The crypto perpetual futures market has experienced significant growth, with Ethereum playing a pivotal role in its development. However, the demand for extremely fast and low-cost transactions has led to the rise of layer-2 networks like Arbitrum and Base, which have become the go-to destinations for high-frequency trading. According to AJ Warner, chief strategy officer at Offchain Labs, 'Perps require frequent transactions, fast execution, and deep liquidity, making them a natural use case for the Arbitrum platform.' The success of decentralized perps exchanges like GMX, which launched on Arbitrum in 2021, has established a template for others to follow. Ethereum's layer-2 ecosystem has become a compromise, preserving the network's security while improving trading performance.
Chris Boulous of Dromos Labs argues that 'trading is effectively a network-effects business,' and that building where liquidity and users exist is crucial. The rise of Solana and Hyperliquid has also been significant, with their low fees and large retail trader base making them attractive destinations for perpetual trading. However, Ethereum's layer-2 ecosystem is still seen as a vital part of the onchain financial stack, providing a settlement and collateral layer that underpins the markets.
As institutions begin to take notice of onchain derivatives, the focus is shifting from whether decentralized perpetuals can work to whether they can compete with traditional infrastructure. The next milestone for the industry is to be able to do things onchain that can't be done, or can't be done as cheaply, in traditional markets. With Ethereum's role evolving rather than diminishing, the network is increasingly positioning itself as the settlement and collateral layer that underpins the markets through its layer-2 ecosystem and broader DeFi infrastructure.