The crypto perpetual futures market has experienced significant growth, with Ethereum's role evolving to focus on supporting layer-2 networks such as Arbitrum and Base, where high-frequency trading and low-latency transactions are optimized. This shift is due to the demanding nature of perpetual futures, which require fast execution, frequent transactions, and deep liquidity. Ethereum's security-first architecture makes it an ideal settlement layer, but its block times and gas costs have historically made it an expensive option for running latency-sensitive trading applications.
As a result, decentralized perpetual exchanges have matured on layer-2 networks, with many protocols launching on these ecosystems to take advantage of their improved performance and growing user base. The distinction between Ethereum's role and that of other chains has become increasingly important as institutional attention turns to onchain derivatives. While some argue that Ethereum faces challenges such as fragmentation and high costs, others see its role as the settlement and collateral layer that underpins the broader DeFi ecosystem, providing the deepest liquidity, widest range of assets, and most mature DeFi primitives. As institutions begin to pay closer attention to onchain derivatives, the focus is shifting from whether decentralized perpetuals can work to whether they can compete with traditional infrastructure, with execution, custody, and predictability being key factors.
The next milestone for decentralized perpetuals will be to offer capabilities that are not available or are more expensive in traditional markets, with the potential to become the foundation for broader capital markets.