In the past, if you wanted to trade perpetual futures (“perps”) – those no-expiry, high-leverage contracts popularized by platforms like BitMEX and Binance – you had little choice but to trust a centralized exchange (CEX).

That’s changing fast. Decentralized exchanges are now matching CEXs in sophistication, and one project in particular, Hyperliquid, has emerged as a trailblazing case study. Launched in late 2024, Hyperliquid built a high-performance blockchain purpose-built for trading, and in just a few months it captured nearly 70% of the on-chain perpetual futures market . Its trading volumes exploded to $175 billion in a single month (March 2025), putting it at roughly 10% of Binance’s volume – an astonishing feat for a DeFi platform . This surge signals a broader shift: traders are migrating from CEXs to on-chain alternatives that combine CEX-like speed with DeFi’s transparency and self-custody. In this article, we delve into how Hyperliquid brought perps on-chain, how it enticed users away from centralized exchanges, and why every blockchain ecosystem now wants its own futures exchange.

At its core, Hyperliquid is a decentralized exchange (DEX) focused exclusively on perpetual futures, built on a custom Layer-1 blockchain designed for trading . Unlike most DeFi protocols that live on general-purpose chains (Ethereum, Solana, etc.), Hyperliquid runs on its own chain. This gives it full control to optimize speed, throughput, and user experience for order-book trading. Hyperliquid operates a fully on-chain central limit order book (CLOB) – meaning every buy/sell order is recorded on-chain, and there is no off-chain matching engine or hidden order flow . The exchange’s core, called HyperCore, acts as the matching engine inside the blockchain’s consensus layer, ensuring that all trades execute deterministically and transparently as part of each new block . In other words, Hyperliquid has effectively embedded a Wall Street-grade exchange engine into a decentralized blockchain.

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Critically, this architecture was built to solve the usual trade-offs that handicapped earlier on-chain trading platforms. Hyperliquid’s HyperBFT consensus and custom execution engine deliver sub-second finality for trades. Internal tests show ~0.2 second median latency from order placement to confirmation (99th percentile under 1 second) and throughput up to ~200,000 orders per second . These numbers are virtually unheard of in DeFi and approach the performance of centralized systems. The design choices behind this performance include:

• On-Chain Order Book & Matching – All bid/ask orders live in the chain’s state, and matching is done by price–time priority just like a traditional exchange, but enforced by the blockchain’s consensus . Every order, cancellation, and trade is an on-chain event, creating a fully auditable trail and preventing any “ghost” orders or off-book deals .
• Deterministic Fair Execution – By placing the matching engine inside the consensus, Hyperliquid guarantees that no miner or validator can reorder or front-run trades beyond the protocol’s rules. The immutable price-time priority is baked in at the protocol level, ensuring censorship-resistant, fair execution for all participants .
• High Throughput, Low Latency – The custom chain leverages a highly optimized Rust-based execution engine and BFT consensus to achieve enormous throughput. Blocks are finalized in well under a second, allowing near-instant confirmations. In practice, traders can submit and fill orders within a fraction of a second, enabling strategies like high-frequency trading on-chain .
• No Gas on Orders – Uniquely, Hyperliquid doesn’t charge a typical gas fee for each order placement or cancellation. Trading fees are paid in the native HYPE token, and the core matching occurs at the consensus layer without incurring per-transaction gas costs . This means users can place many orders (e.g. updates to stop-loss, multiple limit orders) without worrying about prohibitive fees – a critical feature for active traders.
• Robust Perp Mechanics – The platform integrates a on-chain clearinghouse for perpetual futures, which manages margin and positions. Margin requirements are enforced twice – when an order is placed and again on each trade execution – to ensure no position can go uncollateralized . A funding rate mechanism keeps perp prices anchored to spot markets. All of this runs automatically on-chain, but the experience for the trader is akin to a traditional futures exchange.

By combining these innovations, Hyperliquid delivered something rare: a non-custodial exchange that feels as fast and feature-rich as a centralized one. Traders can use advanced order types (stop-loss, take-profit, TWAP, etc.), get instant trade confirmations, and avoid gas battles – all while retaining control of their funds and having total transparency into the order book state. This formula proved immensely attractive. By late 2024, Hyperliquid was already handling over $1 billion in daily trading volume across 145 perp markets, serving more than 200,000 users . It has since grown even more. In April 2025, Hyperliquid’s monthly volume was in the hundreds of billions, and it was reported to comprise 60–70% of all on-chain perpetual futures trading activity . In effect, Hyperliquid demonstrated that a decentralized platform can match the scale of major centralized exchanges. As one Hyperliquid founder put it, the goal was to achieve “the same liquidity, tight spreads, instant confirmations… the chain itself can handle tens of thousands of orders per second without issue. Everything’s transparent. Everything’s on-chain” . That vision – to have CEX performance with DeFi trustlessness – is no longer theoretical, it’s live on Hyperliquid’s mainnet.

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From CEX Dependence to On-Chain Trading

Hyperliquid’s success is not just a tech story; it’s a user story. The platform launched into a market environment primed for a shift toward DeFi. High-profile failures like the FTX exchange collapse in 2022 had severely eroded trust in centralized venues. Suddenly, even sophisticated traders were questioning the wisdom of keeping funds on an exchange that could freeze withdrawals or mismanage assets. The fallout from FTX “drove more attention to on-chain competitors”, as traders sought alternatives where funds can’t be secretly commingled or misappropriated because every transaction is traceable on the blockchain . In other words, the very transparency that DeFi offers became a selling point: on a well-designed DEX, nothing is a black box.

However, earlier decentralized derivatives platforms often forced users to sacrifice too much – whether in speed, liquidity, or product range – which limited their appeal. Hyperliquid changed the equation. By delivering a trading experience comparable to a CEX, it removed the traditional excuses traders had for sticking with centralized platforms. Now, a user can trade a perpetual swap on Hyperliquid with 50× leverage, tight bid-ask spreads, and instant execution without entrusting their funds to an intermediary. The non-custodial nature of on-chain perps like Hyperliquid directly “addresses concerns about exchange insolvency” that plagued centralized platforms . In practical terms, a trader on Hyperliquid doesn’t have to worry about the exchange going bust or locking withdrawals – their collateral remains in their own wallet (or in a smart contract they control) and positions are transparently managed by code.

There’s also a structural trend at play: perpetual futures have been the fastest-growing segment in crypto trading, outpacing spot trading. Perps enable traders to do more with less capital (through leverage) and to profit from both market directions, which attracts a large and active user base. Traditionally, this action was almost entirely on CEXs. But as on-chain platforms become competitive, we’re seeing that flow migrate. In fact, on-chain perps may achieve wider adoption than on-chain spot trading did, because they offer unique advantages beyond self-custody. For example, they let traders amplify positions without needing fully funded trades, and that capital efficiency is a big draw for professional traders . Hyperliquid tapped into this demand at exactly the right time. By early 2025, its rise was evidence of a “gradual shift toward on-chain perpetual solutions”, with Hyperliquid alone processing volumes equivalent to a meaningful fraction of Binance’s .

The data is telling. Hyperliquid saw about $175B in volume in March 2025 and continued to climb in April . Its open interest and liquidity grew so rapidly that top-tier market makers from traditional finance began trading on Hyperliquid’s order books, drawn by the deep liquidity there . It’s not just retail users moving on-chain; institutional traders and crypto funds are dipping their toes in decentralized venues when they see billions in liquidity and active risk management on par with centralized exchanges. Decentralized futures exchanges also benefited from a “flight to transparency” – the idea that it’s “virtually impossible to inconspicuously commingle funds” or hide liabilities on a public ledger . In practice, this means a well-run DEX can offer traders greater assurance that the market is fair and solvent at all times, something CEX users can never fully verify in real-time (proof-of-reserves efforts notwithstanding).

That said, DeFi is not a panacea and comes with its own learning curve and risks (smart contract bugs, oracle failures, etc.). But the momentum is clearly shifting. We now have concrete proof that if you give traders a non-custodial platform that feels as fast and reliable as a CEX, they will use it. Hyperliquid’s dominance (70%+ share of on-chain perps volume) and the growth of other decentralized perpetual trading platforms are strong evidence that the market’s center of gravity is beginning to move. Users are voting with their feet (and funds), showing a willingness – even eagerness – to trade on-chain when the experience is right. This change in behavior foreshadows a new landscape in which the default choice for many traders could be a DEX, not an offshore centralized exchange.

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DeFi ArmsRace. Every chain wants a futures exchange

The emergence of Hyperliquid underscores a broader industry realization: derivatives are the lifeblood of trading volume, and no ecosystem wants to be left without a thriving derivatives platform. In traditional finance and on centralized crypto exchanges, futures and other derivatives consistently generate the majority of trading volume . The same is likely to hold true on-chain. Thus, having a robust perp exchange is becoming a “must-have” component of any Layer-1 or Layer-2 blockchain’s DeFi stack. We’re already seeing an arms race: many L1s/L2s are competing to attract derivatives protocols by offering the most optimal environment (security, speed, low fees, liquidity) . If one chain doesn’t offer a good venue for leveraged trading, traders might migrate to a chain that does – and bring their capital and activity with them.

Consider a few examples. Arbitrum, an Ethereum Layer-2, rose to prominence in part thanks to GMX, a decentralized perps exchange that launched in 2021. GMX (using an innovative pooled liquidity model) facilitated nearly $300 billion in cumulative trading volume on Arbitrum while providing a seamless, low-fee experience for users . Its success not only proved demand for on-chain leverage trading, but also boosted Arbitrum’s usage and TVL significantly, setting a template for L2s to follow. Optimism similarly hosts popular perp protocols like Perpetual Protocol and others, while Solana has seen projects like Hxro and Mango (perps and margin trading platforms) arise, leveraging Solana’s high throughput. Even newer base-layer blockchains are prioritizing trading use cases: for instance, Sei Network launched as a specialized trading chain in the Cosmos ecosystem, aiming to provide an order-book-friendly infrastructure (much like what Hyperliquid built independently).

Perhaps the most striking validation of this trend is dYdX’s migration to an app-chain. dYdX is one of the largest decentralized perp exchanges, originally built on Ethereum (and using StarkWare’s Layer-2). In 2023–2024, the dYdX team decided to leave Ethereum and build a custom chain (using the Cosmos SDK) specifically optimized for its derivatives exchange, citing the need for higher throughput, lower latency, and full on-chain order book decentralization . In other words, one of DeFi’s flagship perp platforms concluded that to compete with CEXs long-term, it needed the sovereignty to fine-tune its own chain – very much echoing Hyperliquid’s approach. Today, dYdX’s v4 chain runs its matching engine on-chain and aims to scale beyond what was possible on general L1s, which reinforces the notion that bespoke trading chains could be a dominant theme going forward.

While each ecosystem is fostering its own perp platform, we also observe a winner-takes-most dynamic in liquidity. On-chain liquidity tends to concentrate where the deepest pools and best execution are. Hyperliquid’s rapid consolidation of market share (leaving competitors like GMX, Vertex, and others with smaller slices) illustrates how network effects in liquidity provision favor the leader . This doesn’t mean there will only be one on-chain futures exchange – rather, each major network may have a flagship platform, but those with superior tech or liquidity can attract users from anywhere. It’s likely we’ll see cross-chain activity as well: for example, traders on various chains bridging assets to whichever DEX offers the best liquidity for the asset/future they want to trade. Nonetheless, from a network perspective, having a native derivatives platform is now seen as critical. It not only keeps trading activity (and fees) within the ecosystem, but also signals maturity of the DeFi offerings. In 2024 and beyond, Layer-1s and Layer-2s “are competitively attracting new derivatives platforms” and optimizing for them , because the equation is simple – more derivatives volume means more total value locked, more fees, and more users gravitating to that chain.

In summary, traders want to go where they can trade anything, with leverage, at high speed. Chains want to provide that venue to capture the traders. So we get a multi-chain landscape of perp exchanges, all interoperating to some degree, but also pushing each other to raise the bar on performance and features. Hyperliquid’s success has effectively set a new benchmark: any “next-gen” blockchain that aspires to be a finance hub will need to demonstrate Hyperliquid-like capabilities or risk seeing its traders move to a chain that does.

DeFi trustlessness are not mutually exclusive. Users no longer have to choose between performance and transparency; the best of both worlds is attainable on-chain. This breakthrough is likely to accelerate the migration of traders and liquidity to decentralized platforms. As every major chain scrambles to support or incubate its own advanced DEX for futures, we move closer to a reality where the default venue for crypto trading is on a blockchain, not a centralized server.

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For builders and the broader Web3 community, this is an inspiring development. The bar has been raised – simply cloning an AMM or launching a basic exchange is not enough. The future lies in bespoke, high-performance protocols that can go head-to-head with traditional exchanges. At Buidly, we recognize the importance of this evolution. As a team dedicated to Web3 innovation, we see our role as enabling the next wave of on-chain financial infrastructure. Whether it’s helping a new Layer-1 implement faster execution logic, building out smart contract systems for complex products, or creating user interfaces that simplify DeFi’s power for everyday traders, our mission aligns with this industry shift. The success of Hyperliquid and its peers shows what’s possible when talented teams build (or “buidl”) with purpose: seemingly insurmountable performance barriers can be overcome in the pursuit of a more open and secure financial system.

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Moving forward, we expect on-chain futures and derivatives to become as ubiquitous as automated market makers did in the last DeFi wave. The challenges of scaling, liquidity, and user education remain – but the case study of Hyperliquid gives a template for tackling them. It’s an exciting time to be involved in the space. The race is on to bring ever more of finance on-chain, and perpetual futures are just the start. The message is clear: the future of trading is being built now, and it’s being built on-chain. Those who buidl today will define the markets of tomorrow, and we’re thrilled to be part of this journey.

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