The concept of perpetual futures has become a staple in the crypto industry, but according to Don Wilson, CEO of DRW, there are many misconceptions surrounding this financial product. In a series of posts, Wilson explained that perpetual futures, also known as 'perps,' are simply futures contracts that do not have an expiration date. The characteristics often associated with crypto perpetuals, such as high leverage and auto-deleveraging, are not inherent to the contracts themselves, but rather a result of how some crypto exchanges have chosen to implement them. Wilson's comments come at a time when there is growing interest in bringing perpetual futures into regulated US markets.
He argued that the design choices made by some exchanges should not be confused with the perpetual futures themselves and that digital payment rails can actually improve risk management. Wilson also emphasized that perpetual futures eliminate the need for investors to repeatedly roll over expiring contracts, reducing transaction costs and market impact. He urged regulators to focus on the economic substance of perpetual futures rather than their legal labels, and to consider making them available across a broader range of markets.