Over the past two years, one of the most significant changes in the crypto market has not been a new public chain or a popular narrative, but the gradual yet steady migration of derivatives trading from centralized exchanges to on-chain platforms. In this process, Perpetual DEX (Perpetual Contract Decentralized Exchange) has evolved from an experimental product into one of the most valuable sectors within the DeFi ecosystem.
If spot trading was the starting point of DeFi, then perpetual contracts are becoming its true "cash flow core."
1. Why Perp DEX Rose to Prominence
In the traditional crypto trading system, perpetual contracts have long been the most important source of profit for centralized exchanges. Whether it's trading fees, funding rates, or additional gains from liquidations, CEXs have almost monopolized the entire derivatives cash flow. For DeFi, this was not a matter of "wanting to do it" but rather "having the capability to do it."
Early DeFi lacked the foundational conditions to support perpetual contracts. Insufficient on-chain performance led to high transaction latency and expensive Gas costs, while low-frequency price oracle feeds made any leveraged product vulnerable to rapid arbitrage. Even with attempts, it was difficult to compete with CEXs in terms of user experience and risk management.
The real turning point came with the maturation of infrastructure. The proliferation of Layer 2 solutions and the emergence of high-performance public chains significantly improved on-chain transaction throughput and latency issues; a new generation of oracle systems provided faster and more stable price data; meanwhile, DeFi users, tempered by multiple market cycles, evolved from mere "yield farmers" into market participants with professional trading capabilities.
More importantly, the trust crisis surrounding centralized exchanges became the final straw that broke the camel's back. Asset freezes, misappropriation risks, and regulatory uncertainties led more high-frequency traders and large capital holders to reassess the cost of "custody." In this context, Perp DEX offered a new possibility: regaining asset ownership without sacrificing leverage and liquidity.
Fundamentally, the rise of Perp DEX represents a redistribution of derivatives红利 (profits) from centralized institutions to on-chain users.
2. Why Perpetual Contracts Are the Ideal Derivative for DeFi
Among all derivatives, perpetual contracts are almost tailor-made for DeFi. Compared to delivery contracts, they have no expiration date and do not require frequent rolling over; compared to options, they have a simple structure and intuitive pricing—users only need to judge direction and leverage without understanding complex Greeks or volatility models.
More importantly, perpetual contracts exhibit extremely high trading frequency. They are not "event-driven" products but rather infrastructure that can continuously generate trading demand. This is crucial for any protocol that relies on fee income and liquidity scale.
Because of this, almost all successful Perp DEXs design their products around the same goal: to make trading as frequent as possible while minimizing friction costs. Whether by reducing slippage, decreasing latency, or optimizing liquidation efficiency, the ultimate aim is to attract more professional traders to stay on-chain long-term.
3. What Problem Does Perp DEX Truly Solve?
Many people simplistically view Perp DEX as a "decentralized version of a CEX," but this underestimates its significance. Perp DEX is not replicating centralized exchanges; it is reconstructing the underlying logic of derivatives trading.
First, there is a change in the trust model. In Perp DEX, user funds are always custodied by smart contracts, and the protocol itself cannot arbitrarily misappropriate assets. Risk exposure, margin, and liquidation logic are all publicly verifiable, meaning traders no longer need to "trust" the platform's risk control but can directly audit the rules themselves.
Second, there is the transparency of risk pricing. Liquidations, mark prices, and funding rates on centralized exchanges are essentially black-box mechanisms. On-chain, these parameters are clearly defined by contracts, and anyone can see how the market is liquidated and rebalanced.
Finally, there is a change in profit distribution. Perp DEX does not concentrate all trading profits at the platform level but instead feeds the cash flow generated by derivatives back to on-chain participants through LPs, Vaults, governance tokens, etc. This allows users to be both traders and potential "shareholders" of the protocol.
From this perspective, Perp DEX is more like an on-chain risk management system than just a trading front-end.
4. How the Core Mechanism of Perp DEX Operates
From a mechanistic standpoint, the evolution of Perp DEX has undergone a clear process of professionalization. Early protocols often used the vAMM model, which addressed liquidity cold-start issues through virtual liquidity pools. However, this approach was prone to slippage in large trades and heavily relied on arbitrageurs for price correction.
As trading volume grew, the order book model was gradually introduced. On-chain or semi-on-chain order books allowed market makers to place orders directly, significantly improving depth and price discovery capabilities. In practice, most protocols opt for a compromise: off-chain matching with on-chain settlement, or combining AMM with limit orders to balance decentralization and trading performance.
Behind these models, it is the liquidity providers (LPs) who ultimately bear the risk. LPs are essentially betting against all traders, earning fees and funding rates while assuming directional market risk. If the protocol's risk control is poorly designed, the long-term profits of professional traders will eventually translate into systematic losses for LPs.
Therefore, mature Perp DEXs invest heavily in liquidation mechanisms, insurance funds, and parameter adjustments. Liquidation is not a punishment but a necessary means to maintain system stability. Those who can execute liquidations quickly and accurately during extreme market conditions earn the right to long-term survival.
5. Where is the Moat of Perp DEX?
To judge whether a Perp DEX has long-term value, one must look beyond the interface or incentives and assess whether it has built a real moat.
Liquidity depth is the first threshold; without stable depth, even the best mechanisms cannot attract large capital. The liquidation system and oracle security form the second threshold; any significant delay or error can directly shake market confidence. The third threshold is the ability to retain professional traders and market makers, which depends on latency, fees, and the overall trading experience.
Ultimately, all moats point to the same question: can the protocol generate long-term profits without relying on subsidies? Only by forming positive cash flow can Perp DEX become genuine infrastructure rather than a short-term narrative.
6. How to Use Data to Assess the Health of a Perp DEX
From a research perspective, Perp DEX has a relatively clear evaluation framework. The relationship between trading volume and TVL reflects capital utilization efficiency. Comparing overall trader profits and losses with LP returns can reveal whether risk control is reasonable. Stable funding rates and frequent but dispersed liquidations are often more important than single-day trading volume.
Additionally, the number of active traders and the structure of protocol revenue can indicate whether the platform has truly built user stickiness, rather than relying on short-term incentives to inflate metrics.
7. The Most Overlooked Risks in Perp DEX
Many risks do not come from leverage itself but from systemic details. Oracle delays can be amplified during extreme market conditions; liquidity can dry up instantly during high volatility; untimely adjustments to governance parameters can trigger chain reactions.
These risks don't occur daily, but when they do, they are often fatal. Understanding these "low-frequency, high-impact" risks is a prerequisite for using Perp DEX.
Case Study: Hyperliquid's "Professionalized Extreme Attempt" at On-Chain Perpetuals
If most Perp DEXs start from the point of "how to replicate the CEX experience in a DeFi environment," Hyperliquid's approach was different from the beginning. It wasn't about "building a Perp" on an existing public chain but rather redesigning the entire underlying infrastructure specifically for the highly specialized scenario of perpetual contract trading.
Hyperliquid's choice to develop its own high-performance L1 / Appchain was essentially a very aggressive but logically clear trade-off: sacrificing generality for professionalism to achieve matching efficiency, latency, and risk control certainty. This also determined that its target users are not general DeFi users but mid-to-high-frequency traders extremely sensitive to execution quality, slippage, and capital efficiency.
In terms of trading mechanism, Hyperliquid uses a fully on-chain Orderbook, not vAMM or semi-off-chain matching. This is crucial. An Orderbook means the price discovery process is closer to traditional derivatives exchanges and also implies significantly higher requirements for system performance, the liquidation engine, and the risk model. Hyperliquid front-loads liquidation and risk control to the system level rather than remedying issues事后, making its behavior during extreme markets more predictable.
From an on-chain data perspective, what is most worth studying about Hyperliquid is not any single metric but the "combined relationship" between metrics.
On DefiLlama, you can observe that Hyperliquid maintains a very high daily trading volume / TVL ratio over the long term. This isn't just the result of "wash trading" but a clear signal: the liquidity entering the system is being used frequently and intensively, not sitting idly in pools waiting for subsidies. High capital efficiency often indicates high-quality traders.
Further breaking down the active trader structure on Dune reveals that Hyperliquid's daily and weekly active users don't just spike briefly during airdrops or events but show a relatively smooth, sustained state. This type of curve usually corresponds to "tool-based usage," not "farming-type participation." For research, this is a very important watershed.
Combining this with Nansen to observe large account behavior makes it easier to understand Hyperliquid's real moat: there are stable, participating professional accounts within the system, whose trading behavior shows strategic consistency rather than one-off gambling. This means what's happening on Hyperliquid is not "attracting users to try it out" but traders migrating their primary trading venue.
From a long-term perspective, Hyperliquid's risk lies not in its product form but in the inherent difficulty of this route—high-performance chain, Orderbook, professional traders place extremely high demands on operations, risk control, and system stability. But once this flywheel starts spinning, its user stickiness and migration costs will be far higher than those of a typical Perp DEX.
8. Who is Suited for Using Perp DEX, and Who is Not
Perp DEX is more suitable for traders with a clear sense of risk management, not those who operate on emotion. On-chain trading means you are responsible for your own positions—there is no customer service or manual intervention. Low to medium leverage and clear stop-loss strategies are basic survival rules for on-chain trading.
For LPs, this is similarly not "risk-free yield" but a passive market-making strategy. You earn fees while also bearing the other side of market fluctuations.
9. The Next Phase of Perp DEX
The changes experienced by the perpetual contract DEX ecosystem over the past year can no longer be simply概括 (summarized) as "growth"; a more accurate description would be a systematic restructuring of trading structure and market share. If Perp DEX in 2021–2023 was still in the product feasibility and user education stage, then 2024–2025 is the period where efficiency begins to dominate everything. Market focus has rapidly shifted from "is decentralized perpetual trading feasible?" to "which structure can sustainably support professional-grade trading?"
Starting with the most直观 (intuitive) data, this round of changes shows clear concentration characteristics. According to the latest statistics from DefiLlama, Hyperliquid's perpetual contract trading volume in the last 30 days reached $156 billion, already forming an overwhelming advantage in scale compared to similar protocols. For comparison, dYdX v4's volume was about $8.7 billion, GMX about $3.7 billion, while Aevo, which covers both options and perpetuals, maintained a monthly trading volume above $15 billion. Extending the time dimension to the past year, this gap is not a sporadic event but the result of continuous accumulation, indicating that users and liquidity are concentrating towards a few structurally superior protocols.
This concentration trend is even more evident on the revenue side. Hyperliquid generated approximately $61.4 million in fee revenue in the last 30 days, while GMX generated about $2.66 million and dYdX only $320,000. For the first time, the perpetual contract DEX sector has a project forming a positive feedback loop simultaneously across trading volume, active users, and real revenue, meaning the sector is no longer just about "good-looking trading data" but truly possesses sustainable cash flow capability.
Zooming out to the entire DeFi market, this change is not an isolated phenomenon. The DeFi ecosystem in 2025 entered a more mature stage overall. Perpetual contract DEXs saw approximately $7.35 trillion in new trading volume for the year, a year-on-year increase of over 170%, hitting a historical high. In contrast, spot DEX growth relied more on cross-chain rotations, with overall net expansion being relatively limited. A clear migration in capital structure is underway; high-frequency, capital-efficient derivative trading is becoming one of the core value capture scenarios on-chain. In terms of revenue share, top perpetual DEXs like Hyperliquid, EdgeX, Lighter, and Axiom collectively contributed about 7%–8% of total DeFi fee revenue in 2025, a proportion that has already surpassed the sum of several mature sectors like lending and staking.
Simultaneously, user structure is also quietly changing. The large amount of short-term speculative trading driven by Meme coin mania is gradually cooling down, and the market is returning to professional demand dominated by hedging, arbitrage, and high-frequency trading. Data released by Aevo shows its platform's number of active traders is close to 250,000, significantly higher than most similar protocols; meanwhile, the number of DYDX token holders in the dYdX ecosystem grew from 37,000 to 68,600 over the year, also reflecting its process of gradually restoring user stickiness after migrating to its own chain. It can be seen that the competition among Perp DEXs is shifting from "attracting流量 (traffic)" to "retaining professional users."
In this phase, performance metrics are becoming the隐性 (implicit) threshold that determines victory or defeat. The differences between early Perp DEXs were more evident in product design and incentive mechanisms. Now, trade execution speed, system stability, and performance during extreme market conditions directly determine whether high-frequency traders are willing to deploy capital long-term. Hyperliquid's architecture, using a dedicated L1 plus CLOB, achieves millisecond-level matching and extremely low state latency; Aevo claims trade latency is below 10ms on its customized L2; dYdX v4, after migrating to its Cosmos-based appchain, saw its response latency decrease by about 98% compared to the early version. In contrast, GMX, which still runs on Arbitrum and Avalanche, is more susceptible to network load and latency impacts during extreme volatility.
These differences are not just a matter of "good or bad experience" but directly affect the platform's ability to承载 (carry) real high-frequency and institutional-grade trading. The trading volume trend chart over the past 12 months clearly shows Hyperliquid's monthly volume持续抬升 (continuously rising) and forming an absolute lead; dYdX明显复苏 (clearly recovered) after Q2, with Q4 single-quarter volume reaching $34.3 billion; Aevo shows an accelerating upward trend; while GMX's growth is relatively平稳 (stable). The revenue distribution bar chart further amplifies this structural differentiation, indicating the market is pricing efficiency and performance with real fees.
Against this backdrop, the next phase of Perp DEX evolution is becoming clearer. On one hand, platforms will continue to evolve towards higher frequency and lower latency trading forms, attempting to replicate or even surpass the matching experience of centralized exchanges on-chain. Hybrid matching models, state compression, and more combinations of off-chain computation with on-chain settlement are likely to become standard future infrastructure. On the other hand, the proliferation of dedicated AppChains or custom Rollups is almost a certain trend; dYdX's practice has proven that the advantages of dedicated chains in throughput, governance flexibility, and parameter controllability are particularly critical for high-frequency products like perpetual contracts.
Meanwhile, the boundary between CeFi and DeFi is being redefined (redefined). dYdX's collaboration with 21Shares to launch a DYDX ETP sends a clear signal: the liquidity of on-chain perpetual contracts is渗透 (seeping) back into the traditional financial system through compliant products. In the future, ETPs, structured products, and hedging strategies built around Perp DEXs may become important bridges connecting institutional capital to on-chain markets. Parallel to this is the further integration of on-chain derivative forms. Aevo already supports both options and perpetual contracts under a unified margin account. This model of multiple products sharing risk control and margin significantly improves capital efficiency and suggests that the leading platforms of the next phase are more likely to evolve into comprehensive on-chain derivatives hubs.
Of course, scale expansion does not mean risk disappears. In November 2025, Hyperliquid experienced a bad debt event of approximately $4.9 million during extreme market conditions and subsequently adjusted fees and risk parameters quickly. Such events remind the market that liquidation mechanisms, insurance funds, and dynamic risk control capabilities will be key to carrying larger-scale capital. As the regulatory environment changes, some perpetual DEXs will also actively consider compliance frameworks and risk disclosure mechanisms to reduce systemic uncertainty.
Overall, Perp DEX is moving from the stage of "is anyone using it?" to "who can sustainably support professional trading?" Subsequent competition is no longer just a比拼 (contest) of trading volume rankings but a comprehensive contest围绕 (revolving) around execution efficiency, liquidity quality, product completeness, and risk management capability. The winners of the first half relied more on subsidies and narratives; the protocols that truly emerge in the second half will inevitably be those that can run fast enough, remain robust during extreme conditions, and possess the ability to connect with the larger financial system. This is precisely why Perp DEX, as core DeFi infrastructure, is most worthy of long-term attention.
Conclusion: Perp DEX is Core DeFi Infrastructure
Perp DEX is not a short-term trend but an essential component必然出现 (inevitably emerging) in the maturation process of DeFi. It enables derivatives trading to operate for the first time in a trustless environment and truly opens profits and risks to users.
In the future, what truly matters is not "whether there is a Perp DEX" but "which Perp DEXs can survive and become the foundation of the on-chain financial system."
