One thing I’ve learned in crypto over and over again is to never fade trends.
Right now, perps DEXs are the hottest thing on Crypto Twitter.
And everyone who farmed Hyperliquid, Aster DEX, and Avantis will tell you that they made way more money than expected from their airdrops.
This makes me think that there’s still good money to be earned from farming perps DEXs. If you’ve been following me for a while, you know I’m bullish on Lighter.
In this post, I wanted to show you my exact strategy for farming perps DEXs, the main protocols I am farming, and why I’ve picked those.
Even if you’re not a perps trader, you can easily apply it.
With that being said, let’s dive in👇
Lighter and Extended - The perps DEXs I am focusing on
Before diving into my actual strategy, I wanted to talk about the reasons why I chose to focus on farming specifically Lighter and Extended.
The reality is that 99% of today’s airdrops are not worth your time.
So it’s crucial to be selective with what airdrops you choose to farm. Before writing this issue, I’ve spent quite a few hours researching the entire perps DEX sector.
I’ve tried to find projects that remind me of Hyperliquid in its early days.
When it comes to Lighter, several things make me bullish on it:
First mover advantage - Lighter is the first perps DEX to introduce zero trading fees for retail, and this proved so successful that other DEXs are now copying it.
Why does it matter? Because projects that bring something new to the market typically trade at a higher valuation. And a higher valuation = higher airdrop value
Now, some people (myself included) questioned how sustainable zero fees are since every product needs revenue to survive. Vladimir Novakovski, the founder of Lighter, clarified that Lighter will still earn revenue by charging a fee only to market makers.
This is similar to Robinhood’s model, which also has zero fees for retail, and despite that, it’s one of the most successful companies in the world.
Points are getting scarcer over time - A fixed number of 250,000 points is being distributed to Lighter users every week.
This is similar to what Hyperliquid was doing, and I think it’s a very good thing as it means that Lighter points will get harder to farm as the protocol grows, which rewards the early adopters who used it in its early days.
Strong community - This is what makes me the most bullish on its airdrop. I’ve seen dozens of posts about Lighter with hundreds of likes each.
The reason why HYPE is trading at a $47 billion FDV (at the time of writing) is not just because Hyperliquid built a good product. Dozens of good products failed. But the difference is that Hyperliquid has a strong community on CT that is constantly promoting it.
Attention is crucial in crypto. I expect the Lighter token to also trade at a high FDV once launched, considering how active its community is.
A 30-50% token airdrop is confirmed - Lighter team confirmed during an AMA a few months ago that they plan to airdrop 30-50% of Lighter's future token supply to early users who are using it now (The TGE is planned for late Q4).
Moving on, my second-highest conviction perps airdrop is Extended.
I’ve discovered this one recently, but after doing some research, I think it’s definitely worth farming.
Extended is less popular, but it has been growing very fast. The main reasons why I am farming Extended are the following:
A 30% token airdrop is confirmed - The team announced plans to airdrop 30% of their token supply to early adopters (The TGE is planned for H1 2026)
Extended distributes around 1–1.1M points every week, regardless of the total trading volume. This means that as Extended’s trading volume grows, points will only become scarcer and harder to farm, just like on Lighter
Great UX - In terms of user experience, I’ve had a great experience using it. While it’s not drastically different from other perps exchanges, I like the project’s attention to detail. For example, I found its realized PNL page to be very useful
Solid team - Extended is built by an ex-Revolut team
Ambitious roadmap - One of the most interesting things that its team plans to launch is a cross-asset collateral unified margin. This will allow using any asset as collateral to open trades, including yield-bearing assets like wstETH
That said, if I had to pick only one perps airdrop to farm, I’d probably choose Lighter, as its success seems almost guaranteed at this point.
Lighter is the fastest-growing tokenless perps DEX right now, has a very strong community, and all the ingredients necessary to do a big airdrop.
Extended is still the underdog. But its team has a very solid background, the UX of the app is great, and they promised a massive 30% token allocation for the airdrop.
I decided to farm both, as my farming strategy also requires using two exchanges.
Here are invite links for both if you want to trade on them:
Lighter - Lighter is in an invite-only phase, so you need an invite to join
Extended - Extended gives a 10% fee discount and a 10% points boost to users joining via an invite link
Just to make it clear, this article reflects only my views, and I was not compensated by any DEX mentioned here. I’m sharing only what I am farming with my own money.
Now let’s dive into how I am actually farming these airdrops:
Funding rate arbitrage: How to do it and why
Let’s start by explaining a few basic concepts.
Funding rates are a mechanism that you’ll find on every perpetual DEX. They are periodic payments between traders with short and long positions.
If too many people short an asset at once → Funding rates will turn negative, and traders with short positions will pay those with long positions
If too many people long an asset at once → Funding rates will be positive, and traders with long positions will pay shorts
Funding rates exist to keep the perpetual futures price aligned with the spot price.
These funding rates vary for every asset from exchange to exchange. On perpetual DEXs like Lighter and Extended, they are paid/received every hour.
This enables some very interesting opportunities.
Funding rate arbitrage is essentially a delta-neutral strategy that allows you to capitalize on the difference in funding rates between exchanges by opening long and short positions for the same asset on different exchanges.
I do this type of arbitrage to profit from funding rates while also generating a lot of trading volume on exchanges to farm the airdrops of perpetual DEXs.
It may sound a bit complicated at first, but you’ll see it’s actually very simple.
All I do in order to arbitrage funding rates is this:
Go to loris.tools → Click on exchanges and select only Lighter and Extended;
Click on “MAX ARB” to sort the arbitrage opportunities shown by the funding rate difference (the bigger the difference, the more you can earn)
Then go to Lighter, respectively Extended, and long and short an asset with an arbitrage opportunity you saw on loris.tools on the two exchanges
That’s all. After that, monitor your leveraged positions on both exchanges from time to time to make sure that you don’t get liquidated.
And when the funding rate difference disappears for more than 3-4 hours, close the positions and move on to the next arbitrage trade.
Here’s a proper example:
In the image above from Loris Tools, you can see that the top funding rate arbitrage opportunity available between Extended and Lighter is for the AVNT trading pair.
The platform even tells you what exactly to do:
Sell (short) AVNT on Extended and buy (long) AVNT on Lighter.
All you have to do is follow these instructions.
After that, when the bps (shown under ‘MAX ARB’ on Loris Tools) for the arbitrage opportunity you chose (in this example, for the AVNT trading pair) falls below 3 bps for 3–4 hours, close your positions and move on to your next trade.
Don’t expect to make huge amounts of money from this strategy.
But the profit you get from funding rates should definitely cover the trading fees you pay and the slippage you incur, and also leave you with some gains.
This is by far the best way to farm the airdrops of perps DEXs.
Things to keep in mind
Firstly, here’s some general advice to maximize your points earnings:
Keep all your trading positions open for 10+ minutes - If you keep them open for a few hours, you’ll likely get even more points. How much trading volume you generate is the most important thing, but the trade duration matters too
Don’t short & long the same asset on the same exchange at once - You might be marked as a sybil and no longer get an airdrop, even if you use different accounts (My recommendation is to use 2 different exchanges for funding rate arbitrage. I am using Lighter and Extended)
Avoid trading BTC/ETH pairs - While those are great as they have the deepest liquidity, on Lighter, for instance, you earn 2-3x more points on average when trading altcoins with lower liquidity like KAITO, ENA, JUP, BERA, etc.
The great thing about funding rate arbitrage is that it doesn’t require having directional market exposure to a certain asset.
You can be the worst trader alive and still make money from it as you’re essentially opening delta-neutral positions.
But this strategy still comes with a liquidation risk.
If you arbitrage funding rates for a certain asset that is very volatile, it can easily get you liquidated and make you lose some of your capital.
I have 4 tips to minimize this risk:
Check your trading positions at least two times a day to make sure you won’t get liquidated - In case your positions are getting close to the liquidation price, close them partially/entirely, or add more collateral
Don’t use very high leverage - As a general rule, make sure that the liquidation price for your short positions is at least 2x bigger than your entry price when entering a new position
e.g. If you short ENA at $0.7 on one exchange, make sure first you have a liquidation price above $1.4 (you should be able to see it on each exchange)
Avoid trading highly volatile tokens
Memecoins are one good example. I generally avoid these pairs for funding rate arbitrage as their high volatility also comes with increased liquidation risk
Always use stop losses and take profits
I use stop losses mainly for shorts, as those typically get liquidated more easily. Stop losses can be very useful especially when the market is highly volatile.
e.g. If I short ENA at $0.7 and my liquidation price is $1.4, I set a stop loss at $1.35 to avoid getting liquidated (the stop loss needs to be a bit below the liquidation price)
And then on the other exchange, where I longed ENA to arbitrage funding rates and achieve a delta-neutral position, I will set a take profit order at $1.35.
By doing this, you can avoid getting liquidated in 95% of cases.
There’s one more tip I have for you.
When you arbitrage funding rates, the biggest cost you’ll pay is not the trading fees (which are zero anyway on Lighter), but the spread.
The spread is the difference between the highest price a buyer is willing to pay (the bid price) and the lowest price a seller is willing to accept (the ask price).
For major assets like BTC, the spread is negligible.
But for volatile altcoins, it can be anywhere from 0.03 to even 0.15% at times, and can impact the profitability of the funding rate arbitrage strategy.
How can you minimize the spread you pay (which is like a hidden fee)?
By using limit orders. For instance, if you arbitrage the funding rate for an asset between Lighter and Extended, you can do the following:
Place a limit order for your short or long position on Extended at the mid price between the bid and the ask price
After the limit order is filled, place a market order on Lighter immediately
In this way, you should be able to do funding rate arbitrage with lower fees.
Other perps DEXs you can farm
As I said, the main perps airdrops I am farming are Lighter and Extended.
But if you want to get exposure to more opportunities, there are also a few other perp DEXs I find interesting.
I will write a full overview comparing them in the coming weeks if there’s interest.
Pacifica - A self-funded perps DEX built by the FTX Chief Operating Officer and the founder of Nftperp (It’s in an invite-only phase, but you can use my invite link here if you want to give it a try) - I have limited invites, so first-come, first-served
Paradex - A zero fees perps DEX with deep liquidity, 250+ markets, and privacy, backed by Paradigm and Jump Capital
EdgeX - The second largest perpetual DEX without a token by trading volume and one of the most profitable DeFi protocols. You can trade on EdgeX both on desktop and on your phone using its mobile app
Based - A popular trading platform built on top of Hyperliquid and backed by Ethena, Hashed, Delphi Digital, and Spartan Group
And that’s all for today.
My plan is to make 6 figures from perps airdrops in the next 12 months, and I really think this is achievable by generating enough trading volume.
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Thank you for reading!
Until next time,
The DeFi Investor