to $5.1 billion range.

If directly benchmarking peers' valuation multiples on total trading fees, the valuation range derived from gross spreads would be as high as $8.7 billion to $23.5 billion; however, these comparable platforms return most fees to token holders: in Q3, Hyperliquid allocated 86% of fees to the Assistance Fund, Aster allocated 78% and Lighter 61% to buybacks, while Variational allocates only 20% of the spread to the token.

On September 30, Polymarket prediction market probabilities showed: the probability that $VAR's market cap would surpass $1 billion on listing day was 62.5%, and the probability of surpassing $2 billion was 29.6%.

At the close of Q3, Variational ranked fourth by trading volume and rose to third by open interest; open interest growth kept pace with trading volume, and within just one month of launching perpetual contracts, it matched trade.xyz in traditional financial asset trading volume.

Its treasury currently holds 10.89 million USDC in real revenue for token buybacks; under a $1 billion valuation assumption, based solely on the Q3 treasury accumulation rate, it could buy back 2.1% of circulating $VAR tokens annually, a buyback yield far exceeding the 0.7% for HYPE and LIT and the 0.8% for ASTER at its September 30 market cap.

Before the token officially launches, professional trading APIs will be rolled out first; Polymarket bets indicate roughly a 70% probability that its listing valuation will be below $2 billion, a level even below the conservative floor derived from peer tokens' real yield multiples.

Source: 深潮 TechFlow