Vertex - Q1 2025 - Alea Research

Key Takeaways

Metrics: the protocol has improved on several data points quarter over quarter, such as sustained trading volume, increase in TVL, and market maker focus. Vertex still remains a leader in its category, leading in 7/8 comparison features.
Significant updates: new chain launches (Sonic and Avalanche), tokenomics revision, and isolated margin were key to set the stage for the protocol this year.
Roadmap: 25 chains in 2025, decentralizing the sequencer, and VLP will be key developments in the coming months.
Due Diligence: no major bugs, hacks, downtime or governance issues were registered in 2025.

Refresher: What is Vertex?

Vertex provides a vertically integrated platform for spot swaps and perp futures with an embedded lending market and support for cross-margin. Its infrastructure can be ported across chains, settling value on each underlying chain. This creates a moat by virtue of owning the entire stack and enabling a positive-sum environment for every additional chain that it is integrated with.

Unlike appchains, Vertex’s Edge solves the issue of liquidity fragmentation by unifying liquidity from multiple chains into an off-chain Sequencer. By synchronizing state across different chains, it can match incoming orders from one chain against the pooled orderbook liquidity of all base layers integrated with the Vertex Sequencer. All of this is enabled by an orderbook offering 5-10 ms latency and a CEX-like UX while still allowing users to retain custody of their funds.

Our previous coverage of Vertex: Deep Dive, Perspective, Blueprint

Metrics

Financials

Daily Average Trading Volume by Chain

Trading volumes have remained high, declining slightly by 19% quarter-over-quarter, despite a tough environment for altcoins and declining prices (aggregate altcoin market cap was down -10% in Q1 2024). This volume metric is a critical indicator of the protocol’s real performance and it suggests that even amid significant price drops, underlying fundamentals have remained strong.

Sei has seen a notable increase in trading volume share since its launch. While Arbitrum had historically been the dominant chain, Sei quickly surpassed it following its launch, becoming the primary venue for activity. With Avalanche giving out rewards and emerging as the new challenger in terms of trading volume, the key question is whether it will follow a similar trajectory to Sei. Sonic is another chain that had a significant run in its share since launch in Q1, also boosted by incentives.

TVL by Chain

TVL has declined by 22% since last quarter, yet signs of stickiness remain—Blast, for instance, has retained most of its TVL despite low trading volume. It’s key to note that TVL serves as a complementary metric for Vertex, as it represents one of the two core sources of liquidity within the protocol. Thanks to this tech, Vertex ensures there is always available liquidity to clear trades, supporting both sophisticated market makers who prefer order books and traditional on-chain liquidity providers who operate through the AMM model.

Most liquidity remains on Arbitrum, which is expected as it’s the protocol’s base chain. Vertex’s core products: spot, perpetuals, and the money market are powered by its on-chain trading and risk engine, all of which are managed through Vertex smart contracts deployed on Arbitrum.

Open Interest by Chain

Open interest has modestly shrunk QoQ by -17%. Similar to TVL, the distribution of capital has broadened with the launch of new chains, diversifying the sources of “sticky” capital. Market makers, who typically operate in and out of positions quickly, have limited impact on open interest. With a new wave of chain integrations expected this summer, there’s significant upside potential for OI increase.

Arbitrum has consistently held the largest share of open interest (OI) across chains since launch, even as other chains have surpassed it in trading volume. One notable exception is Blast, which maintains a strong OI presence despite relatively low trading activity.

Total Fees by Chain

Trading fees have followed a similar trend to volume, remaining relatively flat with some monthly fluctuations driven by incentive campaigns, most notably a significant spike on Sonic in March. This stability in fee generation, despite declining token prices, is a positive signal for the protocol’s valuation multiples (explored in “Multiples” section).

Sei captured the majority of Vertex’s fee generation before the launch of new EVM chains in Q1 2025 (Avalanche and Sonic). Even after the significant rise of these EVMs, Sei remained a major contributor, generating over 40% of total fees in Q1 2025. Sonic followed with approximately 20%.

Unique Users/Traders by Chain

User activity saw a significant year-over-year decline, but the quarter-over-quarter drop was more modest at -25%. This drop is largely attributable to retail users migrating to other platforms, notably coinciding with Hyperliquid’s airdrop. Given that retail users are now accustomed to decentralized exchanges, especially following the rise of Hyperliquid among perpetual DEXs, there’s a strong case that they will increasingly seek alternatives like Vertex, which offer greater upside and opportunities for experimentation, particularly as the protocol expands to support more chains in the near future (25 chains in 2025 roadmap goal explored in the Roadmap section).

While trading volume remains heavily concentrated on a few chains, likely driven by incentive programs, the distribution of actual users is more diverse. In Q1 2025, the top three chains accounted for 73% of the user base, down from 93% in the previous quarter. This shift reflects a notable decline in Arbitrum’s dominance, which dropped from 51% to 38%, suggesting that user activity is gradually decentralizing across chains.

Other Metrics

Spot/Perp Ratio by Chain

The main chains by total trading volume (spot + perps) are Avalanche, Arbitrum, Sei, and Sonic. Historically, these chains have seen minimal spot trading activity (less than 10% of total volume). In contrast, chains like Berachain (via Bro.trade) and Base have shown more meaningful contributions from spot markets.

Maker Rebates % of Total Fees

Vertex has consistently prioritized market makers, a strategy evident in the growing share of maker fee rebates over accruing fees on the protocol’s lifetime. This indicates a deliberate effort to cultivate deep and consistent liquidity from MMs (market makers). It will be interesting to observe whether this trend continues once reward programs are scaled back, but we believe it will stay, as unlike retail participants, MMs typically focus on the long-term and provide more stable, “stickier” forms of liquidity.

Correlations

To assess how strongly Vertex’s price is correlated with each underlying metric (Fees, Trading Volume, and TVL), we apply a simple classification based on the percentage of days in a quarter where the 30-day rolling correlation is greater than 0. We apply this logic quarterly, based on each quarter’s percentage of days with positive correlation, and historically, using the average across all quarters. Correlation Strength Logic:

> 80% of days > 0 correlation: High
60–80% of days > 0 correlation: Slight
40–60% of days > 0 correlation: Inconsistent
< 40% of days > 0 correlation: Weak

Vertex’s correlation data:

Fees: weak quarterly and inconsistent on a historical basis.
Trading Volume: weak quarterly and inconsistent historically.
TVL: high correlation both quarterly and historically.

Market Data

Price, Market Cap & FDV

High emissions significantly impacted the circulating supply and diluted token price (the decline was largely driven by inflationary tokenomics and increased competition). The market cap low has been maintained since the November rally at ~$20m, which if maintained should be an attractive level to add longs given the current metrics and growth potential

Vertex’s Fully Diluted Valuation (FDV) moves with its token price, which we’ve plotted on a log scale to illustrate that even modest pullbacks could result in outsized returns, we could see a pullback of 2x to the nearest highs as the protocol re-rates.

Token volume remained resilient during the broader market downturn, averaging approximately $2 million per day in Q1 2025. This equates to a 6% turnover relative to the protocol’s market cap at the end of the quarter (Token Volume/Market Cap), a healthy signal of sustained trading interest despite adverse conditions. On top of that, the ratio has hit an ATH as the market cap reaches significant lows.

Multiples

Takeaways

What Became Cheaper: Vertex became more attractive on 3 out of 4 valuation metrics, specifically MC/Fees, FDV/Fees, and Trading Volume/Market Cap. This means investors now receive greater value for each dollar invested, a positive sign for potential entry points relative to those metrics. Historically, the perp sector KPIs with most mindshare have been fees and trading volume, which are both playing in VRTX’s favor.
What Became More Expensive: the MC/TVL ratio increased, suggesting that Vertex became slightly more expensive relative to its total value locked. However, since Vertex operates with an embedded order book engine, this metric has limited relevance in assessing its true value.
Relative to the Sector: Vertex remains one of the most undervalued protocols, ranking as the cheapest on 4 out of 6 key metrics compared to its peers: FDV/Fees, Trading Volume/Market Cap, Trading Volume/TVL, and Trading Volume/Traders, highlighting strong relative value and attractiveness as an investment opportunity.

Comps: Vertex Stands Out

Vs Decentralized Peers: Vertex sets the standard by being deployed in multiple chains, where users can get the same UX, same liquidity, same speed, all with the scale to trade in one place, it works similar to a synchronous network of exchanges rather than one exchange, the value prop is clear because the competitor base cannot do that currently. Instead, appchains contribute to the problem of liquidity fragmentation, and compete against base chains for TVL.

Features:

Spot Trading Fees (Taker/Maker): the only platform offering free maker trades; others charge taker fees from 0.04% to 0.10% and Vertex offers 0.02%
Perpetual Fees (Taker/Maker): the only platform offering free maker trades and the lowest maker fee among comps
Market Maker Rebates: highest rebate rate (0.005%), tied with Binance.
Transaction Speed: 15 ms, significantly faster than all other DEXs (2nd fastest is Hyperliquid with 63 ms).
Supported Chains: supports 7 chains natively (+2 via 3rd party protocols), the most among competitors, who support 1–2 chains at most.
Accepted Collaterals: Accepts 6 collateral types, more than any other DEX.
Money Market Availability: only platform in the comparison offering integrated money markets.

Vs CEXs: the crypto industry saw first hand how damaging FTX was, how extractive and problematic centralized custody can get. Multiple institutional asset managers and market makers have moved on-chain for said issues, and do not plan to come back, some of which have compared Vertex’s depth to Binance, showcasing its success.

Significant Upgrades

Isolated margin: launched on February 20th

Before placing a trade, users get to choose their margin type: isolated (new option) or the default unified cross-margin.

Lets users assign a specific amount of margin to an individual perpetual position, isolating it from the rest of their account.
General benefits: risk management, exposure tailoring, “peace of mind”.
Adjusting margin: users can add or remove margin on the go with the edit feature (a pencil next to the open position).

Some retail traders are not comfortable using portfolio margin, whereas more professional users tend to prefer it, which is the default on Vertex. The recently added isolated margin feature helps address this gap, making the platform more accessible to retail users and supporting both retention and acquisition.

New chain launches:

Over the past two years since Vertex’s mainnet launch, the protocol has expanded to nine chains, strengthening its moat through the unification/multiplication of liquidity and users across all deployed chains

Sonic: launched on January 4th

First perps platform on Sonic.
Highly anticipated by the previous “Fantom” community, which was one of the largest around DeFi Summer and the 2021 bull market.

Sonic Season 1: from February 26th to April 1st.

Total Rewards Available: 1.75m $S, rewards Per Week: 350,000 $S.
Mechanism: Taker-only, capped at 100% fees paid.
Bonus Perks: users also farm Sonic Points and Gems as part of the Season 1 ecosystem rewards native to Sonic.

Avalanche: launched on March 26th – Vertex launched on Avalanche, which is one of the first major EVM chains, it has a massive community and DeFi ecosystem.

First trading day did $90m+ of volume.
Avalanche was the last chain to launch on Vertex, but has quickly become #1 of volume in just under 2 months of trading.

AVAX Season 1: from March 29th to April 23rd

Rewards of 40k AVAX .
Reward Cap: Rewards are capped at 100% of fees paid by traders.
Distribution: Rewards are calculated and distributed weekly.

Net net, the protocol has made a 23% profit ($173k) on its AVAX distribution, which is quite substantial. These incentive seasons are a key way to bootstrapping volume on new blockchains launched by Vertex.

Avalanche Season 2: from April 23rd to May 21st (current)

Total Rewards Available: 40,000 $AVAX, rewards Per Week: 10,000 $AVAX.
Mechanism: Taker-only, capped at 100% fees paid.

Similar to Season 1 Results, the rewards/incentives program of Apr/May have been paying out positively with about 14% margin on the fees accrued. Cumulatively, both seasons have distributed over $1m worth of AVAX tokens over the course of 2 months.

Roadmap

25 in ‘25: Scaling Vertex Edge to 25+ Chains in 2025

2.7x Increase from 9 (current) to 25 will accelerate Vertex’s liquidity flywheel where more chains increase more liquidity, and more liquidity increases more users is at full force.
“Go where the users are, be everywhere, and deliver the superior on-chain trading experience no matter the scene. The Vertex way.” – The Vision for 2025 and Beyond, Vertex Blog.

VRTX Tokenomics revision (completed)

Tokenomics Stage 1:

Rewards distribution: the total pool of available VRTX trading rewards (34% of total supply) each epoch (weekly) are split between makers and takers as follows:

Makers = previously 50%, now 75%
Takers = previously 50%, now 25%

This ensures that trading activity remains incentivized but not at the expense of liquidity depth.

VRTX rewards emissions were reduced by 50%.

Lower emissions contribute to a more balanced token economy, which helps to redirect token holdings to support broader growth initiatives beyond trading rewards. Transitioning from monthly to weekly reward epochs.

Tokenomics Stage 2:

The V2 upgrade introduced four key enhancements to VRTX tokenomics:

Auto-Compounding Rewards: staking rewards compound automatically, allowing users to grow their returns continuously without needing to manually restake.
Instant Access to Full Yield: stakers receive the full reward rate immediately upon staking. This delivers instant value and boosts incentive alignment.
Flexible Unstaking: the new design supports a range of unstaking options, giving users more control over their strategy while still encouraging long-term participation through incentives.
Layered Yield Structure: instead of weekly USDC distributions, the new model offers a multi-tiered APY made up of Base, Fee, and Loyalty components. The new model enhances yield through VRTX buybacks funded by protocol revenue.

Also, Stage 2 adds a 10% penalty fee applied to the immediate unstaking option. Forfeited tokens are redirected to the rewards pool, benefiting long-term participants and reinforcing a culture of sustained commitment in the community.
Projected voVRTX staking APY increased from 19% to 32% under the same market conditions.

Tokenomics Stage 3: aligning incentives with market makers

Tiered market maker rebate structure based on the mount of VRTX staked (departure from half a basis point rebate across all markets)
More demand for VRTX by market makers

Other general comments and improvements that could be considered for inclusion/discussion going forward:

VRTX is not required for trading or collateral, so traders only touch USDC
Buybacks only rewards stakers; non-stakers are left with nothing but dilution
Fee discounts could help implemented as tiered fee discounts for holding (not just staking) VRTX, similar to BNB

Vertex Liquidity Pool (VLP)

VLP will bring a “virtualization” between spot and perp markets, so when users are trading on Vertex, they’ll have access to three interconnected markets:

Spot
Perp
Spread

Virtualized orders create liquidity, making it cheaper for users to trade which also attracts more advanced traders and market makers looking for high-efficiency opportunities, all contributing to a higher trading volume.

VLP Architecture

Spread Trading: connects spot and perpetual markets, on top of that, a spread trading AMM within VLP will generate deep liquidity across all supported chains.
100x Leverage Pools: users will be able to use up to 100x leverage with robust risk controls due to VLP. The system will have strict risk management with higher fees and funding rates for these pools.
Long-Tail Asset Support: MMs (market makers) avoid smaller tokens, but with VLP, ensuring liquidity across a wider range of assets helps to foster a more diverse trading environment with a faster listing process.

Decentralizing the Edge Sequencer

As DeFi expands, the demand for decentralized infrastructure intensifies. We have continuously seen this move by peers and Vertex is no exception. By decentralizing the sequencer, the team does not only affirm maturity to these principles but also reaches escape velocity in a fast market.

Decentralized: no single point of failure on execution.
Institutional-grade Security: battle-tested architecture for traders at scale.
Liveness (100% Uptime): protection to ensure seamless trading with no downtime.

Summary

Vertex has shown consistent progress in 2025, with notable improvements across key metrics such as sustained trading volume, growing TVL, and increased market share from market makers rebates as a % of total fees. Significant developments this year include the launch on new chains like Sonic and Avalanche, a comprehensive tokenomics revision, and the introduction of isolated margin, all of which have positioned the protocol for its next phase of growth.

Looking ahead, the roadmap targets expansion to 25 chains in 2025, further enhancements to isolated margin trading, decentralization of the sequencer, and the evolution of the VLP (Vertex Liquidity Pool). From a due diligence perspective, Vertex maintains a strong track record with no major bugs, hacks, downtime, or governance issues reported in 2025. Vertex continues to lead its category, outperforming in 7 out of 8 comparison metrics (spot & perp fees, rebates, speed, chains, accepted collaterals and money market availability).

Where to get more information on Vertex?

To keep up to date with the protocol: