Aggregation Strategies in DeFi: The Showdown between Jupiter and Hyperliquid

In November 2023, Blackstone Group acquired the pet care app Rover. Rover integrates decentralized pet care services into a searchable marketplace, becoming the default platform in the field. This model is known as "shelf ownership" or "aggregation theory": establishing direct relationships with end users, allowing suppliers to compete to serve them, and extracting value from each transaction.

The Amazon flywheel is a classic interpretation of this concept. More choices lead to a better customer experience, attracting more traffic and sellers, reducing costs, providing lower prices, and ultimately resulting in more choices. Once this model works, it can be considered perfect. But it only holds true under two conditions: the aggregated content has value, and suppliers find it difficult to exit easily.

In the cryptocurrency industry, liquidity has become the most difficult moat to shake. Hyperliquid understands this well; it not only builds a deep order book but also allows other applications to directly access its liquidity. Jupiter has evolved from a routing tool to the default entry point for trading on the Solana network, with its trading volume at one point accounting for nearly half of the total computational usage of Solana.

Jupiter ascends through three levels: price discovery, execution, and distribution control. It starts with price discovery tools, moves into the execution layer through smart order routing, and ultimately embeds in various frontends, becoming the main entry point for Solana transactions. To continue its growth, Jupiter has begun to expand its business through acquisitions, acquiring projects that have already captured new user flows.

Two dominant models are emerging in DeFi: Jupiter and Hyperliquid. Hyperliquid focuses on controlling liquidity, offering it as a service. Jupiter, on the other hand, focuses on distribution, aiming to become the default interface and market entry point. Both models bet on scale, but start from opposite ends.

This showdown reflects a larger trend: applications are gradually exhibiting platform characteristics rather than layer 2 solutions. They possess user relationships, embed into daily habits, and strengthen their positions through acquisitions or integrations with other applications. This raises questions about the direction of value flow and the future of fat protocols.

The future direction of Decentralized Finance is still unclear, but this showdown of aggregation strategies will undoubtedly shape the industry landscape.