What are Perpetual Futures?

In the ever-evolving landscape of cryptocurrency trading, beginners often find themselves navigating through spot markets as their primary avenue for investment. However, amidst this bustling market, a distinctive financial instrument has emerged: perpetual futures. Unlike traditional spot markets, perpetual futures offer leveraged exposure to underlying assets without the constraint of expiration dates. Remarkably, the volume traded in perpetual futures exceeds that of the spot market, underscoring its significance in the crypto ecosystem. Moreover, perpetual futures pave the way for innovative trading strategies exclusive to the realm of crypto assets, which not only expands trading opportunities, but also fuels the exploration of novel approaches to risk management.

Building upon this foundation, we've built up Blast Futures Exchange (BFX) as a new beacon of hope and innovation, following the challenges faced by platforms like FTX.

Motivations for building

The surge in the development of decentralised perpetual future exchanges can be attributed to several compelling factors, rooted in the unique advantages offered by this innovative financial infrastructure. Thus, propelled by the promise of enhanced accessibility, security, and financial innovation, numerous teams are fervently spearheading the development of Perp DEXs to provide solutions to several issues:

Risk Mitigation

The FTX scandal vividly highlighted the vulnerabilities inherent in centralised exchanges and served as a glaring reminder of the issues that persist. Perp DEXs present a viable solution to the increasing concerns about the stability and security of centralised exchanges. By decentralising the exchange structure, counterparty risk is reduced, ensuring that traders are not overly reliant on a single entity’s solvency or integrity. Historically, existing Perp DEXs have had a good track record as compared to other DeFi protocols, and this is particularly appealing in the face of frequent security breaches and regulatory uncertainties surrounding centralised platforms.

Leveraged Trading Demand

The crypto market has a strong appetite for leveraged trading, and Perp DEXs could potentially help meet this demand in a decentralised setting. They allow traders to engage in leveraged transactions without the need for traditional centralised intermediaries, offering greater flexibility and control. In addition, perpetual DEXs often offer higher leverage than CEXs do. These aspects align with the decentralised ethos of the broader DeFi world, appealing to traders who value autonomy and less reliance on centralised control. The data below shows the sheer quantity of leveraged trades as compared to spot trades on CEXs.