LIT (Lighter) Research Report

1. Project Overview

Lighter is an Ethereum-based zero-knowledge Rollup (zk-Rollup) perpetual futures exchange. By employing custom ZK circuits, it delivers verifiable order-book matching and liquidation while maintaining centralized-exchange-grade performance (sub-5 ms latency, tens of thousands of TPS) and full on-chain transparency.

The protocol adopts a zero-fee retail trading + API fees for institutions model and uses the LIT token for governance, fee discounts, and liquidity incentives. In November 2025, Lighter closed a USD 68 million Series A led by Founders Fund and Ribbit Capital, valuing the project at approximately USD 1.5 billion.

2. Market Opportunity

1. On-chain derivatives penetration remains below 10 percent, yet daily volume already exceeds USD 33.8 billion, indicating significant growth potential
   
   

2. Existing solutions face an “impossible triangle”:
   
   

• General-purpose L2s (Arbitrum, Optimism) cannot sustain high-frequency order updates due to cost and latency
  
  

• Cosmos app-chains (dYdX v4, Hyperliquid) sacrifice Ethereum security and composability
  
  

• Hybrid order books (0x, StarkEx) rely on centralized matching and are prone to censorship and MEV
  
  

Lighter fills this gap with an application-specific zk-Rollup on Ethereum that unifies performance, security, and verifiability.

3. Product & Technology

3.1 Core Components

• Sequencer: orders transactions, batches blocks, and publishes pre-commitments for millisecond-level feedback
  
  

• Prover: generates zk-SNARK proofs for matching, liquidation, and state transitions, which are verified on-chain
  
  

• Smart Contracts: custody user funds, verify proofs, and enable an emergency Exit Hatch, making the system fully non-custodial

3.2 Innovations

• Order-Book Tree: a patent-level binary prefix tree encoding price-time priority into leaf indices, achieving Θ(log₂ N) proof complexity while supporting batch matching and fast quotes
  
  

• Verifiable Liquidation Engine: a three-tier margin system (initial, maintenance, close-out) plus an insurance fund; the entire liquidation flow is enforced by circuits without human intervention
  
  

• Exit Hatch: if the Sequencer censors or reorders transactions, users can submit Merkle proofs to the contract to trigger emergency withdrawals; fund safety relies solely on Ethereum

3.3 Performance Metrics

• Matching latency below 5 ms; a single block can contain up to 20,000 orders or cancellations
  
  

• On-chain data after compression below 200 bytes per transaction, with fees approaching zero
  
  

• Supports more than 50 perpetual markets with leverage up to 50x; uses an exponential moving premium plus funding-rate mechanism to anchor mark price to spot

4. Tokenomics (LIT)

4.1 Supply & Allocation (official)

• Ecosystem incentives: 41.4 percent – trading mining, LP rewards, liquidity budget
  
  

• Team and advisors: 29.1 percent – four-year linear vesting with a twelve-month cliff after TGE
  
  

• Investors: 16.0 percent – seed and Series A, same vesting schedule as the team
  
  

• Public and community sale: 6.0 percent – expected in Q1 2026 via Binance Launchpool and the official website
  
  

• Airdrop: 4.8 percent – early users, testnet nodes, Ciphernaut campaign participants
  
  

• Foundation reserve: 2.7 percent – legal, audit, and strategic partnerships

4.2 Utility

• Trading fee discounts: stake LIT for up to 50 percent off
  
  

• Governance: Snapshot plus on-chain executor to modify risk parameters and list new markets
  
  

• Liquidity mining: earn LIT rewards by supplying LLP (Lighter Liquidity Pool) shares
  
  

• Insurance fund recapitalization: in extreme scenarios, LIT may be auctioned to cover shortfalls

4.3 Circulation Schedule

• Initial float: public sale (6.0 percent) plus airdrop (4.8 percent), totaling approximately 10.8 percent, or around 108 million tokens
  
  

• No team or investor unlocks during the first twelve months; linear monthly unlock of one-thirty-sixth starting January 2027
  
  

• Estimated circulating supply: 25 percent by end-2026, 70 percent by end-2028, and 100 percent by 2030

5. Competitive Landscape

The on-chain perpetuals market is currently a three-horse race:

• Aster (ASE) operates on a Cosmos app-chain, has already issued tokens, and relies heavily on incentives, reaching USD 4.8 billion in daily volume, but with only 21 validators and higher centralization
  
  

• Hyperliquid (HYPE) is also Cosmos-based with a single-node matcher, achieving USD 3.1 billion in daily volume and a strong community, but requires asset bridging, exposing users to bridge risk
  
  

• Lighter (LIT) tokens are not yet in circulation; current daily volume stands at USD 2.3 billion. With zero retail fees and Ethereum-grade security, Lighter is rapidly catching up and could close the gap once liquidity mining begins post-TGE

6. Team & Fundraising

• Vladimir Novakovski (CEO): former CEO of an AI-driven quantitative fund managing USD 400 million; CTO Murat Ekici previously served as a high-frequency systems architect at Jump Trading
  
  

• Seed round: USD 12 million led by Paradigm in November 2024
  
  

• Series A: USD 68 million led by Founders Fund and Ribbit Capital in November 2025, with participation from Robinhood and Haun Ventures
  
  

• Total funding raised: USD 80 million; valuation approximately USD 1.5 billion

7. Roadmap

• Q1 2026: mainnet launch, LIT TGE via Binance Launchpool, trading mining
  
  

• Q2 2026: mobile applications, more than 100 additional perpetual markets, DAO governance
  
  

• Q4 2026: decentralized Sequencer using timelock encryption and threshold signatures
  
  

• 2027: expansion into spot trading, options, lending markets, and cross-chain support for Bitcoin and Solana

8. Risk Factors

1. Technology: extreme complexity of ZK circuits; potential bugs could result in incorrect matching or liquidations
   
   

2. Regulation: increased scrutiny from U.S. regulators, including the CFTC, may restrict user access
   
   

3. Competition: Aster and Hyperliquid already have tokens and deep liquidity; Lighter must deploy incentives rapidly
   
   

4. Token dynamics: small initial float implies high volatility; later unlocks may introduce selling pressure

9. Conclusion

Lighter is the first application-specific zk-Rollup on Ethereum to deliver verifiable order-book matching with millisecond-level latency, striking a balance between security, performance, and regulatory transparency. With zero retail fees, top-tier venture backing, and an unreleased token catalyst, it is well-positioned to become a leading on-chain derivatives venue in the next market cycle.

 

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