The durability of the foam depends on the concentration of PVP, which brings out the greed and unwillingness of human nature.

Junior high school chemistry mentions that to make blown bubbles more stable and long-lasting, polyvinylpyrrolidone (PVP)—a thickener and foam stabilizer—must be added to the solvent. It provides structure and durability, allowing the foam to maintain its shape and resist external pressure.

Similarly, maintaining the sustainable liquidity and defensible market share of Perp DEX is not achieved through passive farming, shouting orders, and inflating volume, but by actively cultivating an extremely competitive psychological environment. The "PVP" here is not just an abbreviation for chemical stabilizer, but rather Player-vs-Player. By pitting traders against each other through carefully designed mechanisms, the protocol's mechanisms should be designed to unleash humanity's most powerful inherent driving forces—greed and unwillingness—to create a self-perpetuating flywheel of trading activity, thereby freeing itself from over-reliance on inflationary token releases and ultimately achieving true market stability. I. The Great Game: Deconstructing the Zero-Sum Reality of Trading Trading is, at its core, a zero-sum game. Either you lose or I win. There's no need to hide or sugarcoat it. Meme: The Original PvP Arena The Meme trading ecosystem embodies the purest and most unvarnished PvP principles. Unlike assets that claim to possess underlying utility or cash flow, the value of memes derives almost entirely from their cultural relevance, community hype, and virality on social media—in other words, attention itself. Trading in such a market becomes more like "cultural arbitrage": predicting or being the first to spot the next hot topic. This makes the meme market a stark zero-sum game: one trader's gains are directly tied to another's losses. On low-fee, high-throughput public chains like Solana, this PvP environment is pushed to the extreme. Trading bots are rampant, and the median position holding time is measured in seconds. The market has evolved into a "super PvP" ecosystem, making it nearly impossible for new retail traders to achieve significant profits. This brutal environment reveals the true nature of the speculative market: it is not a collaborative community, but an arena where participants cannibalize each other. Since it is a cannibalistic place, claiming to be a bodhisattva descending to earth, illuminating the earth seems somewhat redundant. The Illusion of Positive-Sum Growth The dominant narrative in the cryptocurrency industry often emphasizes its positive-sum aspects: the ever-increasing total market capitalization, new application scenarios enabled by technological innovation, and a continuous influx of new users. This macro narrative is true and important, but it's fundamentally disconnected from the micro level—the daily experience of traders on Perpdex. For a user engaging in high-frequency trading on Perpdex, their goal isn't to "build a new financial system" but rather to extract capital from other market participants as prices rise and fall. Their profit and loss (P&L) dashboard reveals a harsh zero-sum reality. Any successful PvP protocol must build on this fundamental understanding, cease portraying itself as a universally accessible "public utility," and instead embrace its true identity as an "arena." The protocol's positioning should shift from "trading market" to "beating other traders." This repositioning aligns its product features with the true motivations of its users. Leverage: The Great Amplifier High leverage is a core feature of Perp DEX, acting as both a catalyst and amplifier in PvP dynamics. Leverage not only amplifies financial gains and losses, but more importantly, it greatly amplifies the emotional intensity of PvP conflicts. The euphoria of a profit and the devastation of a loss are disproportionately magnified. This emotional amplification is crucial for hooking traders into the psychological loop we'll discuss in the next section. Traditional incentive models assume that trading volume is a function of liquidity and incentives, and that trading volume is a function of conflict. By designing mechanisms that create ongoing, quantifiable conflict (such as leaderboards and tournaments), the protocol can generate a stable underlying trading volume driven by inherent competition without relying on direct token rewards.

II. The Dogma of Participation: Weaponizing Greed and Reluctance

The core of PVP is to draw out two human instincts—greed and reluctance

The Winner's Curse: Cultivating Greed and Overconfidence

For winning traders, the platform's goal is to systematically cultivate greed and overconfidence, prompting them to trade more boldly, more frequently, and more recklessly.

• Psychological Mechanism: Successful trading triggers a series of cognitive biases. The first is overconfidence bias, where traders tend to attribute their success to superior skill rather than luck, thereby underestimating the risks of future trades. Secondly, there's confirmation bias: traders actively seek out information that confirms the effectiveness of their "winning strategies" while ignoring contradictory evidence. This psychological state is known in trading psychology as the "winner's curse," where the largest profit often foreshadows the largest subsequent loss. From a neuroscientific perspective, profits stimulate the release of dopamine in the brain, forming a powerful reward circuit that reinforces trading behavior and encourages traders to take greater risks in search of greater excitement. Taking several major CEX/protocols as examples: Platform amplification strategies: Protocol design should aim to amplify the thrill of victory and transform it into a public symbol of social status. Prominent profit and loss display: Display high floating profit and loss (PNL) figures prominently in the interface, using positive colors like green.

• Achievement System: Create badges like "Winning Streak" and "100x Profit" to transform trading achievements into a virtual identity to show off.

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

• Social Sharing: Share profit screenshots to social media with one click, turning winners into "walking billboards" for the platform while inflicting FOMO, jealousy, and anxiety on other users. The Loser's Game: Creating "Resentment" For losing traders, the platform's goal isn't to prevent them from rationally exiting due to losses. Instead, it aims to foster a feeling of resentment, prompting them to immediately enter the next trade to "recover their losses." This is a more powerful and crucial link in the entire psychological cycle. The psychological mechanism at its core is the theory of loss aversion. Groundbreaking research by Daniel Kahneman and Amos Tversky demonstrated that the psychological pain of a loss is twice as great as the pleasure of an equal gain. This intense negative emotion can lead to a range of irrational behaviors, such as holding onto a declining position to avoid admitting losses (the sunk cost fallacy) or, more importantly, revenge trading. Revenge trading is impulsive, high-risk trading driven by anger, frustration, and reluctance after a significant loss, with the sole purpose of quickly recovering the loss. This reluctance is a key driver of retaining losing users and driving their continued trading volume. Taking several major CEX/protocols as examples: Platform amplification strategies: Every detail of the interface should be designed to maximize users' reluctance, preventing them from conducting a dispassionate review and risk assessment. Visualizing "almost": When a user's position is forced closed, the interface can display how close the price was to their stop-loss or profit target, suggesting that it was simply a case of bad luck rather than a strategic error. Loss Framing Effect: Frames losses as temporary "paper losses" or "pullbacks" rather than permanent capital losses, instantly promoting new "market opportunities." Instant Re-entry Incentives: After a user closes a position or is liquidated, prompts like "one-click reversal" or "receive trading fee discount coupons" pop up immediately. This shortens the time it takes for users to make the next trade after a loss, exploiting emotional windows to encourage impulsive trading. From a protocol operations perspective, the most valuable users aren't the "smart money" who consistently profit and regularly withdraw. Quite the opposite: the ideal user is a trader trapped in a cycle of profit and loss. Regardless of their net profit or loss, they consistently generate significant trading volume and fees. Maximizing protocol revenue comes from the vigorous churn of capital between winners and losers. Therefore, every element of the platform's design—from the color of the profit and loss numbers, to post-trade animations, to the default leverage ratio and social features—is no longer a simple aesthetic choice; rather, it is a tool used to manipulate traders' psychology, guiding them towards greed and "reluctance," two high-volume behavioral patterns. III. Liquidity Spiral: From Psychological Loop to Protocol Flywheel Once a sufficient number of traders are captured through carefully designed psychological mechanisms, the protocol can initiate a self-reinforcing positive cycle, known as the "liquidity spiral." This process transforms individual irrational behavior into a sustainable, structural competitive advantage at the protocol level. Phase 1: The Core Engine of "Hooked" Traders This spiral begins with the core user group, described above, driven by greed and unwillingness. These winners and losers are locked in a continuous trading cycle. Their trading behavior is, in a sense, "organic," driven more by intrinsic psychological needs (the pursuit of pleasure, recovering losses, proving oneself) than by external token incentives. This core group creates a stable and predictable stream of underlying trading volume and fee revenue for the protocol. This is the first step in the protocol's transition away from reliance on hot money/"mercenary capital." Phase 2: Attracting Established Liquidity Providers With a stable and substantial underlying trading volume, the protocol becomes highly attractive to the second tier of market participants: professional liquidity providers. Market makers are drawn to the protocol because they can consistently earn the bid-ask spread from the frequent trades generated by the core traders. Arbitrageurs are attracted by price volatility, and their activities help align the protocol's prices with the broader market, thereby improving market efficiency. This infusion of professional liquidity significantly deepens the order book and reduces slippage, thereby improving the trading experience for all users. This makes the platform more attractive to new users and further strengthens the core engine.

  Phase Three: The Return of "Mercenary Capital" and the Formation of a Liquidity Black Hole

  As 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 sought to shed is now actively returning. This time, however, they are attracted not by the protocol's airdropped tokens, but by the superior trading conditions (extremely low slippage, deep trading volume, and abundant arbitrage opportunities). Their arrival completes the final piece of the liquidity spiral. This massive influx of capital transforms the protocol into a "liquidity black hole"—a market with such immense gravitational pull that competitors struggle to dislodge it. At this point, the protocol's competitive moat has shifted from short-lived incentives to insurmountable structural barriers formed by network effects and deep liquidity. At its core, PVP is a strategy that leverages artificially designed mechanisms (gamified incentives, psychological cues) to create what looks and feels like "organic product-market fit." Traditional liquidity mining, such as SushiSwap's vampire attacks and AsterDex's wash trading, addresses the "cold start" liquidity problem but fails to address user "loyalty." Retention rates for users attracted by incentives are extremely low. PVP mechanisms and models aim to fundamentally address the retention problem by replacing economic "incentives" with a behavioral "addiction" (as described by the psychological mechanisms of gambling addiction). An addicted user doesn't need to be paid to play. Therefore, most protocols prioritize liquidity acquisition as their primary goal, while the PVP model reframes it as an outcome. The primary goal is to maximize user engagement and trading volume through psychological mechanisms. Deep, stable liquidity is a natural consequence of achieving this primary goal. Amidst fierce competition for liquidity among exchanges, the PVP model offers a more capital-efficient path: invest resources in product features that foster a competitive atmosphere, and liquidity will naturally follow trading activity.

  Fourth, Catalysts: Designed for "Single-Point Breakthroughs"

  Kickstarting a powerful PvP flywheel requires precise, powerful catalysts. This requires protocols to abandon "generalized system of preferences" incentives and adopt a "single-point breakthrough" strategy that creates conflict, identifies winners, and inspires losers.

  Broad-based liquidity mining or trading rebates are platforms criticized by users for their "broad-based" strategies. This strategy is inefficient because it rewards everyone indiscriminately, including "zombie users" who passively provide liquidity and trade infrequently, and those who trade for points. This not only dilutes the incentives for high-value, active traders, but also creates significant token inflationary pressure, ultimately leading to a rapid exit of mercenary capital as 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 traders who win the PvP competition, not all participants. A successful PvP incentive program must inherently create a large number of "losers" who gain nothing. This runs counter to the "inclusiveness" and "community sharing" ethos typically promoted in the Web3 space, but it is crucial to the model's success. It is the intense reluctance felt by these losers who "miss out" on the grand prize that forms the core motivation for them to continue participating in the platform in the future, even without direct incentives. We can't expect a platform that prioritizes zero-sum games and winner-takes-all mechanisms to pursue "inclusive finance," can we? If you're held hostage by the moral values ​​of "inclusive finance" or driven by the anti-scam community's demands for fair treatment, then you might not be suited to this "cannibalistic" trench. Conclusion: Sustainable Bubbles Let's return to our original chemistry analogy. Speculative markets are inherently bubbly. The goal of PVP isn't to eliminate bubbles, but to stabilize them. Just as polyvinylpyrrolidone provides structure, resilience, and durability to bubbles, a well-designed player-versus-player system can also provide a sustainable structure to market frenzy. It creates stability in trading activity and fee income amidst volatile price fluctuations. The ultimate strategic recommendation is this: In the future competition among Perp DEXs, the winner will not be those offering the highest APY, but those that most deeply understand and master user psychology. Success is no longer solely the work of financial architects; it is the work of behavioral psychology architects. Make PVP a doctrine—like the Chaoshan people, bring the gaming arena to your own backyard; water will naturally flow to every value trough without guidance.