For years, Ethereum was synonymous with decentralized finance, pioneering on-chain financial tools. However, the rise of perpetual futures, or "perps," has largely occurred on other platforms. This is because perps require fast, low-cost, and high-frequency trading, which Ethereum's base layer was not designed to optimize.
As a result, layer-2 networks like Arbitrum have become the go-to destinations for perps trading, offering a compromise between Ethereum's security and improved trading performance. While Solana and Hyperliquid have also gained traction in the perps market, Ethereum's layer-2 ecosystem is positioned to provide the settlement and collateral layer that underpins these markets. As institutions begin to take notice of on-chain derivatives, the focus is shifting from whether decentralized perps can work to whether they can compete with traditional infrastructure. Ethereum's role is evolving, with its layer-2 ecosystem and DeFi infrastructure providing the foundation for broader capital markets.