Abstract
Stock perpetual contracts, as an innovative product connecting traditional financial markets and the crypto derivatives system, are reshaping the on-chain trading landscape at an astonishing pace. We will delve into the product essence, growth logic, technical architecture, and market ecosystem of this emerging track, and systematically analyze its regulatory challenges and future prospects. Research finds that stock perpetual contracts are not simply a conceptual innovation, but a structural opportunity built upon the global stock market's market capitalization of over $160 trillion, combined with the mature trading paradigm of perpetual contracts. Currently, leading Perp DEXs such as Hyperliquid, Aster, and Lighter have taken the lead in building a complete stock perpetual product matrix, forming a clear leading advantage in trading depth, user experience, and asset coverage. However, regulatory uncertainty remains the biggest constraint on this track, and the exploration of product compliance paths will directly affect its long-term development potential.
From a trend perspective, perpetual stocks are expected to drive the evolution of the on-chain derivatives market from native crypto assets to "full asset perpetuality," becoming a potential growth engine with a trillion-dollar scale. I. Product Essence: A Structural Integration of Traditional Assets and On-Chain Derivatives The essence of a perpetual stock contract is an on-chain synthetic derivative anchored to the price fluctuations of traditional stocks. Users can gain long or short exposure to the price movements of US stocks such as Apple, Tesla, and Nvidia by depositing stablecoin margin, without actually holding the stocks themselves or enjoying shareholder rights such as dividends and voting rights. This product design cleverly combines the asset base of the traditional financial market with the mature perpetual contract mechanism of the crypto market, creating a new type of financial instrument that retains the risk characteristics of stock prices while possessing the flexibility of on-chain trading. From a product positioning perspective, it is essential to clearly distinguish the fundamental differences between perpetual stock contracts and tokenized stocks (RWA Stock Tokens). Tokenized stocks are typically held by custodian institutions who actually hold the corresponding shares and issue tokenized certificates representing real equity on-chain. Their legal attributes and regulatory framework are highly consistent with traditional securities. Stock perpetual contracts, on the other hand, do not involve any equity relationship. They only track stock prices through oracles and build a pure price risk trading market on-chain based on funding rates, margin requirements, and liquidation mechanisms. This difference puts them on completely different tracks: the former is a custody and transfer solution for on-chain assets, while the latter is a derivative innovation for risk trading. The rise of stock perpetual contracts is not accidental, but the result of multiple factors. From the demand side, global users have a long-suppressed demand for US stock trading—traditional brokerage account opening processes are cumbersome, cross-border capital flows are restricted, and trading hours are fixed, which contrasts sharply with the "24/7, stablecoin settlement, high leverage and flexibility" trading habits of crypto users. Stock perpetual contracts provide users with an alternative path to bypass the traditional financial system and directly participate in US stock price fluctuations. From the supply side, since 2025, the maturity of oracle technology, the widespread adoption of high-performance blockchain infrastructure, and the fierce competition within the Perp DEX have provided the technological foundation and market impetus for the commercialization of perpetual stock contracts. More importantly, perpetual stock contracts stand at the intersection of two major narratives: "Real-World Assets (RWA)" and "On-Chain Derivatives." They possess both the substantial financial base of traditional assets and the high growth potential of crypto derivatives, naturally becoming a focus of market attention.
II. Underlying Mechanism: The Triple Challenge of Price, Liquidation, and Leverage
The stable operation of perpetual stock contracts relies on a meticulously designed underlying mechanism, encompassing multiple dimensions such as price discovery, asset synthesis, risk control, and leverage management. Among these, the price source (oracle) is the cornerstone of the entire system. Since on-chain protocols cannot directly access real-time market data from Nasdaq or the NYSE, decentralized oracles are necessary to reliably transmit price data from traditional markets to the blockchain.
Current mainstream solutions include Pyth Network, Switchboard, Chainlink, and some protocols' self-developed oracle systems. Pyth obtains first-hand quotes through direct cooperation with market makers and exchanges, emphasizing high-frequency updates and resistance to manipulation; Switchboard provides a highly customizable price source aggregation solution, allowing protocols to switch update strategies according to different time periods; Chainlink relies on a decentralized node network to provide robust, continuous, and verifiable price feeds. A few leading protocols, such as Hyperliquid, use self-developed oracles, achieving a higher degree of pricing autonomy through multi-source market data aggregation, internal index construction, and off-chain risk control verification. The core issues that oracles need to solve go far beyond data transmission. The US stock market has unique structures such as trading hour restrictions (not 24/7), pre-market and post-market volatility, and trading halt mechanisms, which require oracles to intelligently handle market state transitions. Mainstream solutions employ mechanisms such as market opening and closing markers, TWAP smoothing algorithms, and outlier filtering to ensure that on-chain prices do not deviate from the real-world anchor during US stock market closures, while also avoiding price manipulation risks due to insufficient liquidity. For example, after US stock market closures, oracles may automatically switch to a low-frequency update mode or generate an internal reference price based on the previous effective price combined with on-chain supply and demand, maintaining trading continuity while controlling tail risks. At the synthetic asset construction level, perpetual stock contracts do not mint tokens representing real equity; instead, they create virtual positions linked to the underlying stock price through smart contracts. Users deposit stablecoins such as USDC as margin to open long and short positions, with profits and losses entirely determined by the contract price and settlement rules. The protocol regulates the balance between long and short positions through a funding rate mechanism—when positions in one direction become excessively concentrated, the funding rate guides users to open positions in the opposite direction, maintaining a relatively neutral risk exposure for the system as a whole. Compared to crypto perpetual contracts, equity perpetual contracts require additional consideration of factors such as overnight costs in the US stock market and the actual trading rhythm of the market, exhibiting more complex cyclical characteristics. The liquidation mechanism is a core component of the equity perpetual contract risk control system. Its challenge lies in simultaneously managing the volatility of two asynchronous markets: the US stock market trades only during specific periods, while the crypto market operates 24/7. When the US stock market is closed and the crypto market experiences significant volatility, the value of user collateral may rapidly decrease, leading to liquidation risks for equity perpetual positions. To address this, mainstream protocols have introduced cross-asset risk engines and dynamic parameter adjustment mechanisms. During US stock market closures, the system automatically increases the maintenance margin rate, lowers the maximum leverage limit, and advances the liquidation threshold to mitigate the risk of gaps caused by information discontinuity. Once the US stock market reopens, risk control parameters gradually return to normal. This design preserves the continuity of on-chain transactions while mitigating systemic risks from cross-market mismatches through dynamic risk control. The leverage design also reflects the differences between traditional assets and crypto products. In the realm of perpetual contracts for crypto assets, some platforms offer leverage of hundreds of times or even higher. However, in the stock perpetual market, mainstream protocols generally limit leverage to between 5 and 25 times. This is due to several considerations: First, stock prices are influenced by fundamental factors such as company financial reports, macroeconomic events, and industry policies, resulting in a volatility structure different from crypto assets. Second, the US stock market exhibits unique scenarios like gap openings and after-hours trading, making high leverage highly susceptible to triggering chain liquidations. Finally, regulators maintain a cautious approach to stock-related derivatives, and limiting leverage helps reduce compliance risks. Even if the platform interface displays a maximum leverage of 20 times, the actual available leverage is often dynamically adjusted based on market conditions, underlying asset liquidity, and user position concentration, forming a risk control system that is "flexible on the surface but strict at the underlying level." III. Market Landscape: Differentiated Competition and Ecosystem Evolution of Perp DEXs The current stock perpetual contract market has formed a competitive landscape dominated by leading Perp DEXs such as Hyperliquid, Aster, Lighter, and Apex, each exhibiting significant differentiation in technical architecture, product design, and liquidity strategies. Hyperliquid, leveraging its high-performance self-developed blockchain and the HIP-3 third-party framework, has rapidly entered the stock perpetual contract market through projects like Trade.xyz. Its core advantages lie in its deep order book and institutional-grade liquidity—the XYZ100 (Nasdaq 100 index synthetic contract) can achieve a daily trading volume of up to $300 million, while open interest in commodities such as SILVER and GOLD remains stable at tens of millions of dollars. Hyperliquid employs a multi-source median pricing mechanism, combining external oracle prices, internal EMA smoothing values, and order book market prices to generate a robust mark price for clearing and margin calculation. This dual-channel design of "professional-grade matching + synthetic pricing" achieves a good balance between high-frequency trading and risk control. Aster innovatively launched a parallel architecture of Simple and Pro modes, covering user groups with different risk appetites. The Simple mode uses an AMM liquidity pool mechanism, allowing users to open and close positions with one click and zero slippage, suitable for high-frequency, small-amount, and short-term operations, with a perpetual leverage limit of 25 times for stocks. The Pro mode, based on an on-chain order book, supports advanced order types such as limit orders and hidden orders, providing deeper liquidity and more refined strategy execution. The leverage cap for perpetual stocks is 10x. Data shows that daily trading volume for NVDA and other tech stock contracts under Pro mode remains in the millions of dollars, with open interest steadily increasing, indicating continued participation from professional traders. Aster achieves effective user segmentation and ecosystem expansion through this dual-layer design of "traffic entry point + deep market." Lighter's core selling point is its zk-rollup provably matched system, where all trading and settlement processes can be verified on-chain using zero-knowledge proofs, emphasizing transparency and fairness. Its perpetual stock trading currently supports 10 US stock instruments, with a uniform leverage of 10x, demonstrating a relatively robust risk control approach. The liquidity structure shows a clear concentration at the top—COIN (Coinbase) often exceeds ten million dollars in daily trading volume, while instruments like NVDA, although with moderate trading volume, have high open interest, reflecting the retention of medium- to long-term strategy funds. Lighter strikes a clever balance in user experience: its front-end interaction is minimalist, making it easy for beginners to get started quickly; the underlying layer remains a professional order book, meeting the execution needs of institutions. It's worth noting that the traffic entry point for perpetual stock contracts is expanding from a single official website to a diversified ecosystem. Based.one provides a more consumer-grade trading interface by aggregating the Hyperliquid contract engine; Base.app uses Lighter as a built-in trading module, allowing users to open positions without leaving their wallets; and super apps like UXUY further simplify the operation path, packaging perpetual stock contracts into an experience close to Web2 products. This division of labor and collaboration between the "underlying protocol + application layer entry point" is lowering the barrier to user participation, driving perpetual stock contracts to evolve from a niche professional tool to a mainstream trading product. IV. Regulatory Challenges: Finding a Balance Between Innovation and Compliance The biggest uncertainty facing perpetual stock contracts comes from the regulatory level. Although there is no specific legislation for this type of product globally, regulatory agencies are paying close attention to its potential risks. The core issue lies in defining its legal attributes: Does a perpetual stock contract constitute an unregistered securities derivative? From a regulatory perspective, the US SEC consistently adopts a substance-over-form principle for derivatives based on securities prices. As long as the economic substance of the product is highly correlated with the regulated securities, regardless of its technical packaging, it may fall under the jurisdiction of securities laws. The European ESMA has also repeatedly emphasized under the MiCA framework that on-chain derivatives anchored to traditional financial assets must still comply with existing financial regulations. This means that although perpetual stocks do not involve actual equity custody, their close correlation with US stock prices may lead them to be classified as securities derivatives or contracts for difference (CFDs), thereby triggering a series of compliance requirements such as licensing, disclosure, and investor protection. Currently, the regulatory focus remains on products directly mapped to physical assets, such as tokenized stocks, but the regulatory attitude towards "synthetic risk exposures" like perpetual stocks is still in the observation stage. Possible future regulatory paths include: strengthening the compliance responsibilities of front-end operators (such as trading interface providers and liquidity providers); requiring price indices and oracle data sources to be publicly transparent; restricting high leverage and strengthening KYC and regional access; and explicitly incorporating the product into the existing derivatives regulatory framework. For protocols, strategies to reduce compliance risks include: clearly distinguishing between "price tracking" and "equity tokens," emphasizing the product's synthetic nature and risk hedging attributes; using multi-source decentralized oracles to avoid suspicion of price manipulation; setting reasonable leverage caps and risk parameters to avoid excessive speculation; and fully disclosing product risks and legal disclaimers in the user agreement. In the long term, the compliant development of perpetual stocks may require exploring pathways such as cooperation with licensed institutions, services in restricted jurisdictions, or innovative pilot programs based on regulatory sandboxes. Besides regulatory risks, perpetual stocks also face a series of market and technological risks. Oracle malfunctions or malicious manipulation may lead to erroneous liquidations; cross-market volatility mismatches may amplify tail risks; insufficient liquidity may cause extreme slippage and difficulty in closing positions; smart contract vulnerabilities may be exploited, resulting in financial losses. These risks necessitate that protocols establish multi-layered risk control systems, including but not limited to: multi-oracle redundancy and anomaly detection, dynamic margin adjustments, insurance fund buffers, contract security audits, and bug bounty programs. V. Future Outlook: From Niche Innovation to Mainstream Financial Infrastructure From a market size perspective, the potential of perpetual stock contracts is extremely vast. The total market capitalization of global listed companies is approaching $160 trillion, with non-US markets accounting for more than half, forming a massive asset pool of approximately $80 trillion. Even if only a very small percentage of funds participate through perpetual contracts, its absolute scale can easily reach hundreds of billions of dollars. Referring to the structural characteristic that the trading volume of perpetual contracts in the crypto market is more than three times that of spot trading, perpetual stock contracts are expected to replicate a similar derivatives trend in the traditional asset sector. In terms of product evolution, perpetual stocks may only be the starting point of the "all-asset perpetualization" wave. With the maturation of pricing mechanisms, clearing systems, and liquidity infrastructure, commodities (gold, crude oil), stock indices (S&P, Nasdaq), foreign exchange (Euro, Yen), and even macro assets such as interest rates may be introduced into the perpetual contract framework. Perp DEX will gradually evolve from a crypto-native trading platform into a comprehensive derivatives market covering multiple asset classes, becoming a key interface connecting traditional finance and the on-chain ecosystem. The regulatory environment will gradually move from vague to clear. It is expected that within the next 2-3 years, major jurisdictions will issue classification guidelines and regulatory frameworks for on-chain derivatives, clarifying the compliance boundaries of perpetual equity contracts. This may cause short-term pain, but in the long run, it will benefit industry consolidation and standardized development. Platforms that can proactively build compliance capabilities, establish risk management systems, and maintain communication with regulators will gain a competitive advantage under the new rules. In short, perpetual equity contracts are at a critical breakthrough stage, moving from zero to one. It is both an inevitable choice for Perp DEX to find a new growth narrative and a testing ground for the integration of traditional assets and crypto finance. Although the road ahead is still fraught with technical challenges and regulatory uncertainties, the huge market demand and asset scale behind it determine that this is destined to be an unmissable track. In the future, perpetual equity contracts may not only become a pillar category in the on-chain derivatives market, but also have the potential to reshape how global retail investors participate in US stocks and even global asset trading, truly realizing a borderless, 24/7, and democratized financial market. In this process, protocols that can balance innovation, risk, and compliance are most likely to become the builders of the new era's financial infrastructure.
Brian
Alex
Anais
Catherine
Miyuki
Weiliang
Weatherly