Author: jay
Compiled by: Jiahuan, ChainCatcher
Perpetual contracts ("perps") are futures contracts that never settle. As a crypto-native innovation, they experienced a surge on-chain in 2025. Today, they have become one of the largest markets in crypto, covering traditional assets with trading volumes reaching hundreds of billions of dollars.
Last year, perpetual contract trading volume settled on top centralized exchanges reached $86.2 trillion (a 47% year-over-year increase), while on-chain perpetual contract growth was even more dramatic: leading decentralized exchanges (DEXs) achieved $6.7 trillion in trading volume (a 346% year-over-year increase). Currently, DEX trading volume accounts for approximately 7.8% of centralized exchange (CEX) volume, up from around 2.5% just over a year ago. [Note: Although a few U.S.-regulated centralized platforms offer products similar to perpetual contracts to U.S. investors, all centralized and decentralized exchanges restrict U.S. investors from trading actual perpetual contracts.]
But more importantly, perpetual contracts are gradually shedding their status as niche crypto primitives and beginning to demonstrate a fundamental transformative power over trading behavior and market structure.
So, what is driving the popularity of perpetual contracts? Why now? This section explores why global traders are increasingly favoring perpetual contracts, the market’s scale opportunities, and the opportunities seen by builders.
A Brief History and Evolution of Perpetual Contracts
The idea itself is actually older than the crypto industry. Theoretically, perpetual contracts existed as early as 1993, when Nobel laureate Robert Shiller proposed perpetual futures contracts, initially envisioning them as a tool to hedge against real estate value risk. However, it wasn’t until 2016, with the rise of BitMEX and the XBTUSD (the longest-running Bitcoin perpetual swap contract), that perpetual contracts gained widespread adoption in the crypto space.
Today, ten years later, modern exchanges offer perpetual contracts covering stocks, indices, commodities, interest rates, startup valuations, and even the price of NVIDIA H100 GPUs.
For years, perpetual contracts have been a billion-dollar revenue engine for centralized exchanges. As retail demand for leverage continues to grow, perpetual contracts have become the primary venue for short-term price discovery, liquidity, and trading activity—on many major Asian centralized exchanges, their trading volume is several times that of spot trading.
Over the past year and a half, decentralized perpetual exchanges have begun to substantially erode the perpetual contract market share of centralized exchanges. Leveraging their structural advantage of self-custody, perpetual DEXs are rapidly closing the gap with CEXs in terms of liquidity, performance, and features tailored for active traders.
With breakthrough successes from perpetual DEXs like Hyperliquid, leading crypto wallets and apps have begun supporting perpetual contracts, delivering high-quality trading experiences that reach millions of users. In the second half of 2025, the frontend of perpetual DEXs experienced explosive growth—ranging from casual mobile apps to sophisticated multi-exchange trading terminals.
In particular, Hyperliquid has expanded the boundaries of what DEXs can offer through HIP-3 (Builder-Deployed Perpetuals). This mechanism allows anyone to launch perpetual markets on the exchange without permission. With HIP-3, builders can list nearly any asset and earn a 50% fee share while managing their own oracles and risk parameters.
Meanwhile, new entrants and competitors such as Avantis, Lighter, Ostium, and Variational have emerged or accelerated their product development. Increasing competition has forced perpetual DEXs to differentiate in exchange design, market structure, asset support, and permissionlessness, while also enabling some platforms to achieve strong product-market fit in new categories such as perpetual contracts on real-world assets (RWA).
For years, perpetual contract traders speculated solely on crypto assets—BTC, ETH, SOL, and various long-tail altcoins. But at the end of last year, as perpetual contract trading volume cooled significantly from recent peaks amid broader crypto market sell-offs, RWA perpetual contracts began to gain momentum. A handful of perpetual DEXs listed commodities, stocks, and stock indices, expanding the range of tradable assets to include private companies such as NVIDIA, Samsung, and SpaceX, as well as commodities like silver and palladium.
This year, RWA perpetual contracts have experienced rapid growth. In recent weeks, RWA accounted for as much as 44% of Hyperliquid’s total trading volume, and RWA trading pairs have now firmly established themselves as one of the exchange’s top fee-generating pairs. On Ostium, RWA has dominated the majority of the platform’s trading volume for months.
Decentralized exchanges have also excelled in price discovery for RWAs such as crude oil, especially during weekends when traditional exchanges are closed.
With the rise of RWA perpetual contracts, we are seeing an increasing number of companies developing products and services related to perpetual contracts. In just the past six months, new exchanges, trading interfaces, market makers, and liquidity providers have emerged.
Players entering this space include entirely new startups, startups transitioning to perpetual contracts, and some of the world’s largest fintech companies integrating perpetual trading into their existing products.
All these diverse players are coming together for the same opportunity: perpetual contracts have the potential to become one of the dominant trading instruments in global finance.
Market opportunities for perpetual contracts
Taking a step back to examine traditional finance (TradFi), options are among the largest and most actively traded markets globally. They exist in currencies, stocks, indices, commodities, and ETFs, serving as powerful and versatile tools that enable traders to take positions based on a wide range of predictions: timing, volatility, price ranges, and more.
However, when examining retail trading behavior more closely, it becomes evident that a significant amount of activity is concentrated in a specific category of options: short-term, leveraged, directional exposure. A prominent example is 0DTE (zero-day-to-expiry options)—traders use these to gain high-leverage, intraday returns at a low cost.
This type of trading is one of the fastest-growing categories of options. In 2025, daily trading volume for 0DTE SPX (S&P 500 Index) options reached 2.3 million contracts, a 51% year-over-year increase, accounting for 59% of total SPX options volume. In response to this demand, the market has introduced several new daily-settled index products, including CBTX and MBTX Bitcoin ETF index options, as well as options on the equally weighted Cboe Magnificent 10 Index.
Therefore, despite options having many complex applications—such as structured hedging, volatility trading, discrete trading, and convexity (referring to the asymmetric payoff profile: your maximum loss is fixed, but potential gains are theoretically unlimited)—the massive and growing retail capital flow is essentially seeking short-term, leveraged directional exposure. This exact type of exposure is what perpetual contracts are best suited to fulfill.
Trade-offs are real: options excel at defined risk and convex payoffs and remain the default tool for expressing volatility. Traders can lose at most the premium they pay. With perpetual contracts, the entire collateral position may be liquidated. However, for the directional leverage that most retail traders truly seek, perpetual contracts offer several structural advantages:
- Always online. The latest generation of perpetual markets offers 24/7 trading with no trading hours restrictions or market closures. Continuous access is an expected norm for a global, crypto-native user base.
- No strike price, no expiration date, no rollover. With a single continuous position, traders do not need to select parameters daily or weekly, manage expirations, or reposition. They can hold for seconds, months, or theoretically forever.
- Simpler risk exposure. For perpetual contracts, the primary considerations are price, collateral, and liquidation threshold. For options, even if your directional judgment is correct, you may still incur losses due to time decay, changes in implied volatility, and path dependency. Perpetual contracts eliminate these complexities—trading is a pure expression of directional conviction.
- Capital efficiency of continuous exposure. Short-term options require upfront payment of the full premium and repeated rollovers. Perpetual contracts require margin—typically only a small fraction of the notional value—which generally offers higher capital efficiency for intraday to multi-day directional positions.
Options do not disappear. They have long been a part of financial history and are likely to remain dominant in a significant portion of trading use cases, particularly those involving defined risk and more complex payoff structures. However, for the vast and growing flow of capital seeking Delta-1 directional leverage, perpetual contracts have captured trillions of dollars in trading volume and billions of dollars in revenue.
This raises a question: as perpetual contracts evolve from niche tools to mainstream trading primitives, at which layer of the technology stack will value accumulate?
In traditional markets, the most valuable companies are often built on top of exchange infrastructure, rather than the exchange layer itself. For example, the retail brokerage Robinhood has a higher market capitalization than the Nasdaq exchange underlying it.
Whether this model still holds in the crypto space—whether platforms like Hyperliquid, Lighter, or Ostium can build sufficiently strong network effects at the exchange level—is one of the most interesting open questions in the field.
Regardless, builder activity is rapidly expanding. We are seeing developer growth in the following areas:
- Customized distribution layer: Vertical or audience-specific frontends that not only present markets but also bundle narratives, strategies, gamification, or social touchpoints.
- Market creators and operators (e.g., HIP-3 deployers): Operate a popular market on Hyperliquid, allowing deployers to essentially own a "mini-exchange" without building the most complex exchange infrastructure. Today’s deployers have likely only scratched the surface of what data or price elements could be "perpetualized" in the future.
- Professionalized liquidity provision: Market makers focused on tail markets, event-driven order books, and cross-site inventory management.
- Perpetual-specific data infrastructure: An ecosystem of community-driven dashboards, block explorers, heatmaps, and analytical tools has emerged around positions, funding rates, liquidations, trader signals, leverage exposure, and retention cohorts. More mature, high-quality, real-time data will make the entire ecosystem more transparent and efficient for all participants.
Of course, there remain significant open questions and challenges, including distribution, liquidity depth on new trading platforms, oracle reliability as the asset universe expands, inevitable extreme events ("10/10" events), and regulation (which currently restricts U.S. investors from accessing these products). As perpetual swaps graduate from the crypto-native bubble and step onto the global financial stage, these are expected growing pains. As the perpetual swaps ecosystem matures, the question is no longer whether perpetual swaps can scale, but who will build the most valuable applications and infrastructure around them when they do.