Perpetual futures have become one of crypto’s defining financial products, but DRW CEO Don Wilson says much of what people think they know about them is wrong.
In a series of posts on X, Wilson argued that perpetual futures — or “perps” — are simply futures contracts without an expiration date. The features often associated with crypto-perpetuals, such as high leverage, auto-deleveraging (ADL) and round-the-clock trading, are characteristics of how some crypto exchanges chose to implement the products, not the contracts themselves.
“Most of what people think they know about ‘perps’ … has nothing to do with the contract itself,” Wilson wrote.
His comments come as interest in bringing perpetual futures to regulated US markets continues to grow. Several exchanges and market participants have explored launching perpetual futures in addition to crypto, although questions remain about how the products should be regulated and whether they fit into existing futures or swaps frameworks. Kalshi, which saw trading perps explode soon after its launch, recently filed a proposal with regulators to expand its offerings to precious metals.
Unlike traditional futures markets, crypto exchanges like Hyperliquid operate continuously, use digital security and can calculate margin requirements in real time. These technological differences allowed exchanges to offer products with higher leverage and alternative liquidation mechanisms, including ADL, which automatically reduces winning positions when losing traders cannot cover their losses.
Wilson said these design choices should not be confused with eternal futures per se.
“I’m not a fan of the ADL,” he wrote, adding that there’s “no reason it should be used for perps.”
Instead, Wilson argued that digital payment rails create opportunities to improve risk management. Traditional clearing houses generally calculate margin once a day, with market participants often having until the following banking day to post additional collateral. Because markets can move significantly during that window, clearinghouses require relatively large initial margin buffers.
With real-time settlement, however, exchanges can recalculate margin continuously and require traders to post collateral immediately, reducing the need for large upfront margin requirements while maintaining the same level of protection, Wilson said. Whether exchanges choose to translate these efficiencies into higher leverage is a business decision, not a defining feature of perpetual futures.
Wilson said the real innovation of perpetual futures is that they eliminate the need for investors to repeatedly roll expiring contracts, reducing transaction costs, market impact and roll slippage while allowing positions to more closely follow the front of the futures curve.
He also urged regulators to focus on financial substance rather than legal labels.
“There is no reason to treat perpetuities as swaps simply because they do not expire,” Wilson wrote. “Economically, they are the future.”
Wilson concluded by calling for perpetual futures to be available across a wider range of markets, including commodities, securities and crypto, arguing that they should be seen as another price discovery and risk management tool rather than a crypto-specific innovation.
