Lightspeed Newsletter Update

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Solana-based perpetual futures exchange Zeta Markets has released a testnet for Bullet, a low-latency “network extension.” The team’s mainnet launch is scheduled for early Q2 of this year.

This development occurs amidst competition from Hyperliquid, a new perps DEX operating as a layer-1. Hyperliquid currently uses four validator nodes all co-located in Tokyo, raising some centralization concerns. Despite this, Hyperliquid outperformed other perps DEXs, processing about six times the perps volume of all Solana perps DEXs combined last week, according to DeFiLlama.

> “Solana has simply lacked a reliable and performant perps DEX,” said Zeta Markets co-founder Anmol Singh. “Hyperliquid has shown where the bar is; Bullet pushes this bar further.”

Bullet aims to improve performance with a network extension, akin to an Ethereum layer-2. It will process transactions with a sequencer before batching and settling them on Solana. Its zero-knowledge virtual machine enables transaction verification with fraud proofs.

Whether or not Bullet should be considered a layer-2 is debatable. Bullet co-founder Tristan Frizza previously noted that network extensions are mainly a marketing term in Solana’s ecosystem. Bullet’s resemblance to ETH L2 may cause some contention within the Solana community.

Despite this, the launch of Hyperliquid indicates that users prioritize performance and user experience. Bullet claims it can achieve a 2ms latency, superior to Hyperliquid’s median latency of 200ms. However, these claims should be taken with caution until Bullet operates in a real-world setting.

Additionally, Bullet plans to introduce lending and spot trading, aspiring to serve as a foundation for DeFi apps. This trend towards diversification among perps DEXs suggests that offering a single perps product may not suffice for sustaining a thriving business.

For instance, the Solana perps DEX Drift has launched lending, and other platforms like Jupiter and Raydium are exploring alternate business lines as well, with Jupiter being a popular swap aggregator and Raydium seeing volume from pump.fun graduations.