For years, Ethereum has been at the forefront of decentralized finance, pioneering on-chain financial tools such as lending protocols and tokenized assets. However, the rapidly growing sector of perpetual futures, also known as 'perps,' has primarily flourished on other platforms. Traders often associate on-chain perpetuals with Hyperliquid or Solana rather than Ethereum, due to the latter's base layer not being optimized for the extremely fast, low-cost, and high-frequency trading required for perpetuals.
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 distinction has become increasingly important as decentralized perpetual exchanges mature and attract institutional attention. Ethereum's security-first architecture made it an ideal settlement layer, but its block times and gas costs have historically made it an expensive platform for latency-sensitive trading applications. The launch of GMX on Arbitrum in 2021 established a template for other perps builders to follow, and Offchain Labs has since prioritized perpetuals as a strategic category. Today, much of Ethereum's perpetual trading activity takes place on layer-2 networks like Arbitrum and Base, which have reduced block times and become attractive trading destinations due to their growing user base and liquidity.
Chris Boulous of Dromos Labs argues that technical performance is only part of the story, and that 'trading is effectively a network-effects business.' You have to build where the liquidity and users currently exist, and this dynamic has become self-reinforcing. Solana and Hyperliquid have also surged as popular platforms for perps, with Solana's large base of retail traders and low fees making it an attractive option.
However, some Ethereum proponents argue that the focus on execution misses the network's longer-term role in the on-chain financial stack. Matthieu Saint Olive, a staff product manager at MetaMask, believes that Ethereum's role is the settlement and collateral base where the deepest liquidity, the widest range of assets, and the most mature DeFi primitives live. As institutions begin paying closer attention to on-chain derivatives, the conversation is shifting from whether decentralized perpetuals can work to whether they can compete with traditional infrastructure. The next milestone for on-chain perps is to be able to do things that can't be done, or can't be done as cheaply, in traditional markets.
While much of today's decentralized perpetual volume revolves around crypto assets, market participants see the infrastructure supporting perps as the foundation for broader capital markets. Ethereum's role in the market is evolving, with Solana and purpose-built chains like Hyperliquid establishing themselves as venues for high-speed transactions, and Ethereum positioning itself as the settlement and collateral layer that underpins those markets.