LIT (Lighter) Project Report

# 1. Project Overview

Lighter is a zero-knowledge Rollup (zk-Rollup) perpetual contract exchange based on Ethereum, achieving verifiable order book matching and settlement through customized ZK circuits, balancing centralized exchange-level performance (millisecond latency, tens of thousands TPS) with on-chain transparency. The protocol adopts a "zero-fee retail trading + institutional API fee" model and implements governance, fee discounts, and liquidity incentives through the LIT token. In November 2025, Lighter completed a $68 million Series A funding round, co-led by Founders Fund and Ribbit Capital, with a valuation of approximately $1.5 billion.

# 2. Market Opportunity

1. On-chain derivatives penetration rate is <10%, but daily trading volume has exceeded $33.8 billion, indicating significant growth potential.

2. Existing solutions face the "impossible triangle":

• General-purpose L2s (Arbitrum, OP) cannot meet the high-frequency order requirements for fees and latency;

• Cosmos sidechains (dYdX v4, Hyperliquid) sacrifice Ethereum's security and composability;

• Hybrid order books (0x, StarkEx) rely on centralized matching, posing risks of censorship and MEV.
  Lighter fills the market gap by achieving a "performance-security-verifiability" unity through application-specific zk-Rollup on Ethereum.

# 3. Product and Technical Architecture

3.1 Core Components

• Sequencer: Responsible for ordering, packaging transactions, and publishing pre-commitments, ensuring millisecond-level feedback;

• Prover: Generates zk-SNARK proofs for matching, settlement, and state transitions, verified on-chain;

• Smart Contracts: Custodial funds, verify proofs, trigger emergency exits (Exit Hatch), fully non-custodial.

3.2 Innovations

• Order Book Tree: Patent-level binary prefix tree that encodes "price-time" priority into leaf indices, achieving Θ(log₂N) proof complexity, supporting batch matching and rapid quoting;

• Verifiable Settlement Engine: Three-tier margin system (initial/maintenance/liquidation) + insurance fund, with the settlement process fully enforced by circuits, eliminating human intervention;

• Exit Hatch: If the Sequencer censors or reorders transactions, users can directly submit Merkle proofs to the contract to trigger an emergency exit, with fund safety relying solely on Ethereum.

3.3 Performance Metrics

• Matching latency < 5 ms, capable of packaging 20,000 orders/cancellations per block;

• On-chain data compressed to < 200 B per transaction, with fees approaching 0;

• Supports 50+ perpetual markets, with leverage up to 50×, using an exponential moving premium + funding rate mechanism to anchor spot prices.

# 4. Token Economics (LIT)

4.1 Total Supply and Distribution (Official Disclosure)

• Ecosystem Incentives: 41.4%, for trading mining, LP rewards, liquidity budget;

• Team & Advisors: 29.1%, 4-year linear unlocking, 12-month lock-up after TGE;

• Investors: 16.0%, Series A and seed rounds, same unlocking pace as the team;

• Public Sale & Community Sale: 6.0%, expected to launch in Q1 2026 on Binance Launchpool and the official website;

• Airdrop: 4.8%, incentivizing early users, testnet nodes, and Ciphernaut task participants;

• Foundation Reserve: 2.7%, for legal, auditing, and strategic partnerships.

4.2 Token Uses

• Trading fee discounts: Staking LIT can enjoy up to 50% discounts;

• Governance: Modify risk parameters and launch new markets through Snapshot + on-chain execution module;

• Liquidity Mining: Providing LLP (Lighter Liquidity Pool) shares can earn LIT rewards;

• Insurance Fund Supplement: In extreme cases, auctioning LIT to cover liquidation losses.

4.3 Circulation Rhythm

• Initial circulation: Public sale 6% + airdrop 4.8% ≈ 10.8% (approximately 10.8 million tokens);

• No team/investor unlocks in the first 12 months, with linear unlocking of 1/36 each month starting January 2027;

• Expected circulation of 25% by the end of 2026, 70% by the end of 2028, and full unlocking by 2030.

# 5. Competitive Landscape

Currently, the on-chain perpetual contract space is dominated by three players:

• Aster uses a Cosmos application chain, has issued tokens, and pushed daily trading volume to $4.8 billion through high incentives, currently in first place, but has only 21 validators, indicating a high degree of centralization;

• Hyperliquid is also based on Cosmos, with a single-node matching engine, daily trading volume around $3.1 billion, high community engagement, but assets require cross-chain transfers, posing bridging risks;

• Lighter is still in the token non-circulation phase, with daily trading volume of $2.3 billion, rapidly catching up with zero fees and Ethereum's security boundary, expected to narrow the gap through liquidity mining post-TGE.

# 6. Team and Financing

• Vladimir Novakovski (CEO): Former CEO of an AI quantitative fund, managed $400 million in assets; CTO Murat Ekici was a former high-frequency system architect at Jump Trading.

• Seed round of $12 million in November 2024, led by Paradigm;

• Series A of $68 million in November 2025, led by Founders Fund + Ribbit Capital, with Robinhood and Haun Ventures participating; total funding of $80 million, with a valuation of $1.5 billion.

# 7. Roadmap

• Q1 2026: Mainnet launch + LIT TGE (Binance Launchpool), initiate trading mining;

• Q2 2026: Launch mobile version, add 100+ perpetual markets, start DAO governance;

• Q4 2026: Decentralized Sequencer (based on Timelock encryption + threshold signatures);

• 2027: Support spot, options, and lending markets, cross-chain to Bitcoin and Solana.

# 8. Risks

1. Technical: The complexity of ZK circuits is extremely high, and potential vulnerabilities may lead to erroneous matching or settlement failures;

2. Regulatory: The U.S. CFTC is tightening regulations on on-chain derivatives, which may affect user access;

3. Competition: Aster/Hyperliquid have already issued tokens and secured liquidity, Lighter needs to subsidize quickly;

4. Token: Initial circulation is small, leading to significant price volatility; attention is needed on selling pressure after unlocking.

# 9. Conclusion

Lighter achieves the first "verifiable order book + millisecond matching" on Ethereum through application-specific zk-Rollup, balancing security, performance, and compliance transparency. Coupled with zero fees, top VC backing, and unreleased token catalysts, it has the potential to become the next leader in on-chain derivatives.

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