Perpetual futures, or "perps", are derivatives with no expiry date. Popularised by BitMEX from 2016, they have gradually established themselves as the dominant category of crypto derivatives, far outstripping spot volumes. Their main attraction lies in the possibility of using leverage without maturity constraints.
Spot trading volume compared with that of perp contracts - Source : Kaiko To maintain alignment with the market price, perps rely on a "funding" mechanism.
When the perp price is higher than the spot price, long positions pay shorts; the opposite occurs when the spot is higher. Funding is adjusted at regular intervals (every eight hours on Binance or every hour on Hyperliquid, for example).
Historically, this mechanism has mainly favoured shorts, with the majority of traders speculating on a rising market. During euphoric phases, the cost of maintaining long positions increases sharply.
Evolution of fundings, source: CryptoQuant This success makes perps an important source of revenue for platforms, since they concentrate the bulk of traded volumes.
For a long time, this battle was fought solely between centralised exchanges (CEX), with decentralised alternatives (DEX perps) remaining marginal.
A brief history of DEX perps dYdX was the first to attract significant interest. Its V2 version, deployed as a layer 2 of Ethereum, saw a peak in activity at the end of 2021 with the launch of its token and mass distribution to traders proportional to the volumes generated. Some of this activity was artificial and the hype quickly died down, until it became more pronounced when the protocol migrated to its own blockchain in 2023.
>> Hyperliquid, dYdX, Jupiter, Vertex: the comparative of the best DEX Perp
GMX, launched on Arbitrum, took a different approach by replacing the order book with a liquidity pool that acted as a counterparty. This model quickly ensured sufficient liquidity. After the collapse of FTX in November 2022, GMX attracted many users looking for alternatives to CEX. But the limitations of the pool model and the team's lack of responsiveness slowed its progress.
Finally, it was Hyperliquid, launched in early 2023, that marked a breakthrough. After steady growth in 2024, business exploded following the airdrop of the HYPE token in November.
There are several factors behind its boom: a small team drawn from high-frequency trading, a massive redistribution of value via the airdrop, a continuously improving product and compromises made to make the user experience smoother.
Today, Hyperliquid is the first DEX perp to compete directly with the CEXs: its open interest is now on a par with that of incumbent players such as Kraken (90%)
Volumes of derivatives on major exchanges vs Hyperliquid, source: Hypeflows Perp DEX vs CEX: two different architectures Traders are looking for secure, reliable and liquid platforms. Ideally, they should offer a wide range of assets and complementary services. But CEXs and perp DEXs do not offer the same compromises on these different aspects.
Security Regulated CEXs are supposed to protect their users. In practice, however, there have been a number of flaws, including calls to order by regulators, the collapse of FTX and the recent hack of Bybit.
DEX perp reduce some of this risk, as users retain custody of their funds and can withdraw them at any time. Activity and deposits are also verifiable in real time. On the other hand, the main risk is that of a vulnerability in the protocol code.
Some CEXs nevertheless offer external custody solutions via Copper, Ceffu or Fireblocks, reserved for a minority of institutional users. In practice, the security of CEXs is based on the law, while that of perp DEXs is based on code.
Reliability and performance The most established CEXs offer great technical robustness: few interruptions and the ability to absorb large volumes with low latency.
In contrast, perp DEXs have long suffered from the technical limitations of blockchains. Networks saturated quickly, transactions were slow and users could be subjected to MEV (maximal extractable value) attacks.
>> Read our dossier devoted to MEV
To overcome these constraints, perp DEX were installed on layer 2s with a single sequencer, or on blockchains operated by a small number of co-located validators. This is the case with Hyperliquid, whose validators are based in Tokyo, close to Binance's servers, making arbitrage easier for market makers.
Liquidity Liquidity remains a central issue. Platforms need to reduce spreads and have sufficient volumes to absorb orders. Market makers play a key role here: by placing buy and sell orders simultaneously, they ensure market depth while capturing the price spread.
A platform must attract both market makers and users. This virtuous circle tends to concentrate activity on a few dominant players, with Binance becoming the main place where prices are formed.
To attract market makers, CEX and perp DEX offer discounts, sometimes even negative fees. Hyperliquid goes further by prioritising the cancellation of maker orders over taker orders in order to limit exposure to so-called toxic orders.
In addition, some perp DEX now deploy vaults that act as market makers, offering depositors a return while improving liquidity. However, these strategies carry risks of loss.
>> Hyperliquid: are the criticisms justified?
Specific benefits of perp DEX Perp DEX operate in an uncertain regulatory environment that allows them to operate where perps are prohibited to retail investors, often without KYC procedures. Listing new tokens is also quicker, with no prior audit. But this situation could change with tighter controls, particularly on interfaces that remain centralised.
They also benefit from strong interoperability with DeFi. Integrated directly into wallets, aggregators or lending protocols, they extend their reach without having to develop these ancillary services themselves.
Hyperliquid illustrates this logic: its protocol is integrated into Phantom, Rabby or Infinex, which offer perps trading directly in their applications. The platforms benefit from pooled liquidity, while the applications monetise their user base.
The future of competition The latest developments in DEX perps show that it is now possible to offer a trading experience comparable to that of CEX. Users no longer need to sign each transaction, manually pay network fees or wait for an order to be executed. Centralised and decentralised platforms no longer present themselves as two distinct universes: they now find themselves in direct competition to attract users and liquidity.
At this stage, only Hyperliquid has passed the milestone of critical size. The other perp DEXs have yet to confirm their momentum and prove that they can maintain sustained activity once their tokens have been distributed. To analyse this growth, open interest appears to be a more relevant indicator than volumes, which are often artificially inflated.
The transparency of blockchains represents another challenge. It makes trading strategies and liquidation thresholds visible, an aspect that the founder of Hyperliquid presents as an opportunity, highlighting the benefits in terms of trust and market surveillance.
For their part, CEXs are expanding their offering by integrating building blocks from DeFi, such as lending or spot on-chain. Eventually, some could even host DEX perp developed on their own blockchains, further strengthening the convergence between the two models.
