Author: @agintender
Link: https://x.com/agintender/status/1975136198911029405

In junior high school chemistry, it was mentioned that to make the blown bubbles more stable and lasting, polyvinylpyrrolidone (PVP) should be added to the solvent—a thickener and foam stabilizer that provides structure and durability to the foam, enabling it to maintain its shape and resist external pressure.

Similarly, to maintain the sustainable liquidity and defensible market share of Perpdex, it is not achieved through passive Farming, shilling, or wash trading, but through actively building an extremely competitive psychological environment.

Through carefully designed mechanisms, traders are pitted against each other. The protocol’s mechanism should be used to stimulate the most powerful intrinsic drives of human beings—greed and unwillingness—to create a self-sustaining flywheel of trading activity, thereby breaking away from the over-reliance on inflationary token releases and ultimately achieving true market stability.

I. The Great Game: Deconstructing the Zero-Sum Reality of Trading

The essence of trading is a zero-sum game. It’s either you lose or I win. There’s no need to cover it up or gloss over it.

Meme: The Most Primitive PvP Arena

The Meme trading ecosystem is the purest and most undisguised embodiment of the PvP principle. Unlike assets that claim to have underlying utility or cash flow, Meme’s value comes almost entirely from its cultural relevance, community hype, and viral spread on social media, i.e., attention itself. In such a market, trading is more like a “cultural arbitrage”: predicting or preempting the market to discover the next hot spot. This makes the Meme market a naked zero-sum game: one trader’s gain comes directly from another trader’s loss.

On a low-fee, high-throughput public chain like Solana, this PvP environment is pushed to the extreme. Trading bots are rampant, the median holding time is calculated in seconds, and the market has evolved into a “super PvP” ecosystem where it is almost impossible for new retail traders to obtain substantial profits. This brutal environment reveals the essence of the speculative market—it is not a collaborative community, but an arena where participants cannibalize each other.

Since it’s a dog-eat-dog world, it seems superfluous to say that you are a Bodhisattva descending to earth to illuminate the world.

The Illusion of Positive-Sum Growth

The mainstream narrative of the cryptocurrency industry often emphasizes its “positive-sum” side: the ever-increasing total market capitalization, new application scenarios brought about by technological innovation, and the continuous influx of new users. This macro narrative is real and important, but it is fundamentally disconnected from the micro level—the daily experience of traders on Perpdex.

For a user who engages in high-frequency trading on Perpdex, his goal is not to “build a brand new financial system,” but to extract capital from other market participants in the ups and downs of prices. His profit and loss (P&L) interface shows a cruel zero-sum reality.

Any successful PvP protocol must be built on this basic understanding, stop packaging itself as an inclusive “public utility,” and instead embrace its true identity as an “arena.” The protocol’s positioning should shift from a “trading market” to “defeating other traders,” which realigns its product characteristics with the user’s true motivations.

Leverage: The Great Amplifier

High leverage is a core feature of Perpdex, and it plays the role of a catalyst and amplifier in PvP dynamics. Leverage not only amplifies financial gains and losses, but more importantly, it greatly amplifies the emotional intensity in PvP conflicts. The elation of a profitable trade and the devastating blow of a losing trade are disproportionately amplified. This emotional amplification is critical to “hooking” traders into the psychological loop we will discuss in the next chapter.

Traditional incentive models assume that trading volume is a function of liquidity and incentives, while trading volume is a function of conflict. By designing mechanisms that create continuous, quantifiable conflict (such as leaderboards and championship tournaments), protocols can generate a stable base trading volume driven by intrinsic competition without relying on direct token rewards.

II. The Doctrine of Engagement: Weaponizing Greed and Unwillingness

The core of PvP is to elicit the two hearts of man—greed and unwillingness.

Winner’s Curse: Cultivating Greed and Overconfidence

For winning traders, the platform’s goal is to systematically cultivate their greed and overconfidence, prompting them to engage in bolder, more frequent, and more selfless trades.

Psychological Mechanism: Successful trades trigger a series of cognitive biases. The first is the Overconfidence Bias, where traders tend to attribute success to their superior skills rather than luck, thereby underestimating the risks of future trades. The second is Confirmation Bias, where they actively seek information that confirms the effectiveness of their “winning strategy” while ignoring contradictory evidence.

This psychological state is known as the “Winner’s Curse” in trading psychology, i.e., the largest profit often foreshadows the next largest loss. From a neuroscience perspective, profits stimulate the brain to release dopamine, forming a powerful reward circuit that reinforces trading behavior and encourages traders to take greater risks in pursuit of greater stimulation.

Taking a few mainstream CEXs/protocols as examples: Platform amplification strategy

The design of the protocol should be dedicated to amplifying this feeling of victory and transforming it into a public symbol of social status.

Prominent P&L Display: Display high floating profits and losses (PNL) in the most conspicuous position on the interface, and use positive colors such as green.

Achievement System: Set up “winning streak” badges, “100x return” medals, etc., to transform trading achievements into virtual identities that can be flaunted.

Public Leaderboards: Real-time updated leaderboards are a core tool for creating social pressure, turning individual profits into a public competition.

Social Sharing Function: One-click sharing of profit screenshots to social media allows winners to become the platform’s “walking billboards,” while imposing feelings of FOMO, jealousy, and anxiety on other users.

The Loser’s Game: Manufacturing “Unwillingness”

For losing traders, the platform’s goal is to prevent them from rationally exiting due to losses, but to stimulate their “unwillingness” and prompt them to immediately engage in the next trade to “recover their losses.” This is the more powerful and critical link in the entire psychological loop.

Psychological Mechanism: The core is the Loss Aversion theory, where the psychological pain caused by a loss is twice as great as the pleasure brought by an equivalent gain. This intense negative emotion leads to a series of irrational behaviors, such as holding on to a continuously falling position to avoid admitting a loss (sunk cost fallacy), or more importantly—Revenge Trading.

Revenge Trading is an impulsive, high-risk trade made out of anger, frustration, and “unwillingness” after suffering a significant loss, with the sole purpose of quickly recovering the loss. This feeling of “unwillingness” is the key engine for retaining losing users and prompting them to continuously contribute to trading volume.

Taking a few mainstream CEXs/protocols as examples: Platform amplification strategy

Every detail of the interface should be designed to maximize the user’s “unwillingness” and prevent them from conducting a calm review and risk assessment.

Visualize “Almost There”: When a user is forced to close a position, the interface can show how “close” the price was to their stop-loss line or profit target, implying that it was just bad luck, not a strategic error.

Loss Framing Effect: Describe losses as temporary “floating losses” or “pullbacks” rather than permanent capital losses, and immediately push new “market opportunities.”

Instant Re-entry Incentives: After a user closes a position or is liquidated, immediately pop up prompts such as “one-click reverse open position” or “receive a transaction fee discount coupon to fight again,” shortening the decision time for users from loss to the next trade, and using the emotional window to promote impulsive trading.

From a protocol operation perspective, the most valuable users are not those “smart money” that consistently profit and regularly withdraw. On the contrary, the ideal users are those traders who are trapped in a cycle of profit and loss. Regardless of their net profit or loss, they are continuously generating a large amount of trading volume and transaction fees. The protocol’s revenue maximization comes from the dramatic churning of capital between winners and losers.

Therefore, every element of the platform design—from the color of the profit and loss numbers, to the animation after a transaction, to the default leverage ratio and social functions—is no longer a simple aesthetic choice, but a tool used to manipulate the trader’s psychology and guide them towards the two high-trading-volume behavior patterns of greed and “unwillingness.”

III. Liquidity Spiral: From Psychological Loop to Protocol Flywheel

Once enough traders have been captured through carefully designed psychological mechanisms, the protocol can initiate a self-reinforcing positive cycle, the “liquidity spiral.” This process transforms individual irrational behavior into a sustainable, structural competitive advantage at the protocol level.

Phase 1: The Core Engine Composed of “Hooked” Traders

The starting point of this spiral is the core user group detailed above, driven by greed and unwillingness. These winners and losers are locked in a continuous trading loop. Their trading behavior is “organic” in a sense, as it is driven more by intrinsic psychological needs (pursuit of pleasure, recovery of losses, proving oneself) than by extrinsic token incentives. This core group creates a stable and predictable base trading volume and fee revenue stream for the protocol. This is the first step for the protocol to break away from its reliance on hot money/”mercenary capital.”

Phase 2: Attracting Mature Liquidity Providers

With a stable and substantial base trading volume, the protocol becomes highly attractive to the second tier of market participants—professional liquidity providers. Market Makers are attracted because they can steadily earn bid-ask spreads from the frequent trades generated by core traders. Arbitrageurs are attracted by price fluctuations, and their activities help the protocol’s price align with the broader market, thereby improving market efficiency.

This injection of professional liquidity greatly deepens the order book and reduces slippage, thereby improving the trading experience for all users. This makes the platform more attractive to new users, further consolidating the core engine.

Phase 3: The Return of “Mercenary Capital” and the Formation of a Liquidity Black Hole

When the protocol establishes a deep, active, and efficient market through the first two phases, an interesting reversal occurs. The “mercenary capital” that the protocol initially tried to get rid of now actively returns. But this time, they are not attracted by the tokens airdropped by the protocol, but by the excellent trading conditions (extremely low slippage, huge trading depth, and abundant arbitrage opportunities).

Their arrival completes the final piece of the liquidity spiral. The influx of huge amounts of capital turns the protocol into a “liquidity black hole”—a market with such great gravity that it is difficult for competitors to shake its position. At this point, the protocol’s competitive moat has shifted from short-term incentives to a structural barrier composed of network effects and deep liquidity that is difficult to overcome.

The core of this process is that PvP is a strategy that uses artificially designed mechanisms (gamified incentives, psychological cues) to create what looks and feels like an “organic product market fit” state. Traditional liquidity mining, such as SushiSwap’s vampire attack and AsterDex’s wash trading, solved the “cold start” problem of liquidity, but failed to solve the problem of user “loyalty.” The retention rate of users attracted by incentives is extremely low. PvP mechanisms and models aim to fundamentally solve the retention problem by replacing economic “incentives” with a behavioral “addiction” (as described in the psychological mechanisms of gambling addiction). An addicted user doesn’t need you to pay him to play.

Therefore, most protocols view acquiring liquidity as the primary goal, while the PvP model redefines it as an outcome. The primary goal is to maximize user engagement and trading volume through psychological mechanisms. Deep, stable liquidity is just a natural product of achieving this primary goal. In the context of fierce competition among exchanges for liquidity, the PvP model offers a more capital-efficient path: invest resources in product features that create a competitive atmosphere, and liquidity will naturally follow trading activity.

IV. Catalyst: Designed for “Single Point Breakthrough”

To launch a powerful PvP flywheel, a precise and powerful catalyst is needed. This requires the protocol to abandon the “universal” incentive model and turn to a “single point breakthrough” strategy that can create conflict, screen winners, and inspire losers.

Broad-based liquidity mining or transaction fee rebates are the “large and comprehensive” platform strategies criticized by users. This strategy is inefficient because it indiscriminately rewards everyone, including “zombie users” who passively provide liquidity and trade at extremely low frequencies, and brushes who are in it for the points. This not only dilutes the incentive effect for high-value, high-activity traders, but also creates huge token inflation pressure, ultimately leading to mercenary capital quickly leaving after the rewards decay.

An effective “single point breakthrough” incentive model should be based on relative performance rather than absolute participation. The core principle is to reward those traders who win in PvP competition, not everyone who participates in trading.

A successful PvP incentive program must be designed to create a large number of “losers” who get nothing. This runs counter to the “inclusiveness” and “community sharing” spirit commonly promoted in the Web3 space, but is critical to the success of the model. It is the strong “unwillingness” felt by these losers who “missed out” on the grand prize that constitutes the core motivation for them to continue participating in platform trading in the future without direct incentives.

We can’t demand that a platform that emphasizes zero-sum games and winner-take-all mechanisms do a “inclusive finance” thing, right? If you are kidnapped by the moral values of “inclusive finance” or are required to be treated fairly by the anti-rug community, then you may not be suitable for entering this “cannibalistic” trench.

Conclusion: Sustainable Bubble

Let’s go back to the original chemical analogy. Speculative markets are inherently bubbly, which is their inherent attribute. The goal of PvP is not to eliminate bubbles, but to stabilize them. Just as polyvinylpyrrolidone provides structure, toughness, and durability to foam, a well-designed “player versus player” system can also give a sustainable structure to the market’s frenzied activity. It creates stability in trading activity and fee revenue during violent price fluctuations.

The ultimate strategic recommendation is: in the future competition between Perpdex, the winners will not belong to those protocols that offer the highest APR, but to those protocols that most deeply understand and master user psychology. Success is no longer just the job of financial architects, but the masterpiece of behavioral psychological architects.

Form PvP into a doctrine—like the Chaoshan people, bring the gaming field to your own backyard; without guidance, water will naturally flow to every value depression.