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Cross-chain Liquidity: The Next Iteration of Perp DEXs
June 05, 2024
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Key Takeaways

  • Derivatives in DeFi have shown significant growth, but the proliferation of new perp DEXs has led to fragmented liquidity across various DEXs and chains.
  • Vertex, known for its vertically-integrated DEX that includes spot, perpetual, and integrated money markets, is now tackling cross-chain liquidity fragmentation through horizontal integration with the launch of new Edge instances.
  • Vertex's integrated offerings and cross-margined account structure amplify the benefits of new instances: native cross-chain spot trading, optimized cross-chain basis trading, consistent interest rates, reduced bridging friction, and more.
  • Edge transforms the typical subtractive creation of new protocols on new chains, which fragments liquidity, into a synergistic, value-additive endeavor, which is groundbreaking for a multi-chain future.

The DeFi space has witnessed an impressive proliferation of perpetual decentralized exchanges, with over 150 different derivatives protocols spanning multiple blockchain networks. This rapid expansion, driven by the strong product-market fit of perp DEXs, has led to fragmented liquidity across various DEXs and chains, presenting a challenge for traders and investors. TVL in DeFi derivatives has surged from $1.8 billion to $3.4 billion since the beginning of this year, highlighting the increasing adoption and demand for these products.

Vertex, known for its vertically-integrated DEX that includes spot, perpetual, and integrated money markets, is now tackling cross-chain liquidity fragmentation through horizontal integration. Vertex Edge, Vertex’s latest product, addresses this by offering synchronous orderbook liquidity, effectively unifying liquidity across different chains. Essentially an enhancement to the Vertex sequencer, Edge extends its capabilities to operate across any supported ecosystem. To fully appreciate Edge's potential, let’s revisit Vertex’s architecture and understand how this upgrade integrates into its existing framework.

Vertex Overview

Vertex employs a hybrid orderbook AMM design. Its trading and risk engine, which encompasses all Vertex products such as spot, perpetuals, and money markets, operates onchain and is governed by smart contracts on Arbitrum. Meanwhile, the sequencer, acting as a high-performance orderbook that matches inbound orders from the protocol layer, operates offchain. This creates a hybrid model where the sequencer handles trade ordering and routing. In this system, the onchain AMM's pooled liquidity complements the bids and asks on the Vertex orderbook, serving as an additional market maker via smart contracts. The AMM liquidity is merged with liquidity from automated traders through the sequencer, providing users with a unified liquidity source. The sequencer ensures trades are filled with the best available liquidity, simultaneously utilizing limit orders and liquidity provider positions.

If the sequencer fails, the DEX defaults to a traditional xy=k model, ensuring the onchain AMM continues to function as the protocol's fallback, a mode referred to as "Slo-Mo Mode."

This liquidity model offers several clear advantages. Firstly, it guarantees more consistent liquidity since the DEX can always rely on the AMM when orderbook depth is insufficient. This makes it easier to bootstrap markets with passive AMM liquidity while still allowing for customization through limit orders on the orderbook.

Additionally, projects like Elixir facilitate easy liquidity deployment across orderbook exchanges. Users can select a pair to provide liquidity, and the protocol automatically deploys this liquidity through automated market making strategies. Currently, Elixir enhances orderbook liquidity on Vertex with 23 perp liquidity pools, adding $13.9M to Vertex’s orderbook on Arbitrum. Moreover, there are five additional pools providing spot liquidity, currently with $17.5M in TVL for Vertex.

As of now, Vertex presents a total cumulative volume of $88.72B and a user base of 26,650, with $81.37B coming from perpetuals trading. Over the past month, the total average daily trading volume for both perp and spot markets has averaged around $280M, and the TVL in money markets stands at $96.79M. Vertex gained significant traction during its initial incentives and token launch, capturing considerable market share in the perps market. Shortly after it declined as expected through the exit of mercenary liquidity, but since then, it has maintained a steady market share of around 7%, as illustrated in the chart below.

The Sequencer Orderbook

The Vertex sequencer is a custom, parallel EVM implementation of an offchain orderbook and trading engine built in Rust. Currently, the sequencer operates as an independent offchain node, with plans to decentralize it via Vertex governance in the future. The orderbook is a key feature that sets Vertex apart as a high-performance perp DEX. Compared to the onchain latency of distributed node consensus, it achieves average order-matching execution speeds of 5-15 milliseconds and supports 15,000 transactions per second (TPS), making it competitive with centralized exchanges. It complements the Vertex AMM by providing a low-latency, central-limit orderbook (CLOB) for traders who want to place limit orders, engage in faster trading, and execute automated strategies. Pairwise LPs from the AMM contribute to the orderbook, enhancing its liquidity.

Several important properties are worth highlighting. The sequencer protects traders on Vertex from validator MEV on the underlying blockchain, as validators cannot order or front-run transactions. Additionally, due to the millisecond-level operation of Vertex’s sequencer, MEV extraction becomes less attractive. It is important to note that while the sequencer is offchain, it does not have custody over user assets—custody is managed by smart contracts on the underlying chain. Furthermore, the sequencer cannot censor transactions, halt trading, or block withdrawals. Although certain trust assumptions are necessary, specifically, that the sequencer operates impartially and does not favor any entities, the ability to avoid MEV concerns can be a significant advantage.

Cross-Margined Accounts

A key advantage of Vertex is the capital efficiency enabled by its cross-margined accounts. By default, Vertex consolidates a user's liabilities across their trading account to offset margins between positions, meaning a user’s entire portfolio serves as collateral for multiple open positions. While cross-margined collateral has become more common on perp DEXs, Vertex takes it further by allowing multiple types of positions, including lending and spot positions, to collectively serve as margin. Additionally, Vertex employs portfolio margining, which means that unrealized profits can be used as margin for existing or new positions, further enhancing trading flexibility and efficiency.

In practice, this means that accounts generally have lower margin requirements compared to having the same positions in separate, isolated margin accounts. Vertex also features an automatic risk management system that helps traders avoid liquidations. It automatically calculates and transfers margin between open positions to maintain the required margin levels, which is particularly useful in volatile market conditions and when executing complex trading strategies.

In addition to improving capital efficiency, cross-margined accounts on Vertex enhance practicality and reduce costs for common strategies like basis trading. With linked spot and perpetual markets, Vertex offers native markets for basis trading, which is typically more capital-intensive on other exchanges due to the need for separate markets for perpetual and spot positions. For example, if you are long spot ETH on Binance and short ETH, you must maintain the full margin for the perp contract since it doesn't account for the offsetting spot position. Vertex’s onchain risk engine recognizes this redundancy, significantly reducing the margin requirement for the ETH perpetual position, making arbitrage trading more capital-efficient. Additionally, Vertex’s integrated money market allows assets to serve as both collateral and available for borrowing to leverage spot positions. This closely aligns the basis rate with the borrowing rate of stablecoins.

These advantageous arbitrage conditions on Vertex have the potential to generate greater trading volumes and improved liquidity, as traders can execute profitable basis trade strategies with leverage and lower margin requirements.

Vertex’s Portfolio Overview provides easy access to overall portfolio health and risk indicators, streamlining management for multiple open positions. All positions are linked and managed together, offering a comprehensive view of a trader’s risk. An account’s health is determined by assigning weighted values to each balance and position. Vertex simplifies risk management by distinguishing between Initial Health and Maintenance Health. When Initial Health is depleted, the account enters Maintenance Mode, preventing new risk-taking actions like opening new positions. The remaining Maintenance Health acts as a buffer, allowing users to de-risk before facing liquidation. If Maintenance Health is fully depleted, the account becomes susceptible to liquidation.

In determining an account’s health, certain special cases can offer significant benefits to traders. As always, the devil is in the details. Spreads, which involve offsetting positions on the same underlying asset, are inherently less risky than individual spot and perpetual positions. Recognizing this, Vertex assigns health benefits to these spread positions, enabling a much larger capital efficiency.

Key Details

Liquidations

Spot oracle prices are utilized for liquidations, ensuring robust pricing and shielding users from temporary liquidity shortages that might affect spot prices. Additionally, an independent oracle price is in place for USDC, enabling accurate health calculations and trading even during USDC de-pegging events. Vertex Protocol adopts a multi-oracle approach, gathering prices from various providers. Presently, most Vertex markets rely on Stork, but the recent deployment of Chainlink Data Streams on Vertex initially supports ETH markets, with plans to expand to other markets.

Any user can buy assets from the liquidating account at a discount or settle its debts at a premium until the account's Initial Health surpasses zero. If an account's Initial Health exceeds zero at any point during the liquidation process, the liquidation halts.

Vertex Protocol earns 25% of the profits generated by liquidators, with these fees going to the insurance fund to safeguard protocol health. In the event of insolvency, the account's positions are exited at a loss, resulting in bad debt. Vertex's last lines of defense are then activated: USDC from the insurance fund is allocated to the insolvent account to compensate liquidators for undertaking the underwater positions. If the insurance fund is depleted, losses from underwater positions are distributed among other perpetual accounts in the market. If this isn't feasible, losses are spread across all USDC holders. Currently, the Insurance Fund holds 1.26M USDC on Arbitrum and 0.12M USDC on Blast, totaling approximately 1.4M USDC to offset bad debt. 

Fees

Vertex offers a competitive trading fee model, featuring low fees for takers and zero fees for makers across spot and perpetuals. The current taker fee structure entails a 2 bps fee for takers, applied only after a certain minimum order size. This effectively yields a total fee rate potentially smaller than 0.02%.

Supplementing this model is the Vertex Maker Program, which incentivizes price makers with a rebate-based trading fee program and VRTX token incentives based on a scoring function prioritizing market support, uptime, and fees. All trading fees are paid in USDC, initially allocated to secure the protocol, fund ongoing expenses, seed VRTX liquidity, and drive value to the VRTX token via tokenomics mechanics. Additionally, Vertex charges a flat fee in USDC for interactions with the Sequencer to cover gas costs, with fees subject to change over time but expected to remain relatively stable within months of launch (e.g. 1 USDC for submitting a liquidation or minting/burnin LP tokens). 

The cross-chain fee accounting model maintains the same fee structure while distinguishing between fee payouts for cross-chain versus single-chain scenarios. In a cross-chain order match between two instances, the taker fee is charged on the taker chain, and the maker rebate is charged on the maker chain. In the Edge ecosystem, takers generally incur a 2bps fee and makers receive a 0.5bps rebate. So, in a cross-chain match between a taker on Blitz and a maker on Vertex, the taker fee on Blitz is 1bps, the maker rebate on Vertex is 0.5bps, and the fee accrual for Vertex is 0.5bps. This structure ensures that revenue accrues to the maker chain, keeping makers incentivized through token rewards and rebates. If the taker and maker are on the same chain, the taker fee is 1.5bps, with a 0.5bps fee accruing to the same chain.

UX

Vertex's 1-click trading (1CT) feature replicates the ease of trading on centralized exchanges, allowing users to opt-in while retaining manual signing as the default mode. 1CT simplifies trading by generating a secure private key for automated transaction signing, requiring two signatures upon activation. Users must confirm ownership at the start of each session, and 1CT enables trigger orders for uninterrupted trading. Vertex supports stop market, take profit, and stop loss orders (excluding stop limit), with trigger prices based on Mark Price or Last Price for the entire position size. Partial position orders and advanced trading strategies like TWAPs or scale orders are currently unavailable.

Vertex Edge - Cross-chain Liquidity

Vertex Edge introduces cross-chain liquidity through a synchronous orderbook, consolidating liquidity from various instances and settling transactions onchain at the source base layer. This extension of the sequencer's capabilities broadens its reach across supported base layer ecosystems, with the sequencer's state sharded and updated across all chains. Inbound orders from each chain are aggregated and matched against the total liquidity pool, with the sequencer (Edge) automatically hedging and rebalancing liquidity between chains. Essentially, Edge operates as a virtual market maker, focusing on resting liquidity (maker orders) across sharded states of Edge instances, while taker orders are submitted directly to Edge's unified liquidity layer from independent instances.

This innovation opens up possibilities for accessing unified liquidity on any chain. It's particularly beneficial for launching new perp DEXes on different early-stage chains, eliminating the need to attract liquidity initially, crucial for competitive price execution. Blitz on Blast, the inaugural instance by Vertex Edge, illustrates this transition: initially, volume predominantly stemmed from Edge, and is gradually drawing liquidity from the chain (Blast) over time. Since March 13th, shortly after Blitz’s launch on Blast, until May 22nd this year, Edge has contributed to 62% of Blitz’s maker volume. For total maker and taker volume, Edge’s contribution is 27%. As illustrated in the chart below, the trend indicates an increase in direct volume from Blast.

With each new Edge instance, benefits extend to both the new and existing instances. Increased liquidity in one instance translates to more liquidity available across all existing ones. Liquidity from non-Arbitrum instances, like Blitz, merges into a synchronous orderbook, combining liquidity from Vertex on Arbitrum and Blitz on Blast. Deploying on more chains adds liquidity rather than fragmentation, enhancing usage across all chains and providing value to apps on other chains. The chart below illustrates how Vertex, despite having more established liquidity, is progressively benefiting from Edge’s cross-chain liquidity.

It's crucial to highlight that matched orders are settled locally onchain to the user's origin chain, ensuring a net-positive impact on the local chain's blockspace demand. Each Edge instance showcases the combined orderbook liquidity of all interconnected chains on the app's trading interface, allowing access to this shared liquidity from any base layer.

Up next is Mantle, slated to receive its own Edge instance. With a TVL of $331.57M, approximately 11% of Arbitrum's TVL, Mantle stands to benefit significantly from access to deeper liquidity than currently available onchain. This expansion allows Mantle to accommodate a much broader user base.

Recently, the team unveiled plans to launch an Edge instance on Botanix, the Spiderchain EVM L2 on Bitcoin. The Edge deployment on Botanix introduces novel concepts for decentralizing the sequencer, with further details to be disclosed as development progresses. This move expands liquidity availability from Arbitrum and Blast to the Bitcoin L2 ecosystem, potentially bridging these two very separated worlds and catering to diverse user types.

Amplifying User Benefits

Vertex Edge's architecture facilitates multi-chain liquidity sharing through a unified, synchronous orderbook. However, thanks to Vertex's vertically integrated offerings (spot, perpetuals, and money markets) and cross-margined account structure, this entails more than just additional perp DEXs accessing consolidated liquidity. Instead, Vertex's design offers amplified benefits to all users across each instance and underlying network.

Through Vertex's spot market, users will be able to trade native spot assets across chains without needing to access the network of any specific asset. This is a significant step in the roadmap that will be key to reduce friction between networks and bridging risks. With the synchronized orderbook aggregating liquidity, sellers on one chain gain access to buyers on multiple chains, optimizing market depth and potentially reducing slippage.

Additionally, Vertex's cross-margined accounts with spot and perpetual products enhance basis trading opportunities across ecosystems, further optimizing market efficiency through Edge. Unified funding rates on Edge streamline trading, mitigating liquidity fragmentation.

Edge's money markets enable users to maintain collateral on their preferred chain without asset bridging, again reducing friction and expanding collateral options to enhance liquidity and trading efficiency. The synchronous orderbook layer retains Vertex's embedded money markets through cross-margin accounts, ensuring consistent interest rates across chains. This consistency facilitates easier cross-chain spot trading, enabling traders to access assets in different ecosystems without the need for stablecoin bridging, optimizing yields for passive lenders.

App Layer Alignment

Vertex Edge offers three distinct benefits to base layer networks: increased blockspace demand, better onchain liquidity, and reduced development/integration costs. Vertex Edge's batched settlement model increases blockspace demand, as evidenced by Vertex contracts consistently ranking among the top gas spenders on Arbitrum in 2024. This alignment encourages more blockchains to integrate Vertex Edge, possibly offering native incentives such as the Arbitrum STIP.

Edge's cross-chain liquidity access alleviates obstacles for users moving assets between chains, and retaining onchain capital by diminishing outflows seeking better DEX liquidity. Each new chain added to Vertex Edge's network enhances liquidity for all chains, creating a virtuous cycle of growth and liquidity. Additionally, Vertex Edge reduces development costs and resources for launching DEXs on L2s by leveraging existing liquidity, avoiding the need for extensive new technology development and deep liquidity creation.

Implications For The Token

VRTX functions as a utility token within the Vertex ecosystem, providing several benefits to users. It primarily serves as an incentive for the Vertex community, rewarding user activity, efforts, and transaction volume within the Vertex Protocol. These rewards vary based on contributions and commitments, encouraging ongoing participation over the long-term.

Staking VRTX is necessary to join the protocol's incentive program, signaling a user's commitment and adherence to standards. Staked VRTX generates voVRTX, a non-transferable token that acts as a multiplier for incentives, proportional to the staking duration. Users who stake longer (up to 183 days) can earn 1 to 2.5 times more rewards. Besides staking, voVRTX can also be earned through active and consistent participation, making it a comprehensive incentive model. This system encourages continuous contributions, creating a positive feedback loop.

Vertex's primary revenue comes from trading fees, which scale with trading volume. Up to 50% of trading fee revenue, excluding sequencer fees, is allocated to the Protocol Treasury for rewards, with the specific percentage determined each epoch based on the protocol's needs.

Just recently on May 16th, the team announced a VRTX Buyback & Burn program to replace the previous Buyback & Stake, meaning that VRTX purchased with protocol revenue will be periodically sent to a burn address instead of staked moving forward. It is designed to use a portion of retained protocol revenue from the Vertex protocol (e.g., trading fees) to purchase VRTX on a forward-looking basis.

The expansion to other chains through Edge instances is set to generate more trading fee revenue, leading to progressively more VRTX being burnt. With a fixed total supply of 1 billion tokens, and 90.85% of it to be distributed over the five years following the TGE, this supply reduction could drive significant value back to the token. Notably, 34% of the supply is allocated to ongoing incentives to be distributed over the next 6+ years, starting from Epoch 8. As more tokens are burnt due to rising revenue and fewer incentives are given out over time (as per the emission schedule), this could create buying pressure. The portion of revenue allocated to Buyback & Burn will vary based on the protocol's needs.

Risks

Cross-margined accounts offer significant capital efficiency and advantages for strategies like basis trading. However, they also present higher solvency risks compared to isolated margin systems. An example of this vulnerability is the Mango Markets hack in October 2022. Although oracle design and security measures have improved since then, it is important to acknowledge that more complex margin systems can inherently provide more opportunities for exploitation.

The Insurance Fund’s capability to cover bad debt in extreme scenarios must also be monitored. As new Edge instances are launched, it takes time for protocol revenue from liquidations to sufficiently bolster individual insurance funds. However, funds can be utilized where necessary in emergencies and losses can be socialized, resulting naturally in a poor user experience but avoiding protocol insolvency.

The offchain sequencer is a single point of failure, with its consequences increasing with the addition of more instances. This risk is mitigated by the Slo-Mo fallback, which allows trading against AMM liquidity. However, execution in this mode is not as efficient, potentially leading to losses and high opportunity costs, which may not be ideal at times for sophisticated and professional traders.

The perpetuals landscape is highly competitive and liquidity is known to be mercenary, with the current craze for points programs and typical inflationary token rewards making user retention challenging. Nonetheless, Vertex’s market share has remained relatively stable since its token launch, and its ability to expand into multiple protocols with additive liquidity is promising for its future.

Final Thoughts

Vertex Edge’s cross-chain liquidity addresses the growing need to aggregate liquidity in an increasingly fragmented blockchain landscape. As more blockchains (L1s, L2s, L3s) are created, trying to convince users to use one protocol on one network can become futile. Edge embraces the multi-chain future, finding a solution to unify liquidity across chains. By ensuring that deployment on more chains means increased liquidity for every chain, Edge offers a future-proof approach. Edge transforms the typical subtractive creation of new protocols on new chains, which fragments liquidity, into a synergistic, value-additive endeavor. This perspective is groundbreaking for a multi-chain future, allowing users to trade on their preferred chains without missing out on the best price execution and overall trading experience. For anyone who believes in the multi-chain future, Vertex is a standout project in the perps landscape.

App layer alignment with the underlying network means that more blockchains can welcome Vertex Edge into their ecosystems, potentially offering native incentives. This boosts adoption, especially if Edge launches on established networks to leverage local liquidity and users. While competition is stronger on these chains, the value add could be significant.

Low trading costs and increasing liquidity can sustainably attract more volume and drive value to the token. With the initial token phase incentives involving a 7-month lock period concluding soon, and with monthly emissions on a fixed schedule, combined with growing protocol revenue leading to more tokens being bought and burnt, the token could have a clearer path for value accrual.

Finally, improvements to the perp DEX trading UX, including reduced latency and fees, along with deep cross-chain liquidity that Edge offers, are paving the way for perp DEXs to gain market share from CEXs, growing the total market and changing market dynamics.

This research report has been funded by Unlimited Technologies PTE. By providing this disclosure, we aim to ensure that the research reported in this document is conducted with objectivity and transparency. Blockworks Research makes the following disclosures: 1) Research Funding: The research reported in this document has been funded by Unlimited Technologies PTE. The sponsor may have input on the content of the report, but Blockworks Research maintains editorial control over the final report to retain data accuracy and objectivity. All published reports by Blockworks Research are reviewed by internal independent parties to prevent bias. 2) Researchers submit financial conflict of interest (FCOI) disclosures on a monthly basis that are reviewed by appropriate internal parties. Readers are advised to conduct their own independent research and seek the advice of a qualified financial advisor before making any investment decisions.

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Federal Operations for Resilience, Troop Resources, Energy, Supply and Survivability.

The program addresses a vulnerability that rarely receives much public attention:

The world's most powerful military still depends extensively on civilian infrastructure.

Electric grids.

Commercial supply chains.

Communications infrastructure.

Fuel.

Foreign sources of critical materials.

FORTRESS America is intended to reduce those dependencies.

The Pentagon's own public description says the initiative is designed to ensure that major U.S. military installations generate independent power so that bases remain operational even if the civilian grid is taken down by cyberattack or sabotage.

It goes beyond electricity.

The program includes five major areas:

Energy independence

Installation hardening and cyber resilience

Supply-chain and defense-industrial-base resilience

Strategic defense reserves

Space and spectrum resilience

The Pentagon also wants deeper reserves of critical supplies so military operations can continue when ordinary supply lines are disrupted.

The underlying idea is simple:

The military should be capable of functioning even when the infrastructure surrounding it cannot.

An October 7 implementation memorandum obtained by DefenseScoop shows that the Pentagon had already begun establishing the FORTRESS America Program Office and assigning officials to implement those objectives.

Then another piece of the story emerged.

DOCUMENT 02

THE 90-DAY REQUIREMENT

On October 25, Fox News published details from additional FORTRESS America documents its reporters reviewed.

According to that reporting, major continental U.S. military installations are being prepared to sustain essential operations for at least 90 days without outside support.

The essential systems reportedly include:

Power.

Water.

Fuel.

Communications.

Think about the distinction carefully.

The Pentagon isn't telling Americans that the United States will lose electricity for 90 days.

It isn't predicting a 90-day blackout.

Military contingency planning deliberately prepares for scenarios officials hope never occur.

But preparing installations for this possibility tells us something about the scenario being considered.

The Pentagon is building resilience around the possibility that a sufficiently serious conflict or attack could interfere with the civilian systems on which military installations normally depend.

The publicly released FORTRESS material specifically discusses:

Cyberattack.

Sabotage.

Grid disruption.

Foreign supply-chain disruption.

Attacks against installations.

And prolonged military contingencies.

That makes the 90-day requirement significant—but it must be described accurately.

Mind Bend Theory verification note:

The September 30 FORTRESS America program itself is documented publicly.

The October 7 implementation memorandum has been reported and described by DefenseScoop.

The 90-day requirement, however, currently comes from documents reviewed by Fox News, rather than a primary 90-day document independently published for the public.

That distinction matters.

We follow the documents as far as they take us—and no farther.

DOCUMENT 03

UNITED KINGDOM — BE READY FOR THREE DAYS

Now cross the Atlantic.

On October 22, the British government launched its new Be Ready campaign.

This time the audience wasn't the military.

It was ordinary households.

The UK government is asking households that are able to do so to prepare to remain self-sufficient for approximately three days during an emergency.

The government specifically discusses disruptions affecting:

Power.

Water.

Phones.

Internet access.

A Parliamentary Written Statement issued the same day explicitly states:

“The updated advice calls on households to be self-sufficient for three days in the case of an emergency.”

The government recommends maintaining three days of bottled water and non-perishable food.

Its expanded preparedness guidance includes:

Approximately three litres of drinking water per person per day

Three days of non-perishable food

Battery-powered or wind-up radio

Torch and spare batteries

Charged power bank

Essential medications

First-aid supplies

Blankets and warm clothing

Important telephone numbers written down

Basic hygiene supplies

Cash

Why cash?

Because during some disruptions, electronic payment systems and ATMs may not function normally.

That creates an important connection between infrastructure and finance.

Electricity isn't isolated from banking.

Communications aren't isolated from payments.

Modern infrastructure is interconnected.

And failure can move through those connections.

DOCUMENT 04

INDIA — “WARS ARE NOT FOUGHT WITH WEAPONS ALONE”

Three days later, on October 25, another statement appeared.

This one came from Indian Prime Minister Narendra Modi.

Modi was inaugurating the Reserve Bank of India's newly established Data Centre and Cybersecurity Training Institute in Bhubaneswar.

The facilities are designed to strengthen the technological foundations and cybersecurity resilience of India's financial system.

Four data centres will host mission-critical payment and settlement systems.

But Modi's explanation of why this matters went beyond ordinary cybersecurity.

His official statement says:

“Nowadays, wars are not fought with weapons alone; a nation can also be weakened by attacking its economy.”

He continued by saying India's growing economy requires its banking system to be protected against cyber looters and cyber terrorists.

That puts another critical system into the picture:

Money.

A modern economy depends on digital banking infrastructure almost as heavily as it depends on electricity and telecommunications.

Payment systems move commerce.

Banks hold liquidity.

Settlement systems move money between financial institutions.

Data centres keep those networks functioning.

Disrupt the financial infrastructure badly enough and the consequences don't remain inside banks.

They reach businesses.

Supply chains.

Payroll.

Purchasing.

Markets.

And households.

DOCUMENT 05

BANK OF ENGLAND — WHAT IF CYBER DEFENSE FAILS?

There is another document worth reading.

On June 30, Bank of England Deputy Governor Sarah Breeden delivered a speech titled:

“Agents of Change.”

The subject was artificial intelligence and financial stability.

One section deserves particular attention.

Breeden warned that advanced AI systems are becoming increasingly capable of identifying and chaining together cyber vulnerabilities.

That changes the nature of cyber risk.

AI can help defenders.

But the same capabilities can potentially increase the speed and effectiveness of attackers.

The important change in thinking comes afterward.

Preventing attacks is no longer enough.

Financial institutions must also prepare to recover after a successful attack.

Breeden raised the possibility of simultaneous disruption across multiple financial firms.

She then asked whether critical financial institutions may eventually require completely separate failover capabilities—or even the ability to rebuild compromised core systems from “bare metal.”

In October, Reuters reported that the Bank of England was pushing financial institutions further toward this type of recovery planning.

That represents a subtle but significant change in the question.

It isn't simply:

How do we stop the attack?

It's becoming:

What happens if we don't?

And:

How do we keep the system functioning afterward?

CONNECT THE DOCUMENTS

Now put the documents beside one another.

UNITED STATES

Military installations are being hardened so essential operations can continue when civilian infrastructure is disrupted.

UNITED KINGDOM

Households are being told to prepare for three days without services they normally assume will remain available.

INDIA

The prime minister publicly warns that modern conflict can weaken a country by attacking its economy and calls for stronger protection of banking infrastructure.

BANK OF ENGLAND

Financial authorities are examining recovery scenarios in which cyber defenses have already failed and multiple institutions could potentially be disrupted simultaneously.

These aren't identical programs.

They aren't even aimed at the same people.

And there is currently no public evidence demonstrating that they were coordinated.

But they share one important assumption:

CRITICAL SYSTEMS CAN FAIL.

And resilience therefore cannot begin after the failure occurs.

It has to exist beforehand.

THE SYSTEM BEHIND THE SYSTEM

This is where the story becomes bigger than individual announcements.

Modern infrastructure isn't a collection of isolated systems.

It's a network.

Consider what happens when electricity fails.

Without power, telecommunications eventually become difficult to maintain.

Without communications, electronic payments can be affected.

Fuel pumps require electricity.

Water systems depend on pumping and treatment infrastructure.

Businesses depend on payment processing.

Supply chains depend on communications, transportation and fuel.

Hospitals require electricity, communications, water, medicine and logistics simultaneously.

A serious disruption doesn't necessarily remain inside the system where it started.

It can propagate.

POWER → COMMUNICATIONS → BANKING → COMMERCE → SUPPLY CHAINS

And the dependency runs in multiple directions.

That interconnectedness is precisely why governments plan for resilience.

WHAT THIS DOES NOT PROVE

Mind Bend Theory exists to examine unusual patterns.

But a pattern isn't automatically proof of a conspiracy.

There is currently no public evidence showing that Washington, London and New Delhi are secretly preparing for the same scheduled event.

There is no verified date for a coming global blackout.

There is no public document establishing an imminent 90-day collapse of the American electrical grid.

And the Pentagon's 90-day military resilience requirement should not be interpreted as a prediction that Americans will lose electricity for 90 days.

That would go beyond the evidence.

What the evidence actually establishes is interesting enough.

Governments increasingly consider disruption of power, communications, supply chains and financial infrastructure plausible enough to justify concrete preparation.

The UK is preparing households.

The United States is hardening military infrastructure.

India is strengthening the technological backbone of its financial system.

The Bank of England is thinking about how banks recover after cyber defenses fail.

That isn't speculation.

It's in the documents.

THE QUESTION

Perhaps the most important change isn't what governments believe will happen.

It's what they're preparing to survive.

For decades, infrastructure security focused heavily on preventing failure.

The emerging model looks different:

Assume something eventually gets through.

Assume something eventually goes down.

Build the ability to continue operating anyway.

The Pentagon calls that resilience.

The UK calls it being ready.

Central banks call it operational resilience.

Different terminology.

Same fundamental question:

WHAT STILL WORKS WHEN THE SYSTEM DOESN'T?

DOCUMENT TRAIL

Read the Evidence Yourself

Mind Bend Theory strongly encourages readers to examine the original material rather than relying solely on our interpretation.

🇺🇸 DOCUMENT 01 — FORTRESS America Establishment

September 30, 2026

Defense Secretary Pete Hegseth's memorandum establishes FORTRESS America as a Department of Defense resilience program.

The publicly reported memorandum establishes the program around installation resilience, independent energy, strategic reserves, supply chains and related national-defense infrastructure.

Source type: Pentagon memorandum / official announcement.

🇺🇸 DOCUMENT 02 — FORTRESS America Implementation Memorandum

October 7, 2026

DefenseScoop obtained the memorandum from Under Secretary for Acquisition and Sustainment Michael Duffey directing officials to begin operationalizing the FORTRESS America Program Office.

It identifies five foundational pillars, including energy independence, installation hardening and cyber resilience, strategic reserves and supply-chain resilience.

Source type: Pentagon memorandum obtained by DefenseScoop.

🇺🇸 DOCUMENT 03 — 90-Day FORTRESS Requirement

October 25, 2026

Fox News reports that documents it reviewed require major continental U.S. installations to sustain essential operations for at least 90 days without outside support.

Source type: Journalistic reporting based on documents reviewed by reporters.

Important: This is not currently being presented by Mind Bend Theory as a publicly released primary 90-day Pentagon document.

🇬🇧 DOCUMENT 04 — UK Cabinet Office Be Ready Announcement

October 22, 2026

The Cabinet Office announces the three-year Be Ready campaign and describes preparation for disruption affecting power, water, phones and internet.

Source type: Official UK government publication.

🇬🇧 DOCUMENT 05 — Parliamentary Written Statement HCWS409

October 22, 2026

The UK Parliament records the government's explicit recommendation that households prepare to remain self-sufficient for three days.

Source type: Official Parliamentary record.

🇬🇧 DOCUMENT 06 — Be Ready Household Emergency Checklist

The government's practical household guidance provides recommendations for water, food, radio, lighting, medication, power banks, emergency cash and other supplies.

Source type: Official UK government preparedness guidance.

🇮🇳 DOCUMENT 07 — Prime Minister of India / RBI Cybersecurity Facilities

October 25, 2026

Official statement documenting the opening of the Reserve Bank of India's Data Centre and Cybersecurity Training Institute and Modi's warning that countries can be weakened through attacks against their economies.

Source type: Official Government of India statement.

🇬🇧 DOCUMENT 08 — “Agents of Change” — Sarah Breeden

June 30, 2026

The Bank of England deputy governor discusses rapidly advancing AI cyber capabilities, simultaneous disruption across financial institutions, separate failover infrastructure and potentially rebuilding compromised systems from bare metal.

Source type: Official Bank of England speech.

DOCUMENT 09 — Bank of England Cyber-Recovery Reporting

October 15, 2026

Reuters reports on the Bank of England's push for stronger recovery capabilities against AI-enabled cyberattacks, including bare-metal recovery.

Source type: Independent reporting.

MIND BEND THEORY

Follow the documents. Separate what they prove from what they don't.

Then ask why the preparation is happening now.

Documents attached to the investigation

FORTRESS America — Sept. 30 memorandum record
Pentagon FORTRESS America implementation memorandum — DefenseScoop
FORTRESS America 90-day documents — Fox News investigation
UK Cabinet Office — Be Ready announcement
UK Parliament — Written Statement HCWS409
India PM's Office — RBI Data Centre & Cybersecurity Training Institute
Bank of England — Sarah Breeden, “Agents of Change”
Reuters — Bank of England cyber-recovery warning

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September 13, 2026
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Revolut Leak Shows the Cost of Constant ID Collection
Revolut’s mistake is the news, but the bigger problem is the growing number of companies being encouraged or required to keep copies of our most sensitive identity documents.

Online bank Revolut has revealed that it gave out sensitive personal and financial information of an undisclosed number of its customers in response to a fake government request.

The information that was handed over to an “unauthorized third party” reportedly includes names, dates of birth, occupations, addresses, phone numbers, account numbers, transaction histories (including Bitcoin), and even copies of government-issued IDs and onboarding verification selfies.

Revolut claims that derived biometric face data was not.

The company said that the data was handed over in response to an email that came from a real government agency’s domain, but was not actually sent or authorized by that agency.

The email passed several authentication checks (SPF, DKIM, and DMARC) that are designed to establish the authenticity of a message’s origin and integrity, but do not verify the legitimacy of the legal request itself.

Revolut said that it complied with the request “under the reasonable belief that it was an authentic government agency request” – and only later found out that it was not.

Revolut said it later realized its mistake, blocked the email address, and reported the incident to the relevant authorities.

Revolut said that only a “limited” number of its customers were affected by the data leak, and that the company’s systems were not hacked, nor was any money stolen.

The story broke on September 11 when Revolut customers started receiving an email notice about a data leak, and the news was picked up by media outlets the following day.

Revolut notice explaining customer identity and financial data was shared after an unauthorized government email request.

The reason this is a recurring problem is that companies are keeping highly sensitive information about their customers’ identities, and sometimes even financial transactions, for a long time, and this data is then available to be disclosed to third parties – either in response to valid legal requests, or, as in the case of Revolut, fake ones.

One reason for this is know your customer (KYC) and anti-money laundering (AML) rules. Revolut’s current UK customer privacy notice spells it out: the company generally keeps personal data of UK customers for no more than seven years after the relationship ends, and sometimes longer – for legal reasons.

This means that even if you close your account, your identity documents don’t disappear.

And while the incident with Revolut happened in the financial sector, it’s by no means the only one that requires customers to hand over sensitive identity information. Discord, a popular chat service, said in an October 9, 2025 security update that government ID photos of approximately 70,000 users may have been exposed after a third-party customer service provider got hacked.

This was not a financial service, nor the same type of attack. But the result was similar – because the underlying business process was the same: requiring and storing sensitive identity documents. In the case of Discord, these were used to review age-related appeals.

It’s hard to do anything about a copy of your old passport, or a photo of your face, or a record of your past transactions. These can be used to identify and profile you, and can be used to carry out targeted fraud. And this can happen even if the initial disclosure didn’t result in financial loss.

The more companies are forced to collect and store such information, and the more of it they have, the more opportunities there are for this data to be leaked, either by the company itself or a third party it works with. That's what makes governments' push for more ID checks just to access ordinary parts of life so reckless.

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This Is The Income A Family Needs To Live Comfortably In Every US State

Here’s the short version of what it takes for a family of four to live comfortably in 2026 by state:

In Massachusetts, you’d need nearly $330,000 a year - the highest figure in the entire country. Only three states clear the $300,000 mark: Massachusetts, Hawaii, and California. At the other end of the spectrum, Mississippi is the most affordable at about $188,000. That’s a full $142,000 less than what you’d need in Massachusetts.

So… how much does a family of four need in your state?

This map shows the pre-tax income a household with two working adults and two kids needs to live comfortably in every U.S. state.

The numbers come from SmartAsset (as of February 2026). They’re based on the familiar 50/30/20 budget: 50% for necessities, 30% for discretionary spending, and 20% for savings or other goals. These aren’t bare-minimum survival numbers—they’re what it takes to live pretty well while still putting money aside.

And as Visual Capitalist notes, Massachusetts sits at the very top of that list. Massachusetts tops the ranking, with a family of four needing $329,555 per year to meet the 50/30/20 benchmark.

Hawaii follows at $313,165, while California ranks third at $302,682.

Rank State Income needed for family of four (2026)

  • 1 - Massachusetts - $329,555
  • 2 - Hawaii - $313,165
  • 3 - California - $302,682
  • 4 - Connecticut - $298,189
  • 5 - New Jersey - $295,110
  • 6 - New York - $291,533
  • 7 - Colorado - $283,213
  • 8 - Washington - $281,798
  • 9 - Oregon - $280,966
  • 10 - Vermont - $280,384
  • 11 - Alaska - $272,064
  • 12 - New Hampshire - $267,904
  • 13 - Rhode Island - $264,659
  • 14 - Minnesota - $263,078
  • 15 - Maryland - $257,837
  • 16 - Maine - $250,931
  • 17 - Montana - $249,434
  • 18 - Pennsylvania - $247,936
  • 19 - Illinois - $244,109
  • 20 - Virginia - $242,944
  • 21 - Nevada - $242,278
  • 22 - Indiana - $241,696
  • 23 - Wisconsin - $238,451
  • 24 - Arizona - $236,870
  • 25 - Utah - $235,789
  • 26 - Delaware - $228,134
  • 27 - Ohio - $226,221
  • 28 - Idaho - $226,054
  • 29 - Florida - $223,392
  • 30 - New Mexico - $223,142
  • 31 - Nebraska - $223,059
  • 32 - Missouri - $217,734
  • 33 - Georgia - $214,573
  • 34 - Michigan - $214,323
  • 35 - South Carolina - $212,909
  • 36 - North Carolina - $212,410
  • 37 - Wyoming - $212,410
  • 38 - Oklahoma - $211,910
  • 39 - North Dakota - $210,496
  • 40 - Kansas - $207,917
  • 41 - Iowa - $204,422
  • 42 - Texas - $203,424
  • 43 - West Virginia - $202,592
  • 44 - South Dakota - $201,760
  • 45 - Alabama - $198,931
  • 46 - Louisiana - $197,933
  • 47 - Tennessee - $197,267
  • 48 - Arkansas - $195,437
  • 49 - Kentucky - $194,854
  • 50 - Mississippi - $187,533

Connecticut, New Jersey, and New York aren't far behind, bringing the number of states with comfortable-income thresholds above $290,000 to six.

Colorado and Vermont Make the Top 10

As expected, many of the highest income thresholds are concentrated in the Northeast and along the West Coast.

However, Colorado has the seventh-highest threshold in the country at $283,213, ranking above Washington and Oregon.

Vermont rounds out the top 10 at $280,384, despite having the second-smallest population of any U.S. state. Meanwhile, nearby states like New Hampshire, Maine, and Rhode Island all fall outside the top 10.

Just Six States Come in Below $200,000

Despite the wide range in living costs across the country, only six states have a comfortable-income threshold below $200,000 for a family of four.

Mississippi ranks lowest at $187,533, followed by Kentucky. The states of Arkansas, Tennessee, Louisiana, and Alabama also fall below the $200,000 mark.

The gap between Massachusetts and Mississippi exceeds $142,000 per year, meaning the Massachusetts benchmark is about 76% higher.

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