Author: Pantera Capital
Compiled by: Jiahuan, ChainCatcher
Perpetual futures (or "perpetual swaps") are gradually becoming one of the dominant trading instruments in global financial markets. They are evolving from a crypto-native phenomenon into a fundamental shift in market structure that traditional investors can no longer ignore.
The concept itself is not new. Today, the infrastructure supporting it has caught up, especially in the on-chain realm of decentralized finance. And just last week, the U.S. regulatory system began formally embracing it, as the Commodity Futures Trading Commission (CFTC) took a series of actions.
Advantages of Perpetual Swaps
The first formal futures market was the Dojima Rice Exchange established in 1730, aimed at helping Japanese rice farmers hedge crop price risks. External speculators realized they could trade these contracts with margin and leverage, making directional bets on rice prices without needing physical delivery of rice (cash settlement).
Capitalism has worked as usual. To this day, futures cover all major asset classes (commodities, foreign exchange, equities), and most futures trading is related to leveraged, directional bets.
A perpetual swap is a futures contract that never expires. Instead of an expiration date, it uses a funding rate: a small fee (e.g., hourly, or most commonly every 8 hours on crypto exchanges) paid periodically between longs and shorts.
When the perpetual swap price is too high relative to the spot price, longs pay shorts; when the price is too low, shorts pay longs. Basis arbitrageurs step in to anchor the contract price to the spot price.
The lack of an expiration date sounds like a simple design choice, but it offers significant benefits compared to existing derivatives (e.g., dated futures and options): easier to manage from an execution standpoint, easier to understand from a risk perspective, and natively supporting 24/7 trading.
From a practical execution perspective, perpetual swaps require less management than traditional futures. Traditional futures have expiration dates (e.g., monthly), which is why they are often called "dated futures."
To hold a position over a longer period, traders must constantly roll from one contract to the next, sometimes managing a series of contracts with different maturities, each with its own basis between futures and spot.
Perpetual swaps simplify this complexity into a single continuous position with no expiration, thus no need to roll. Traders can hold for a few seconds or, in theory, forever, without worrying about trade management.
From a risk management perspective, perpetual swaps are also easier to understand than other derivatives. Dated futures require a view on a specific time horizon. With options, which also have specific expiries, traders can be right on direction but still lose due to time decay or changes in implied volatility.
Perpetual swaps strip away this complexity, allowing traders to express their beliefs more directly, almost entirely (though not completely) based on price.
Perpetual swaps also never stop; they trade 24/7 with no market hours or weekend closures. This generation of internet-native users lives in a globally connected, always-on economy. For them, continuous access is not an add-on feature but a default expectation.
Driven by these market demands, traditional exchanges are already moving in this direction. Extrapolating the current trend, perpetual swaps would be the natural choice.
Considering their origins, dated futures feel somewhat antiquated. For the directional leveraged exposure most participants want, perpetual swaps are a more natural instrument, offering all the aforementioned advantages.
Digital Assets Laid the Groundwork for Perpetual Swaps
The design of perpetual swaps is not new and dates back to a 1993 paper by Nobel laureate Robert Shiller. However, the existing market structure of traditional exchanges created too much friction for them to gain popularity.
The digital asset industry, unburdened by legacy systems, created an environment for perpetual swaps to thrive in an internet-native way. The specific mechanisms making perpetual swaps work were first solved at scale by BitMEX in 2016 for trading Bitcoin, and BitMEX achieved remarkable growth with this innovation.
Perpetual swaps subsequently gained immense traction. In 2025, the total trading volume of perpetual swaps on centralized exchanges reached $62 trillion. This is many times the roughly $19 trillion spot trading volume and constitutes the majority of the $86 trillion total derivatives trading volume, indicating a market preference for perpetual swaps over options.
For much of their history, perpetual swaps traded on centralized exchanges (CEX). A more recent and interesting story is their migration on-chain to decentralized exchanges (DEX).
There were many early attempts with varying degrees of success, most notably GMX and Synthetix using a pool-based trading model, and dYdX using a central limit order book and a dedicated blockchain, but all struggled to match centralized platforms in latency, liquidity, and user experience.
Hyperliquid has elevated DEX perpetual swaps to a new level, significantly increasing the market share of on-chain perpetual swaps. DEX perpetual swap volume has reached 14% of CEX perpetual swap volume, up from less than 1% when Hyperliquid first launched in early 2023.
The Rise of Hyperliquid
Hyperliquid is the largest decentralized perpetual swap exchange, accounting for roughly 40% of on-chain perpetual swap volume. It was conceived by Jeff Yan, a Harvard Math 55 alumnus and former high-frequency trader who previously ran a low-profile market-making firm, Chameleon Trading, for several years.
The collapse of FTX was the catalyst for building Hyperliquid. Yan pivoted his trading team to create a decentralized alternative to the centralized exchanges that had just failed their users, while also recognizing that existing blockchains were too slow for professional on-chain trading.
The team built its own Layer 1 blockchain tailored for trading and launched it globally in late February 2023. One notable change included adding a speed-bump-like feature to prevent the most aggressive high-frequency trading firms from exploiting market makers, sacrificing short-term volume for healthier growth.
To solve the cold-start problem all exchanges face, the team bootstrapped liquidity by opening their proprietary trading algorithms to the public, allowing anyone to participate via an on-chain vault called HLP (Hyperliquidity Provider).
Offering this high-performance strategy for free to the public had the added benefit of winning over the community, whose members became consistent advocates, further driving Hyperliquid's growth.
Concerned about regulatory uncertainty in the U.S. regarding decentralized finance and perpetual swaps, they also moved to Singapore in the spring of 2024. This was one of many significant losses the U.S. suffered due to its previous regulatory stance, which is now being corrected.
With a high-density talent core team, the stakeholder-alignment spirit representing the best ideas in crypto, and incredible execution, Hyperliquid has surpassed competitors to become the largest and most profitable decentralized perpetual swap exchange today, with monthly trading volume exceeding $250 billion and annualized revenue reaching $800 million.
Hyperliquid's trading volume continues to grow, and its share of volume relative to centralized exchanges increases over time.
From Digital Assets to "Containing All Finance"
Hyperliquid's growth accelerated this year as it expanded beyond crypto-native assets into equities, commodities, indices, and private companies. Jeff Yan describes this vision as "containing all finance" on a single platform.
Hyperliquid has two blockchain-native attributes that helped it successfully expand its scope to traditional assets typically traded on conventional exchanges. First, as a decentralized exchange, Hyperliquid is open by default 24/7, including weekends and holidays. In contrast, traditional exchanges like the New York Stock Exchange (NYSE) or CME Group (CME) are open only five days a week.
The second attribute is that Hyperliquid is permissionless, meaning any third party can quickly list assets people most want to trade. The listing market is not limited to the imagination of Hyperliquid's core team.
Permissionless listings were unlocked by Hyperliquid Improvement Proposal 3 (HIP-3), a framework allowing any third party to permissionlessly launch new perpetual swap markets, incentivized by a share of trading fees. An independent group operating under the trade.xyz brand has been the most active deployer.
Consequently, the Hyperliquid platform can adapt quickly, attracting trading volume on whatever asset is currently hottest, even when traditional markets are closed, with remarkable results. On-chain perpetual swaps are becoming a parallel, always-on derivatives platform starting to meaningfully compete with traditional infrastructure.
The most obvious evidence appears during moments of stress outside traditional trading hours. When gold and silver prices took off in late 2025, Hyperliquid was the only platform trading these assets over the weekend, including the moment China announced changes to silver trading collateral requirements. Silver briefly reached 2% of global derivatives volume at its peak.
When conflict with Iran started on a Saturday morning in late February, Hyperliquid was the only platform where people could trade oil that weekend, with daily crude oil volume surging (Editor's note: the specific figure is missing in the original text here).
When oil futures opened on Sunday evening, the opening price was exactly where oil perpetual swaps were already trading on Hyperliquid. Oil trading reached 2% of global oil derivatives volume at its peak.
A month later, a fully licensed S&P 500 perpetual contract saw first-day volume exceed $100 million. Traditional assets sometimes account for up to 40% of Hyperliquid's trading volume, a number that was essentially zero at the end of 2025.
Mainstream Attention Begins
Hyperliquid's appeal has garnered mainstream attention this year. We increasingly hear traditional asset hedge funds referencing Hyperliquid prices and even considering trading on the platform to react more promptly to world events.
Hyperliquid is becoming the exchange for price discovery when all other markets are closed. This doesn't just mean weekends; increasingly, it applies to pre-IPO private companies as well.
On the day of Cerebras's IPO (the largest IPO year-to-date), the banks underwriting the IPO were monitoring prices on Hyperliquid. A circulated photo shows a banker's screen displaying the Hyperliquid trading interface before the open.
Traditional Wall Street exchanges are also taking notice. On May 27, at Bernstein's Strategic Decisions Conference, Intercontinental Exchange (ICE) founder and CEO Jeffrey Sprecher called Hyperliquid "bigger than Nasdaq" and noted ICE had met with its founders several times.
Just two weeks ago, reports emerged that ICE and CME were lobbying regulators to restrict Hyperliquid, indicating they view it as a genuine competitive threat. The significance is that one of the world's major exchange operators is now publicly acknowledging Hyperliquid as a serious competitive challenge, not a fringe experiment.
Public equity markets have also shown interest. Hyperliquid Strategies Inc. (NASDAQ: PURR) is a digital asset treasury ("DAT") dedicated to Hyperliquid, with Pantera as a cornerstone investor. The company holds HYPE on its balance sheet, chaired by former Barclays CEO Bob Diamond with David Shamis as CEO.
The two have taken the case for HYPE directly to mainstream U.S. financial media, including CNBC's Squawk Box and Bloomberg, bringing traditional finance pedigree and credibility to this crypto-native asset, thereby raising its profile.
As of June 1, 2026, PURR is up over 200% year-to-date and is one of the few DATs consistently trading at a premium to net asset value, hinting at strong demand.
The next catalyst to watch is the SpaceX IPO, reportedly targeted for later this month. There is a SpaceX perpetual swap on Hyperliquid, offering traders a way to express pricing expectations for the company before its Nasdaq listing opens to public equity investors.
As of June 1, 2026, SpaceX is currently trading on Hyperliquid at around $200 per share, higher than the rumored level bankers were hoping to price the stock.
Every market participant is watching this IPO, and it's reasonable to expect that Elon Musk, the well-known "hardcore internet addict" and crypto-supportive SpaceX CEO, might prompt bankers and potential investors to consider SpaceX's trading on Hyperliquid, significantly boosting the platform's visibility.
How Big Can This Get?
Hyperliquid is an on-chain protocol with a token-based capital structure. HYPE is the native token through which Hyperliquid's protocol economics accumulate value, most notably via the platform's programmatic buyback mechanism utilizing 99% of revenue, a capital allocation strategy akin to many stocks with fundamental value.
The investment case for Hyperliquid rests on several pillars:
Large and Growing Total Addressable Market: Hyperliquid is a disruptive platform targeting an attractive and expanding end market. Perpetual swaps are an innovative product that better serves a large set of investors than traditional derivatives, historically monetized with highly attractive trading fees. As Hyperliquid expands from crypto-native markets to its "contain all finance" goal, its TAM multiples.
Strong Execution and Scale Flywheel: The protocol captured significant market share by scaling faster and more successfully than previous iterations of decentralized perpetual exchanges. In this market, scale creates a flywheel advantage: higher trading volumes drive order book liquidity, which continually improves user experience and attracts more capital.
Superior Product Experience: Hyperliquid delivers a premium user experience by operating on a custom Layer 1 blockchain built for derivatives trading. User feedback consistently highlights that the platform is far superior to other DEXs and competes directly with major CEXs on speed and user experience.
Direct and Strong Token Holder Value Accrual: Crucially, these strong fundamentals translate directly into protocol profitability and token value. Hyperliquid generates $800 million in annualized revenue, with nearly all of it directed into its programmatic token buyback mechanism. This creates exceptionally tight alignment between protocol growth and token holder value.
Looking at the bigger picture, Hyperliquid's total addressable market (TAM) is roughly $10 trillion in daily notional trading volume. Currently, tools investors use for simple, highly leveraged directional exposure include 0DTE options and leveraged ETF equity trading, around $200 billion daily.
Commodity derivatives trade $2 trillion daily, and Hyperliquid has proven it can make inroads, especially on holidays and weekends. FX derivatives trade about $8 trillion daily and are almost entirely untapped on-chain, representing a massive blue ocean opportunity.
Sustainably capturing a low single-digit percentage of this combined volume implies potential revenue 5x today's, with valuation potentially expanding similarly.
Nevertheless, it's important to recognize that Hyperliquid faces real risks. The biggest risk Hyperliquid faces is regulation. Perpetual swaps are currently not freely tradeable in the U.S., though trends are emerging to legalize and list them.
Hyperliquid is a decentralized exchange, meaning it has no KYC requirements. While it geofences U.S. users, it's not impossible to imagine ways to bypass this.
If perpetual swaps are legalized in the U.S., Hyperliquid would face a more competitive landscape and could lose volume share from U.S. users migrating to regulated platforms. A mitigating factor is that Hyperliquid could also launch a regulated U.S. version of its exchange, as other platforms have done.
Regulatory Developments Open the Door
The single biggest constraint on perpetual swap growth in the U.S. has been regulation, and this uncertainty is what pushed Hyperliquid's team offshore to Singapore. Americans have had no access to true perpetual futures, with both centralized and decentralized platforms geofencing U.S. users.
That began to change last week. The CFTC approved Kalshi's application for a Bitcoin-based perpetual futures contract on its U.S.-registered exchange, and its staff separately cleared the way for Coinbase to offer certain crypto perpetual swaps through foreign affiliates as foreign futures.
The main line is that the CFTC has opened a pathway for regulated crypto perpetual swaps under the existing futures framework, rather than requiring entirely new rules.
Some policy advocates argue that the absence of perpetual swaps in the U.S. was more a commercial accident of what existing firms chose to list than a deliberate regulatory choice, and there was never a fundamental reason the CFTC couldn't approve them. If and when exchanges apply to list more perpetual swaps, the CFTC now only needs to act to clarify this.
The harder question is what it would take to bring decentralized perpetual swaps to U.S. users, and the path here is less clear. A centralized participant could register as a U.S. exchange today, and we've already seen others like Coinbase and Kalshi wanting to list true perpetual swaps.
For a permissionless on-chain protocol, the Commission would need to expand exemptions to include waivers for the requirement that derivatives trade on registered exchanges and rules about who can access certain contracts.
Both the SEC and CFTC hold innovation-friendly stances and have previously made statements supporting the view that "nothing in the core stack of an on-chain protocol inherently requires registration." However, reconciling permissionlessness and lack of KYC with legitimate concerns about sanctions and market integrity will require some work.
Perpetual swaps started on the fringes of crypto, where market structure evolved fastest. Perpetual swaps are now moving to the center of global finance. The recent CFTC actions don't resolve all regulatory questions, especially for permissionless on-chain platforms, but they do signal an important shift.
The U.S. is beginning to embrace this product rather than reject it. Hyperliquid sits at the center of this shift. It combines the best attributes of DeFi—open access, 24/7 markets, transparent settlement, and high alignment of interests—with a product that looks increasingly better suited for modern trading than its competing instruments.
The question is no longer whether perpetual swaps matter outside of crypto; the market has answered that.
The question is whether the infrastructure built first by the blockchain industry can become the place where more and more risk is priced, traded, and price is discovered for the rest of finance.
