Onchain perps surge as dominance shifts

Decentralised derivatives trading on public blockchains has crossed a defining threshold, with on-chain perpetual futures volumes touching about $12 trillion over the past year as traders migrated from centralised venues to faster, cheaper and more transparent rails. Data compiled across major protocols show that activity more than tripled through the year, with monthly volumes cresting near $1.8 trillion in October, underscoring how on-chain markets have matured from a niche experiment into a core part of global crypto trading.

Perpetual futures, contracts without expiry that track spot prices, have long been dominated by offshore centralised exchanges. What changed was the convergence of technical upgrades and trader demand for non-custodial execution. New matching engines, improved oracle designs and cross-margining systems narrowed the performance gap with centralised platforms, while regulatory pressure in several jurisdictions pushed professional traders to seek alternatives that did not require asset custody or opaque risk management.

Hyperliquid emerged as the most visible beneficiary early in the cycle, building a proprietary high-throughput chain and an order-book-based perpetuals exchange that attracted market-makers accustomed to centralised venues. For much of the year it commanded a clear majority of on-chain perps activity, at times handling more volume than all rivals combined. Its rise demonstrated that sophisticated traders were willing to deploy capital on decentralised infrastructure when latency and liquidity constraints were addressed.

That dominance, however, did not hold. Competitive pressure intensified as new protocols launched with differentiated approaches. Lighter focused on ultra-low fees and aggressive incentives to seed liquidity. Aevo expanded its product range beyond perps into options, drawing hedgers and arbitrage desks. dYdX, following its migration to a standalone chain, rebuilt volumes with a renewed emphasis on decentralised governance and professional-grade tooling. GMX retained a loyal base of traders seeking simpler pooled-liquidity models, while Solana-based Jupiter leveraged its ecosystem reach to scale perpetuals rapidly.

By the final quarter, market share had fragmented. Hyperliquid remained a leading venue but no longer enjoyed a near-monopoly. Several platforms each captured meaningful slices of daily volume, creating a more competitive landscape that resembled traditional derivatives markets rather than a winner-takes-all structure. Traders benefited from tighter spreads and deeper liquidity, while protocols competed on execution quality rather than headline incentives alone.

A shift in onchain futures power also reflected broader trends in crypto market structure. High-frequency traders and proprietary firms increasingly deployed capital directly on-chain, integrating smart-contract risk into their models. At the same time, retail participation grew through mobile-friendly interfaces and composable wallets that simplified leverage management. The presence of both cohorts helped stabilise order books and reduce volatility during periods of heavy flow.

Risk management remained a central concern. Liquidations on on-chain perps are transparent and rule-based, reducing the uncertainty that has plagued some centralised venues during stress events. Yet the speed of cascades can be unforgiving, and protocols invested heavily in insurance funds, dynamic margining and circuit breakers. The absence of discretionary intervention, while appealing to many traders, placed a premium on robust code and conservative parameters.

The regulatory backdrop also influenced adoption. While decentralised protocols do not operate as traditional intermediaries, uncertainty around offshore exchanges prompted funds and desks to reassess counterparty exposure. On-chain trading, with assets held in self-custody and positions settled programmatically, offered a different risk profile that appealed to compliance teams navigating an uneven global rulebook.

Economically, the growth of on-chain perps reshaped token incentives and fee flows. Protocols generated substantial revenue from trading fees, some of which accrued to token holders through buy-backs or staking rewards. This reinforced a feedback loop where higher volumes supported token valuations, which in turn funded further development and liquidity programmes.