The introduction of perpetual futures into regulated markets has sparked concerns about systemic risk, driven by high-leverage retail trading. However, the critique is misplaced, as the risk is inherent to the venue's design, not the contract. Venue choices, such as leverage caps, margin rules, and default management, determine the level of risk.
The recent crypto market deleveraging episodes, including the October 2025 cascade, were caused by a combination of factors, including macro shocks, stablecoin de-pegs, and exchange outages. The liquidation cascade, which is often triggered by venue choices, can turn a sell-off into a systemic event.
Regulatory requirements, such as segregated funds and a registered clearing entity, are necessary to secure the baseline. The real question is how a given venue is built, including its approach to default handling under stress.
Institutions may not want perpetuals as a replacement for regulated futures due to their speculative nature and limitations, such as variable funding and basis risk. However, perpetuals can be used to hedge delta, and their liquidity edge is structural, drawn in by retail flow. The design that concentrates liquidity in perpetuals is the overlooked prize in bringing them onshore. The debate is not about whether perpetuals are dangerous, but about how a venue handles defaults under stress.
Regulated clearing has established a standard for decades, which is also the standard that Bullish is building towards. A well-designed venue can contain risk, breaking the chain that turns a blown-out account into a market-wide cascade.