The Rise and Future of Perp DEX: A Structural Revolution in On-Chain Derivatives
Over the past two years, one of the most significant changes in the crypto market is not a new public chain or a popular narrative, but the gradual and continuous migration of derivatives trading from centralized exchanges to on-chain platforms. During this process, Perpetual DEXs (decentralized perpetual contract exchanges) have gradually evolved from experimental products to one of the most valuable tracks within the DeFi ecosystem.
If spot trading is considered the starting point of DeFi, then perpetual contracts are becoming its true “cash flow core.”
Why Perp DEXs Are Rising
In traditional crypto trading systems, perpetual contracts have long been the primary profit source for centralized exchanges. Whether it’s trading fees, funding rates, or additional earnings from liquidations, CEXs almost monopolize the entire derivatives cash flow. For DeFi, this is not a question of “whether to do it,” but rather “whether capable of doing it.”
Early DeFi lacked the foundational conditions to support perpetual contracts. On-chain performance issues led to high trading delays and expensive Gas costs; price oracle update frequencies were low, and any leveraged product could be quickly arbitraged out. Even attempts to launch such products faced difficulties competing with CEXs in terms of user experience and risk control.
The real turning point occurred after infrastructure matured. The proliferation of Layer 2 solutions and high-performance public chains significantly improved on-chain transaction throughput and latency; next-generation oracle systems could provide faster and more stable price data; meanwhile, DeFi users, having gone through multiple cycles, are no longer just “yield farmers,” but are gradually evolving into market participants with professional trading capabilities.
More importantly, the trust crisis in centralized exchanges has become the final straw. Asset freezes, misappropriation risks, and regulatory uncertainties have led more high-frequency traders and large capital pools to reconsider the costs of “custody.” Against this backdrop, Perp DEXs offer a new possibility: reassert control over assets without sacrificing leverage and liquidity.
Essentially, the rise of Perp DEXs is a redistribution of derivatives benefits from centralized institutions to on-chain users.
Why Perpetual Contracts Are the Most Suitable Form of DeFi Derivatives
Among all derivatives, perpetual contracts are almost tailor-made for DeFi. Unlike delivery contracts, they have no expiration date and do not require frequent rollovers; compared to options, they are simpler in structure, with intuitive pricing—users only need to judge direction and leverage, without understanding complex Greeks or volatility models.
More importantly, perpetual contracts feature extremely high trading frequency. They are not “event-driven” products but infrastructure that can continuously generate trading demand. This is crucial for any protocol that relies on fees and liquidity scale.
Because of this, almost all successful Perp DEXs are designed around the same goal: enabling as frequent trading as possible while minimizing friction costs. Whether through reducing slippage, lowering latency, or optimizing liquidation efficiency, the ultimate aim is to attract more professional traders to stay long-term on-chain.
What Problems Do Perp DEXs Truly Solve
Many people simply see Perp DEXs as “decentralized versions of CEXs,” but this underestimates their significance. Perp DEXs are not copying centralized exchanges; they are reconstructing the underlying logic of derivatives trading.
First is the change in trust model. In Perp DEXs, user funds are always held by smart contracts, and the protocol itself cannot arbitrarily misappropriate assets. Risk exposure, margin, and liquidation logic are fully transparent and verifiable, meaning traders no longer need to “trust” the platform’s risk controls but can directly audit the rules themselves.
Second is the transparency of risk pricing. Centralized exchanges’ liquidations, mark prices, and funding rates are essentially black-box mechanisms. On-chain, these parameters are explicitly defined by smart contracts, and anyone can see how markets are liquidated and rebalanced.
Finally, the way profits are distributed has changed. Perp DEXs do not concentrate all trading revenue at the platform level but instead return the cash flows generated by derivatives to on-chain participants through LPs, vaults, governance tokens, and other mechanisms. This makes users both traders and potential “shareholders” of the protocol.
From this perspective, Perp DEXs are more like an on-chain risk management system rather than just a trading frontend.
How the Core Mechanism of Perp DEXs Operates
Mechanically, the evolution of Perp DEXs has undergone a clear process of specialization. Early protocols mostly adopted vAMM models, solving liquidity cold-start problems via virtual pools, but this approach tends to produce slippage on large trades and heavily relies on arbitrageurs for correction.
As trading volume grew, order book models were gradually introduced. On-chain or semi-on-chain order books allow market makers to place orders directly, significantly improving depth and price discovery. In practice, most protocols choose a compromise: off-chain matching with on-chain settlement, or combining AMMs with limit orders to balance decentralization and trading performance.
Behind these models, liquidity providers (LPs) bear the actual risk. LPs essentially bet against all traders, earning fees and funding rates while bearing market directional risk. If risk controls are poorly designed, long-term profitability for professional traders can turn into systematic losses for LPs.
Therefore, mature Perp DEXs invest heavily in liquidation mechanisms, insurance funds, and parameter tuning. Liquidation is not punishment but a necessary tool to maintain system stability. Those who can execute rapid and accurate liquidations under extreme market conditions will have the long-term survival qualification.
Where Is the True Moat of Perp DEXs
Assessing whether a Perp DEX has long-term value cannot rely solely on interface or incentives; it must be whether it has established a real moat.
Liquidity depth is the first threshold. Without stable depth, even the best mechanisms cannot attract large capital. The security of liquidation systems and oracles is the second threshold—any severe delay or error can directly shake market confidence. The third threshold is whether professional traders and market makers can be retained, which depends on latency, costs, and overall trading experience.
Ultimately, all moats point to the same question: can the protocol sustain long-term profitability without relying on subsidies? Only by generating positive cash flow can a Perp DEX become a true infrastructure rather than a short-term narrative.
How to Use Data to Assess Whether a Perp DEX Is Healthy
On the investment and research side, Perp DEXs have a relatively clear evaluation framework. The relationship between trading volume and TVL reflects capital utilization; comparing overall trader profits and LP returns can reveal whether risk controls are reasonable. Whether funding rates are stable, and whether liquidations are frequent and dispersed, are often more important than daily trading volume.
Additionally, active trader numbers and protocol revenue structure can indicate whether the platform has truly built user stickiness, rather than relying on short-term incentives to inflate data.
Risks Most Easily Overlooked in Perp DEXs
Many risks do not stem from leverage itself but from system details. Oracle delays can be amplified under extreme market conditions; liquidity can evaporate instantly during high volatility; delayed governance parameter adjustments can trigger chain reactions.
These risks do not occur daily but are often fatal once they do. Understanding these “low-frequency, high-impact” risks is a prerequisite for using Perp DEXs.
Case Study: Hyperliquid’s On-Chain Perpetual Contract “Extreme Specialization Attempt”
If most Perp DEXs start from the idea of “how to replicate CEX experience in DeFi,” Hyperliquid’s approach has been quite different from the beginning. It is not simply “building a Perp on existing public chains,” but rather, it has redesigned a complete underlying infrastructure tailored for highly specialized perpetual trading.
Hyperliquid chose to develop its own high-performance L1 / Appchain, which is a bold but logically clear trade-off: sacrificing generality for professionalism to achieve matching efficiency, latency, and risk control certainty. This also means its target users are not the general DeFi crowd but high- and mid-frequency traders who are extremely sensitive to execution quality, slippage, and capital efficiency.
In terms of trading mechanism, Hyperliquid employs a fully on-chain order book rather than vAMM or semi-off-chain matching. This is critical. An order book means the price discovery process is closer to traditional derivatives exchanges, which also demands higher system performance, liquidation engine robustness, and risk control models. Hyperliquid pre-positions liquidation and risk control at the system level rather than as post-hoc remedies, making its behavior more predictable under extreme conditions.
From on-chain data, the most insightful analysis is not a single indicator but the “relationship between multiple indicators.”
On DefiLlama, Hyperliquid maintains a very high daily trading volume / TVL ratio over the long term. This is not just “volume inflation” but a clear signal: the liquidity entering the system is being used intensively by high-frequency traders, not just sitting idle waiting for subsidies. High capital efficiency often indicates high-quality traders.
Further, analyzing active trader structures on Dune reveals that Hyperliquid’s daily and weekly active traders are not just temporarily spiked during airdrops or events but show a relatively smooth and sustained pattern. This kind of curve typically corresponds to “tool-based usage” rather than “mining participation.” For research, this is a crucial dividing line.
By combining with Nansen to observe large account behaviors, it becomes easier to understand Hyperliquid’s true moat: there are stable professional accounts actively participating, with trading strategies showing consistency rather than one-off gambles. This indicates that what is happening is not “attracting users to try,” but traders migrating their main trading venues.
From a long-term perspective, Hyperliquid’s risks are not in the product form but in the difficulty of this route itself—high-performance chains, order books, professional traders, and the high demands on operations, risk control, and system stability. But once this flywheel is spinning, user stickiness and migration costs will be far higher than typical Perp DEXs.
Who Is Suitable for Using Perp DEXs and Who Is Not
Perp DEXs are more suitable for traders with a clear risk management mindset rather than those relying on emotional trading. On-chain trading requires responsibility for your positions, with no customer service or manual intervention. Low to moderate leverage and clear stop-loss strategies are fundamental survival principles on-chain.
For LPs, this is not “risk-free yield” but a passive market-making strategy. You earn fees while also bearing the other side of market volatility.
Next Phase of Perp DEX Development
Over the past year, the evolution of perpetual contract DEX ecosystems is hard to summarize simply as “growth.” More accurately, it is a systemic restructuring of trading structures and market share. If 2021–2023 Perp DEXs are still in the product feasibility and user education stage, then 2024–2025 marks the era where efficiency begins to dominate everything. Market focus shifts from “Is decentralized perpetual feasible” to “Which structure can sustain professional trading long-term.”
From the most direct data, this change shows clear signs of centralization. According to DefiLlama’s latest stats, Hyperliquid’s perpetual contract volume in the last 30 days reached $156 billion, establishing an overwhelming lead over similar protocols. In comparison, dYdX v4’s volume was about $8.7 billion, GMX about $3.7 billion, while Aevo, which covers options and perpetuals, maintains a monthly trading volume above $15 billion. Over nearly a year, this gap is not accidental but a result of continuous accumulation, indicating user and liquidity concentration in fewer, better-structured protocols.
Further, this concentration is even more evident in revenue. Hyperliquid generated approximately $61.4 million in fees over the last 30 days, compared to GMX’s $2.66 million and dYdX’s $320,000. For the first time, the perpetual DEX track shows projects with positive feedback loops across trading volume, active users, and actual revenue, indicating this sector is no longer just “looking good on trading data,” but has real sustainable cash flow.
Expanding the view to the entire DeFi market, this shift is not isolated. In 2025, the overall DeFi ecosystem has entered a more mature stage, with perpetual DEXs adding about $7.35 trillion in new trading volume annually, a year-over-year increase of over 170%, setting new records. In contrast, spot DEX growth relies more on cross-chain rotations, with overall net expansion remaining limited. Capital structures are clearly migrating, with high-frequency, capital-efficient derivatives trading becoming one of the most critical on-chain value capture scenarios. In terms of revenue share, leading perpetual DEXs like Hyperliquid, EdgeX, Lighter, and Axiom contributed about 7%–8% of total DeFi fee income in 2025, surpassing the combined revenue of many mature sectors like lending and staking.
Meanwhile, user structures are quietly changing. The surge of short-term speculative trading driven by meme coins has cooled, and the market is returning to professional needs such as hedging, arbitrage, and high-frequency trading. Data from Aevo shows its active traders number nearly 250,000, significantly higher than most peers; dYdX’s token holders increased from 37,000 to 68,600 within a year, reflecting a gradual recovery of user stickiness after migrating to dedicated chains. It’s clear that competition among Perp DEXs is shifting from “attracting traffic” to “retaining professional users.”
At this stage, performance metrics are becoming the implicit threshold for success. Early differences among Perp DEXs were mostly in product design and incentives, but now, execution speed, system stability, and performance under extreme conditions directly determine whether high-frequency traders are willing to deploy capital long-term. Hyperliquid uses a dedicated L1 combined with CLOB architecture, achieving millisecond-level matching and extremely low latency; Aevo claims sub-10ms trading delay on its custom L2; dYdX v4, after migrating to the Cosmos chain, reduced API response latency by about 98% compared to earlier versions. In contrast, GMX, still running on Arbitrum and Avalanche, is more susceptible to network load and delays during extreme market conditions.
These differences are not just about “better experience,” but directly impact whether platforms can support genuine high-frequency and institutional-grade trading. From the past 12 months’ trading volume trends, Hyperliquid’s monthly volume has been steadily rising and has become the leader; dYdX rebounded significantly after Q2, reaching $34.3 billion in quarterly volume; Aevo shows an accelerating upward trend; GMX’s growth remains relatively steady. The revenue distribution bar chart further emphasizes this structural differentiation, indicating the market is pricing efficiency and performance based on real fee income.
In this context, the next evolution of Perp DEXs is becoming clearer. On one hand, platforms will continue evolving toward higher frequency, lower latency trading, attempting to replicate or even surpass centralized exchange matching experiences on-chain. Hybrid matching modes, state compression, and more off-chain computation combined with on-chain settlement are likely to become standard infrastructure features. On the other hand, dedicated AppChains or customized Rollups are almost certain trends; dYdX’s practice has demonstrated that specialized chains’ advantages in throughput, governance flexibility, and parameter control are especially critical for high-frequency products like perpetual contracts.
Meanwhile, the boundary between CeFi and DeFi is being redefined. dYdX’s partnership with 21Shares to launch the DYDX ETP sends a clear signal: on-chain perpetual contract liquidity is being retroactively integrated into traditional finance through compliant products. In the future, ETPs, structured products, and hedging strategies built around Perp DEXs may serve as important bridges connecting institutional capital with on-chain markets. Parallel to this, further integration of on-chain derivatives forms is underway. Aevo already supports options and perpetuals under a unified margin account, sharing risk controls and collateral—this multi-product approach significantly improves capital efficiency and hints that the next leading platforms will evolve into comprehensive on-chain derivatives hubs.
Of course, scaling does not eliminate risks. In November 2025, Hyperliquid experienced a bad debt event of about $4.9 million during extreme market conditions, prompting rapid adjustments to fee and risk parameters. Such incidents remind the market that liquidation mechanisms, insurance funds, and dynamic risk controls are key to supporting larger capital scales. As regulatory environments evolve, some perpetual DEXs will also proactively consider compliance frameworks and risk disclosures to reduce systemic uncertainties.
Overall, Perp DEXs are transitioning from the “are there users” stage to the “who can sustain professional trading long-term” stage. Future competition will no longer be just about trading volume rankings but a comprehensive contest over execution efficiency, liquidity quality, product completeness, and risk management capabilities. Early winners rely more on subsidies and narratives; but those who truly succeed in the later stage will be projects that can operate at high speed, remain robust under extreme conditions, and connect with larger financial systems. This is precisely why Perp DEXs, as core infrastructure of DeFi, are the most worthy of long-term attention.
Conclusion: Perp DEX Is the Core Infrastructure of DeFi
Perp DEXs are not just short-term trends but an inevitable core component of DeFi’s maturation. They enable derivatives trading to operate in a trustless environment for the first time and truly open up the benefits and risks to users.
In the future, the real question will not be “whether there is a Perp DEX,” but rather “which Perp DEX can survive and become the foundation of on-chain finance.”