Perp DEX daily volume hits $11.31 billion

Products track unlisted firms, Korean blue chips

Experts warn: 'This is a price bet, not a stock'

The perpetual futures — or "perp" — market, which originated in the digital asset space, is growing rapidly. Products that track the price of unlisted companies such as SpaceX have recently emerged. [Image generated with ChatGPT]
The perpetual futures — or "perp" — market, which originated in the digital asset space, is growing rapidly. Products that track the price of unlisted companies such as SpaceX have recently emerged. [Image generated with ChatGPT]

When SpaceX listed on Nasdaq, a college student in his 20s identified only as A did not open his brokerage app. Instead, he logged on to the decentralized exchange Hyperliquid, deposited USDC through a linked personal wallet, and took a position in SPCX — a perpetual futures contract on SpaceX that had been trading even before the company's formal initial public offering. "I put in less than 1 million won ($651) because I'm a student, but with 10x leverage my actual position was close to 10 million won," he said. "I made about $40 in profit, but the volatility was frightening."

A's experience reflects a broader trend. Perpetual futures — known as "perps," short for perpetual futures — originated in the digital asset market but have expanded well beyond bitcoin and ether to track traditional equities and even unlisted companies, drawing a growing number of investors to overseas exchanges. Industry observers say high leverage, 24-hour trading, and a fast listing process have been the main drivers of the perp market's expansion.

Q: What are perps, and how do you trade them?

A: A perp is a derivative in the form of a futures contract with no expiry date. Traditional futures have a fixed maturity and settlement date, but perps allow traders to hold a position indefinitely. Instead of a settlement date, the gap between the perp price and the underlying asset's spot price is managed through periodic funding payments exchanged between holders of long (buy) and short (sell) positions. Investors can bet on price moves in either direction without owning the underlying asset, and depending on the exchange, they can apply significant leverage.

To trade perps, investors must deposit stablecoins such as USDC as margin. Profit and loss are realized by opening and closing derivative positions. For example, a trader who shorted SPCX expecting its price to fall can close the position once the price drops and pocket the gain.

The range of assets covered by perps is broad — from commodities such as gold and silver to individual equities. Products tracking major Korean blue chips including SK Hynix, Samsung Electronics, and Hyundai Motor have also appeared. While retail investors face limited leverage access in the domestic stock market, digital asset exchanges offer products on these same names with leverage of up to 20 times. Trading volumes are not trivial: as of 8:21 a.m. Monday, 24-hour volume on Hyperliquid for perps tracking SK Hynix and Samsung stood at $55.66 million and $7.21 million, respectively.

Perps have spread across both centralized exchanges (CEX) and decentralized exchanges (DEX). Since BitMEX introduced the product in 2016, major CEXs including Binance, Bybit, OKX, and Coinbase have all entered the market. Binance Research found that average daily trading volume in perps tracking traditional financial assets such as equities and commodities grew from about $3 billion in January to about $8.6 billion in March.

Growth on the DEX side has also been striking. Global asset manager VanEck said Hyperliquid processed $633 billion in trading volume in the first quarter of this year alone — more than six times the volume recorded in the second quarter of 2024. Hyperliquid's share of the on-chain perp market climbed from around 20 percent in the fourth quarter of last year to 26 percent in the first quarter of this year, recovering from a dip after an October peak. VanEck projected the figure would reach 32 percent in the second quarter.

Perp trading volume now rivals the spot market. According to DeFiLlama, the 24-hour trading volume across perp DEXs stood at $11.31 billion as of 8:59 a.m. Monday — ahead of the $8.49 billion in 24-hour spot trading volume for ether on CoinMarketCap at the same time. Daily perp volume has thus surpassed spot volume for top-tier digital assets by market capitalization. The gap with bitcoin's spot trading volume of $15.73 billion was also relatively narrow.

Q: Why has the perpetual futures market grown more popular than spot trading?

A: Market observers point to strong demand for high leverage and the speed with which new products can be listed as the key drivers of perp market growth. Yoon Seung-sik, head of research at Tiger Research, said geopolitical tensions have increased volatility in commodities such as gold and crude oil, stoking demand to trade them. "Leverage-based trading is more readily available in futures than in spot markets, and that has attracted investor attention," he said.

The relative ease of creating new perp products is another factor. "A standard spot listing takes a long time because of due diligence and procedural requirements, but perps track prices, so they can be brought to market comparatively quickly," Yoon said. "The low barrier to listing is one of the reasons the market has grown."

Some analysts argue that the spot market's move closer to the regulated mainstream has paradoxically boosted demand for derivatives. In Ho, director of the Blockchain Research Institute at Korea University, said that after US regulators approved spot bitcoin exchange-traded funds, institutional money flowed in and price volatility declined — pushing investors seeking short-term, high-multiple returns toward derivatives instead. "Spot trading has become less profitable due to fee competition, while perpetual futures generate both trading fees and funding fees, so exchanges are aggressively expanding their derivatives offerings," In said.

The digital asset market's round-the-clock trading culture has also contributed to the spread of perps. Unlike traditional futures with fixed expiry dates, perps allow positions to be held indefinitely, and investors anywhere in the world can trade without time restrictions — a trading habit already ingrained in the digital asset market that has now extended into derivatives.

Some caution, however, that rising futures volume should not be automatically read as a sign of market maturity. Cho Jae-woo, director of the Blockchain Research Institute at Hansung University, said that while institutional use of futures for hedging can support market stability and maturity, high-leverage futures products accessible only to retail investors could have the opposite effect.

The "wag the dog" phenomenon — where the tail (the futures market) wags the body (spot prices) — is another risk to watch. Yoon said that in theory futures prices should follow spot prices, but when futures volatility is extreme, price dynamics in the futures market can feed back into the spot market. "Bitcoin has recently been heavily influenced by the futures market," he said.

Q: Perps now cover unlisted companies — what should investors watch out for?

A: SpaceX has been central to the recent surge of attention on the perp market. Coinbase made Elon Musk's space company the first pre-IPO perp product it listed, and recently announced at a service revamp event that it plans to add Anthropic and OpenAI soon. Overseas exchanges are increasingly broadening their perpetual futures offerings to cover companies that have not yet gone public.

Pre-IPO perps are, however, fundamentally different from investing in actual unlisted shares. What an investor gains is not equity, voting rights, dividend rights, or an IPO allocation — it is price exposure to an estimate of a company's value. Unlisted companies such as OpenAI and Anthropic do not disclose sufficient financial information, and the secondary markets where their private shares trade have limited liquidity. As a result, pre-IPO perp prices are better understood as reference prices reflecting market expectations and limited transaction data, rather than a true valuation of the company.

Kim Jong-seung, chief executive of Xcrypton, said pre-IPO perpetual futures are best understood as synthetic derivatives on the value of unlisted companies. "These products are meaningful in that they let you observe market expectations about an unlisted company's value, but the price can diverge significantly from the actual IPO price or the post-listing share price," he said.

Pre-IPO perps are also distinct from tokenized real-world assets (RWA). In said that RWA products such as BlackRock's BUIDL are backed by real assets and operate within a structure that recognizes legal ownership. "Pre-IPO perps, by contrast, are closer to price-betting products that borrow the name of a well-known company," he said.

Experts advise investors to examine the rights structure before putting money into such products. Kim said that buying a perp does not give the investor any equity stake in the underlying company, and investors should not generally expect their position to automatically convert into shares if the company lists.

How the price is determined is equally critical. "Listed stocks have prices formed on public exchanges, but unlisted companies often lack a clear reference price," Kim said. "When funding-round valuations, secondary market transactions, broker asking prices, and oracle data are all mixed together, it becomes very difficult for investors to verify the basis for price movements."

Liquidity and liquidation risk also warrant attention. Low-volume products make it hard to close a position at a desired price, and leverage means even a small price move can trigger forced liquidation. "Investors should check the trading platform, who carries out liquidations, how collateral is managed, how prices are calculated, and whether funding fees are transparent," Kim said.


kyoung@heraldcorp.com