Lighter: a platform for trading perpetual futures with verifiable order execution

The cryptocurrency market continues to evolve, and along with it, tools for trading derivatives are developing. Lighter is a decentralized platform specifically designed for trading perpetual contracts (perps) with a focus on transparency, security, and high performance. Unlike traditional centralized exchanges, Lighter operates based on cryptographic proofs, eliminating the need to trust intermediary counterparties.

Currently, the platform is in the testing phase (Testnet), and its architecture plans for a transition to the main network (Mainnet) with expanded functionality. Lighter combines innovative technologies with user-friendliness, borrowing best practices from centralized management while maintaining the advantages of decentralization.

Technological Innovations: Verifiable Order Execution via SNARKs

One of Lighter’s key features is the use of SNARKs (Succinct Non-Interactive Arguments of Knowledge), which allow mathematically proving the correctness of each operation without revealing confidential information. This means that order execution is not just based on Price-Time Priority (as on traditional exchanges), but each process is cryptographically verified and confirmed.

The platform’s Matching Engine processes incoming orders with fairness guarantees: the system prevents manipulation, front-running, and other forms of unfair trading. Users can be confident that their orders are executed honestly and transparently. A similar approach is applied to the liquidation mechanism: the system uses Liquidation Proofs to confirm that each forced position closure meets established criteria, without reliance on centralized oracles or subjective decisions.

Three-Tier Margin and Risk Management System

Lighter implements a comprehensive risk management approach through a multi-level collateral requirement system. The platform uses three key parameters:

Initial Margin (IMR) – the minimum collateral required to open a new position. If the account balance falls below this level, the system blocks the opening of additional positions, but existing positions remain open.

Maintenance Margin (MMR) – the threshold for partial liquidation activation. When the balance drops below MMR, the system automatically initiates partial liquidation via IOC (Immediate or Cancel) orders at an algorithmically determined price, typically at zero. This protects the account from total wipeout.

Close Margin (CMR) – a critical level at which full liquidation of all open positions begins. If the insurance fund is exhausted and the system cannot absorb losses, it activates Auto-Deleveraging (ADL) — an automatic process of reducing leverage on active positions proportionally to their size.

Trading Process: Step-by-Step Operation

Lighter’s trading cycle includes several key stages:

Order Placement. Users can place market orders, limit orders, stop-loss, take-profit, and more complex tools like TWAP (Time-Weighted Average Price). Each order can have modifiers: Reduce-only (close only existing positions), Post-only (place in order book without immediate execution), Time-in-force (time restrictions on order validity).

Position Valuation via Mark Price. The market value of an open position is calculated based on three components: the Index Price (derived from aggregated data from external sources), the funding premium (reflecting market demand for long or short positions), and Impact Price (considering liquidity when executing large orders). Mark Price serves as the basis for unrealized PnL calculation, margin requirements, and liquidation triggers.

Funding Mechanism. Every hour, the system recalculates the funding fee based on the difference between Mark Price and Index Price. When the rate is positive, long position holders pay fees to short position holders, balancing the market. When negative, the direction of payments reverses.

Profit and Loss Calculation (PnL). Unrealized PnL for each position is calculated as (Mark Price – average entry price) × position size. The current account balance equals the initial collateral plus unrealized PnL. Realized PnL is updated upon position closure and includes paid funding fees.

Public Pool Model: Opportunities for Retail Investors

Lighter offers a Public Pools model, opening access for retail investors lacking extensive derivatives trading experience. Investors can deposit funds into pools managed by professional traders (Operators) and receive a share of profits proportional to their contribution. This system:

• Distributes professional capital management among more participants
• Lowers the barrier to entry for newcomers to derivatives trading
• Creates incentives for experienced traders to generate stable returns
• Ensures transparency via blockchain, where every operation is recorded and verified

Community Engagement: Point Accumulation and Incentives

During the testing phase, Lighter implements a Point Accumulation Program that rewards active users. Points are awarded for:

• Successful order placement and execution
• Bug reporting and bounty submissions
• Providing valuable feedback to developers
• Participating in public pools and supporting liquidity

Accumulated points can be exchanged for rewards upon the official Mainnet launch, fostering long-term community engagement and platform testing. Currently, during testing, users do not pay trading fees (neither Maker nor Taker fees), encouraging active platform use.

Anti-Manipulation Measures

Lighter incorporates built-in mechanisms to prevent wash trading—artificial volume accumulation through self-trading. The system monitors and blocks attempts by a single user to buy and sell via multiple accounts, ensuring the authenticity of trading volume data. This is vital for maintaining ecosystem health and protecting honest traders from manipulation.

Additional Account Management Tools

Lighter supports sub-accounts and API keys, enabling experienced users and automated trading systems to:

• Manage multiple trading strategies via separate accounts
• Integrate automated bots through REST API
• Diversify risk across different strategies
• Improve administration when scaling portfolios

Current Status and Future Development

As of February 2026, Lighter remains in the Testnet testing phase. According to development plans, core platform features are still being refined, with a gradual transition to Mainnet underway.

Roadmap: The team is completing critical development and optimization stages in preparation for a public launch. Afterward, additional features will be introduced, and the ecosystem expanded.

Team and Investors: The full roster of founders, technical experts, and strategic advisors remains private, which is typical for early-stage projects. Information about investors and supporting organizations will be disclosed later.

Tokenomics: The token distribution structure, locking mechanisms, and ecosystem functions are continuously being optimized to balance the interests of the development team and the community.

Conclusion

Lighter represents a significant step forward in the evolution of decentralized derivatives trading platforms. The use of cryptographic proofs (SNARKs) for verifying order execution and liquidations removes traditional trust issues inherent in centralized exchanges. The combination of a three-tier margin system, public pools, and community incentives makes Lighter a compelling tool for both professional traders and retail investors.

As the platform transitions from Testnet to Mainnet, further functionality, performance improvements, and user base growth are expected. Lighter’s innovative approach to ensuring fairness and security in derivatives trading could set a standard for the broader DeFi ecosystem.

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