On-Chain Perpetuals: How Design Choices Are Shaping the Next Growth Cycle

Author: Castle Labs | Compiled by Deep潮 TechFlow DeepChain Perpetual futures have become the dominant product in crypto trading. Across major venues, perpetual volume now runs at 4.7x spot and represented more than 82% of total crypto trading volume over the past 30 days. Even so, activity remains heavily concentrated on centralized exchanges: roughly $4.56 trillion in perpetual volume over the last 30 days versus $614.5 billion on decentralized exchanges, leaving DEXs with only about a 13% share. This briefing reviews how on-chain perpetual venues have evolved across architecture, market structure, and go-to-market strategy, and why the next leg of growth is increasingly tied to real-world assets (RWAs). ### Why perpetuals matter more as on-chain markets broaden Perpetuals let traders maintain leveraged price exposure without holding the underlying asset. For highly liquid crypto assets such as BTC and ETH, the product's fit has been clear for years. As more asset classes move on-chain, the utility expands: perpetuals are shifting from a leverage tool for crypto to a way to access exposures that were previously unavailable in a 24/7, permissionless environment. ### Early leaders: dYdX and GMX took very different paths The first wave of on-chain perpetuals was led by dYdX and GMX, and their original design DNA remains visible. **dYdX: app-chain control, but added friction** dYdX chose a central limit order book and migrated from StarkEx to its own Cosmos SDK application chain, aiming for greater control, higher decentralization, and fully autonomous infrastructure. Strategically, the move increased flexibility at the protocol level. For traders, it also added friction: crosschain bridging, more complex fund management, and a more complicated onboarding process. The transition also introduced operational challenges, including downtime and validator delays. Governance dynamics further slowed iteration and created trust issues—including the decision to shut down the token crosschain bridge while token holders still had liquidity and assets outstanding. **GMX V1: GLP bootstrapped liquidity, but bundled risk** GMX V1 popularized the GLP model: a dynamically balanced pool (ETH, BTC, stablecoins, etc.) that acts as the counterparty to all trades. GLP helped solve early liquidity constraints, but it is not a clean long-term market structure. Liquidity providers absorb trader P&L, asset exposure, and inventory imbalance risk, while also paying fees. Scaling becomes difficult because every new market adds risk to the same pool. Open interest limits, fee design, oracle choices, and pool composition all constrain long-tail expansion. GLP was never built for long-tail assets and works best for large-cap, highly liquid markets. In 2025, GMX V1 also suffered a $40 million hack tied to a reentrancy vulnerability, further weakening depositor confidence. GMX later shifted away from GLP toward V2 and GLV to improve flexibility and capital efficiency. Pool-based approaches remain generally less flexible than order books for rapid market expansion, though several newer protocols continue to adapt the model, including Hyperliquid's Hyperliquidity Provider (HLP) and Variational's Omni Liquidity Provider (OLP). ### DEX share is rising, but the real story is inside the category On-chain perpetuals still trail CEXs by a wide margin, largely because early designs could not scale liquidity to institutional-grade volumes. Even so, the DEX share of perpetual volume climbed from 4% in 2024 to more than 13% today, peaking in December 2025 at over 14.25%. Volume acceleration began in late 2024, aligning with the launch and breakout of Hyperliquid. Since 2026, growth has also been supported by two reinforcing trends: (1) RWAs becoming tradable via perpetuals and (2) a proliferation of new venues, including Lighter, Variational, Extended, Entropy, and many others. Since Hyperliquid's debut, more than 261 decentralized perpetual exchanges have launched. ### Competitive landscape: open interest concentration around Hyperliquid Hyperliquid remains the clear leader among decentralized perpetual venues, holding over 56% of total open interest. Next are Aster (9.7%), Variational (6.2%), and Lighter (5.7%). The market briefly saw Lighter overtake Hyperliquid in November 2025, but Hyperliquid quickly reasserted leadership. End-2025 marked the all-time monthly open interest peak, followed by a cooldown into 2026. The leadership shift also reflects a broader repositioning of the category: listing and trading RWAs is becoming a primary differentiator. ### TradeXYZ and the RWA breakout: crude oil as the proof point A major driver of Hyperliquid's visibility beyond crypto is TradeXYZ, which supports asset listings that were previously not tradable on-chain, enabling 24/7 access. At its peak, this segment represented 50% of Hyperliquid's total trading volume. Crude oil (CL) became the flagship example. During the Iran crisis, the United States launched an attack on Iran over a weekend when traditional venues were closed. TradeXYZ was the only place where crude oil could be traded. Over three weeks, CL on TradeXYZ progressed from an early market into a venue capable of supporting hedging activity for traditional finance participants. Funds such as Abraxas have since become vocal advocates of RWA trading on TradeXYZ. TradeXYZ maintains continuous trading through explicit boundary mechanisms: during non-trading hours, price moves are constrained to within ±(1 / maximum leverage) of a reference price. Early testing saw CL hit the 5% boundary, halting trading over the weekend. The system has since evolved to use "reanchoring": when price approaches a trigger condition near the boundary, the market resets around a new reference price to sustain price discovery. The institutional relevance shows up in market composition. As of September 10, 2026, seven of the top ten assets by perpetual trading volume are RWAs. The Nasdaq 100 Index and gold lead this set, together generating over $1.4 billion in 24-hour volume and more than $850 million in open interest. ### Hyperliquid's flywheel: from a DEX to an integrated trading stack Hyperliquid's growth has been powered by more than volume. Its airdrop-style TGE and its shift from a single venue into a broader ecosystem aim to position it as the "AWS of liquidity." This reframed what on-chain perpetual venues can be. Before Hyperliquid, on-chain perpetual DEXs were often treated as lower-custody, lower-quality replicas of CEX products: weaker execution, poorer UX, thinner liquidity. Hyperliquid pushed the category toward a full trading platform by assembling a unified stack: - **HyperCore**: high-performance trading layer for spot and perpetuals - **HyperEVM**: native builder environment - **HIP3**: builder-deployed perpetual markets, moving listings toward a permissionless model - **HIP4**: outcome markets suitable for prediction and option-like instruments - **Builder code**: external frontends can route order flow and monetize distribution - **HLP**: liquidity provider vault enabling passive market-making participation - **RWA frontends (e.g., TradeXYZ)**: bring off-chain exposures into the same trading environment This modular design enables portfolio margin across the platform, supporting more advanced strategies: combining spot and perpetual exposures across crypto and RWAs, providing liquidity, and hedging event risk. Hyperliquid also launched a manual lending feature last week, allowing anyone to deposit HYPE or BTC to borrow USDC and USDT. ### Revenue, distribution, and token alignment Hyperliquid has generated cumulative revenue exceeding $1.24 billion. Importantly, revenue is not limited to perpetuals: spot markets, auctions, priority burns, and HyperEVM gas fees also contribute, keeping $HYPE at the center of the growth loop. HLP was critical early on as a native liquidity layer that reduced reliance on external market makers and created a retention path for passive participants. Unlike GMX's GLP, HLP was designed to be more active than a static basket, consistent with Hyperliquid's positioning as a venue for diverse strategies. As HyperCore liquidity deepened, HLP became less foundational and was gradually phased out, though it has shown renewed activity since mid-August 2026, with plans to move idle HLP USDC into lending to reduce idle capital. The model has faced stress tests. One notable case was the JELLY event in March 2025, when a trader attempted to squeeze the market by pushing up the spot price while holding both short and long exposure. HIP3 and builder code also changed the platform's scaling dynamics. Under HIP3, Hyperliquid is no longer the sole decision-maker on which markets matter: builders can acquire trading codes via auction and deploy perpetual markets inside the protocol, with fees flowing to the token. Builder code extends distribution by allowing wallets and apps to integrate Hyperliquid's trading engine as a white-label backend. This channel has produced over $40 billion in trading volume in the past 24 hours, accounting for 7.4% of total volume. Phantom and MetaMask opted to integrate rather than build from scratch, generating over $25 million in revenue for Phantom and over $10.5 million for MetaMask. HIP4 expands the surface area further through binary outcome markets, opening routes into event markets, prediction markets, and options. A key structural element is token alignment. Hyperliquid directs 95% of all protocol fees to repurchasing HYPE. To date, it has bought more than $1.26 billion of HYPE on the open market. ### What it means for the sector On-chain perpetuals are still early, but open interest is at historic highs and the pace of iteration is accelerating. The ecosystem has moved from earlier leaders such as dYdX and GMX toward Hyperliquid, Variational, and Lighter. Architectural experimentation is converging around a new growth lever: RWA perpetuals. TradeXYZ illustrates the clearest adoption narrative so far: bringing traditional assets on-chain and enabling 24/7 trading, including periods when traditional markets are closed, as seen during the Iranian attacks earlier this year. Much of the current momentum traces back to Hyperliquid, which controls over 56% of on-chain open interest and has turned trading activity into broader distribution, token alignment, and a reinforcing flywheel. We have expanded coverage across protocol designs in the perpetual futures landscape and conducted microstructure research comparing execution quality on CEXs and DEXs. See the full report here.