The introduction of perpetual futures to regulated markets has sparked concerns about systemic risk. However, this criticism is misplaced, as the risk is inherent to the venue's design, not the contract.
The venue's choices, such as leverage caps, margin rules, and default management, determine the level of risk. The recent deleveraging episodes in crypto, 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 forced liquidations, can lead to a systemic event. Nevertheless, this is not a feature of perpetuals, but rather a result of poor venue design.
The real question is how a given venue is built, and regulatory requirements are necessary to establish a baseline for security. The handling of defaults under stress is a separate choice that varies even within regulated markets.
A more significant objection to perpetuals is that institutions may not want them, as they are seen as speculative and lack term structure. However, institutions are using perpetuals to hedge delta, taking advantage of their liquidity, which is often deeper than that of dated futures. The design of perpetuals draws in retail flow, concentrating liquidity and creating a structural edge. This liquidity is the overlooked prize in bringing perpetuals onshore, and it can be used safely with institutional-grade default management.
The debate surrounding perpetuals is not about their inherent danger, but about how venues handle defaults under stress. Regulated clearing has established a standard for decades, which is also the standard that Bullish is building towards. By containing defaults at their source, rather than transmitting them to the market, venues can break the chain that turns a blown-out account into a market-wide cascade. This is the difference between a venue that contains a failure and one that transmits it, and it is the key to making perpetuals a safe and useful tool for institutions.