Ondo’s DeFi lead explains why perpetual futures keep growing

Core Insights - Perpetual futures, or perps, are derivatives contracts that allow traders to take leveraged positions on assets without an expiration date, differing from traditional futures which require rolling over contracts [1][2] Group 1: Structure and Appeal of Perpetual Futures - The structure of perps has contributed to their popularity in crypto markets, as they eliminate the need for constant management of expirations while still providing leverage and risk hedging capabilities [2][3] - The appeal of perps is linked to addressing inefficiencies in traditional futures markets, which were originally designed for physical delivery and hedging [3][4] - In traditional futures markets, a significant portion of trading volume is now focused on leveraged exposure rather than physical delivery, leading to operational overhead from rolling positions [5] Group 2: Efficiency and Market Dynamics - Perpetual futures improve market efficiency by trading continuously and aligning with spot markets through a funding mechanism that balances long and short positions [6] - The absence of an expiry date allows traders to maintain exposure without the need for constant contract management, fostering new trading strategies in crypto markets [7] - The demand for long positions in crypto markets can lead to attractive funding rates for traders willing to hedge their spot exposure, making perps valuable for both directional bets and risk management [7]