Author: CoinGecko

Translation: TechFlow

TechFlow Introduction: The core data from CoinGecko's annual report is enough to illustrate the issue: the trading volume of DEX perpetual contracts surged by 346% year-over-year, while CEX holdings declined by 20.8% during the same period, indicating a systematic migration of funds from centralized to decentralized.

This article does not just pile up numbers; it clearly explains why this migration is happening, how Hyperliquid can surpass Coinbase International, and what these platforms will become after HIP-3.

The full text is as follows:

In 2025, perpetual contract exchanges—especially decentralized platforms—experienced an explosion, with a total trading volume of $92.9 trillion (a year-on-year increase of 64.6%), fundamentally shifting the crypto market from spot trading to a derivatives-led price discovery mechanism.

Key Points:

• DEX perps grew by 346%, reaching $6.7 trillion; meanwhile, CEX holdings decreased by 20.8%. This represents a large-scale capital migration driven by platforms such as Hyperliquid (ranked seventh globally with a trading volume of $2.9 trillion) from centralized to decentralized infrastructure.
• Capital efficiency drove adoption: Perps allow traders to gain exposure with less capital through leverage, enabling profitable trading in both directions (crucial during the downturn in Q4 2025) and avoiding the friction of physical settlement.
• HIP-3 achieved permissionless listings for any asset with a price source, transforming platforms like Hyperliquid from "crypto exchanges" into 24/7 global financial infrastructure capable of trading everything from commodities to pre-IPO equities.

Why Perps are Growing Faster than Spot Trading

Image: As of March 2, 2026, the top 5 decentralized perpetual contract exchanges ranked by 24-hour trading volume on CoinGecko

Capital Efficiency: Doing More with Less

The fundamental advantage of perpetual contracts is capital efficiency. In the spot market, buying $10,000 worth of Bitcoin requires $10,000 in funds, which is locked during the holding period. In the perpetual market, only a small portion of capital is needed to gain equivalent exposure through leverage, freeing up liquidity for other positions or strategies.

Apart from speculation, perpetual contracts also allow market participants to:

Hedge existing positions without selling the underlying asset (thus triggering tax events); arbitrage price differences across exchanges; express directional views without the friction of physical settlement; and simultaneously deploy capital across multiple opportunities.

Every dollar in the perpetual market has a greater impact than a dollar in the spot market. For traders, funds, and institutions optimizing capital returns, the scales are tipping towards perps.

Market Maturity: Following the Path of Traditional Finance

The explosive growth of crypto derivatives mirrors the patterns experienced by every mature financial market. In traditional finance, the derivatives market vastly exceeds the underlying spot market, often reaching 10 to 50 times. For instance, the notional value of the interest rate swap market exceeds $400 trillion, while the global bond market is approximately $130 trillion.

The crypto market is simply catching up. As the market matures and more experienced participants flood in, the ratio of derivatives to spot trading volume continues to expand. The top ten exchanges alone generated $92.9 trillion in perpetual contract volume, far exceeding the total spot trading volume of all crypto exchanges combined.

Hedging Factors: Maintaining Resilience During Declines

Perhaps the most convincing evidence of the value proposition of perpetual contracts emerged during the downturn in Q4 2025. While the spot market contracted and investor sentiment worsened, the trading volume of the top ten perpetual contract exchanges still grew by 64.6% year-over-year.

Why is this? Because perpetual contracts allow traders to profit in both directions. When prices fall, short positions profit substantially, leading to increased hedging activity. The ability to express bearish views keeps funds active, maintaining high trading volume even when spot buying has dried up.

In a traditional pure spot market, a price drop means decreased activity. This is evident in the decline of CEX spot trading volume from $2.21 trillion in January 2025 to a low of $0.95 trillion in December.

However, in the perpetual market, volatility in any direction means opportunity. Data from 2025 demonstrates that this dynamic has fundamentally changed the structure of the crypto market.

Image: Comparison of CEX and DEX spot and perpetual contract trading volumes

The Great Migration: DEX vs CEX

Image: Top 10 Perp CEX and Perp DEX trading volumes

Source: CoinGecko 2025 Crypto Industry Report

Although centralized exchanges still dominate in absolute scale, the real story of 2025 is the rapid rise of decentralized perpetual contract exchanges. Perp DEX trading volume surged by 346%, reaching a record $6.7 trillion for the year.

To visualize this leap: just in October 2025, at its peak, Perp DEX processed $1.18 trillion in trading volume, more than four times that of January 2025.

Breaking Through DEX

By 2025, Perp DEX had solved the fundamental usability issues that previously kept users on centralized platforms:

1. User experience parity: The notion that "DEX operations are clunky" ended in 2025. Hyperliquid and Lighter provided interfaces nearly indistinguishable from Binance or Coinbase. Order book depth is sufficient, trades are nearly instantaneous, and ordinary traders no longer feel they are using a decentralized platform.
2. Competitive fee structures: Early DEX charged premiums for decentralization. By 2025, competition and technological advancements drove Perp DEX fees down to be equal to or even lower than CEX. Platforms such as Hyperliquid even began offering taker rebates of up to 90%, rivaling the most competitive CEX fee structures.
3. Scalable performance: Early blockchain-based DEX could not handle the transaction volumes required by serious derivatives exchanges. The emergence of dedicated Layer 1 chains and optimized rollups solved this issue. For instance, Hyperliquid's custom L1 can process thousands of transactions per second, with confirmation times under one second—performance comparable to centralized infrastructure.

Divergence in Holdings

According to CoinGecko's "2025 Crypto Industry Annual Report," CEX holdings decreased by 20.8% in 2025, while DEX holdings surged by 229.6%.

Holdings—the total value of open derivative contracts—represent committed funds and confidence. This divergence indicates that traders are not merely "testing" DEX for rapid transactions; they are forming substantial long-term positions on-chain.

This shift represents a reallocation of funds from centralized to decentralized infrastructure. Once this migration begins, network effects will accelerate it. More liquidity attracts more traders, which in turn attracts more market makers, further deepening liquidity.

The Rise of Hyperliquid and Lighter

The rankings for perpetual contract exchanges in 2025 revealed significant changes in market structure. Two decentralized platforms made strong entries into the top ten, replacing traditional centralized players:

• @HyperliquidX: ranked seventh globally, with an annual trading volume of $2.9 trillion;
• @Lighter_xyz: ranked tenth globally, with an annual trading volume of $1.3 trillion.

In 2025, Hyperliquid's trading volume surpassed that of Coinbase International. This decentralized platform, founded in less than two years, outperformed a publicly traded exchange backed by billions in capital and years of operational history.

Coinbase International processed about $1.4 trillion in 2025, whereas Hyperliquid reached $2.9 trillion—more than twice that of the former.

Infrastructure Wins

The secret to Hyperliquid's success is not clever marketing or token incentives, but infrastructure. The platform built a proprietary Layer 1 blockchain (HyperCore) specifically optimized for perpetual contract trading.

This architectural decision put an end to the notion of "DEX being slow." By controlling the entire tech stack from consensus mechanism to matching engine, Hyperliquid achieved: transaction confirmations under one second; zero gas fees for market makers; over 20,000 orders per second throughput; and 100% uptime throughout 2025.

In contrast, Ethereum-based DEX suffer from network congestion and variable gas costs, while other L2 solutions rely on external infrastructure. Hyperliquid's vertical integration allows for a user experience on par with centralized exchanges while maintaining complete decentralized security assurances.

Lighter followed a similar path, although the technical implementations varied. The conclusion is clear: to compete with centralized exchanges, DEX must control their own infrastructure fate.

Beyond Crypto: Hyperliquid's HIP-3 Revolution

At the end of 2025, Hyperliquid implemented HIP-3 (Hyperliquid Improvement Proposal 3), fundamentally reshaping its market structure.

Permissionless Listings

Previously, opening a new perpetual market required validator approval—a semi-centralized process. HIP-3 introduced a mechanism for deploying permissionless perpetual markets.

Now, any builder can create a perpetual market for any asset with a reliable price source. No tokens, no permissions, no listing fees.

The immediate impact was explosive. Within weeks, perpetual markets for assets that had never been traded on-chain appeared on the platform.

A Bridge Connecting Traditional Finance

By February 2026, the effects of HIP-3 became increasingly clear. Platforms like Hyperliquid are no longer just "crypto derivatives exchanges"; they are becoming the infrastructure for global financial markets.

Currently, the perpetual markets on Hyperliquid cover:

• Commodities: perpetual contracts for gold and silver tracking COMEX futures; crude oil and natural gas; agricultural products (wheat, corn, soybeans).
• Equities: Pre-IPO companies like SpaceX and OpenAI; synthetic exposure to major tech stocks; index perpetual contracts (S&P 500, Nasdaq 100).
• Alternative assets: prediction markets (election outcomes, economic indicators); sports betting derivatives; weather derivatives.

This expansion means that Perp DEX is becoming the infrastructure for 24/7 global price discovery.

Markets That Never Close

Traditional financial markets close— the New York Stock Exchange shuts down at 4 PM EST, and the CME futures market stops trading on Sunday evenings. This causes friction, information gaps, and opportunity costs.

In contrast, blockchain-based perpetual markets never close. When traditional markets go offline, on-chain markets continue to operate, incorporating new information in real time.

Imagine this: major news breaks on a Sunday evening—geopolitical crises, corporate bankruptcies, central bank surprises. Traditional markets can only price in this information by Monday morning, leading to potential gaps and misalignments.

Perpetual contracts on platforms like Hyperliquid would price in the information immediately. As the liquidity of these markets deepens, they may begin to influence the opening prices of traditional markets—on-chain 24/7 pricing is becoming the reference point that traditional markets chase on Monday morning.

Conclusion: The New Frontier of Perpetual Contracts

The data from 2025 tells a clear story: perpetual contracts have become the dominant force in crypto trading, and decentralized platforms are rapidly closing the gap with centralized counterparts.

Numbers speak for themselves: $92.9 trillion in trading volume from the top ten perpetual contract exchanges; DEX perpetual trading grew by 346%; DEX holdings surged by 229.6%; leading DEX have replaced major CEX in rankings.

As permissionless market creation becomes possible, blockchain infrastructure achieves parity in performance with centralized systems, the boundaries between "crypto exchanges" and "global financial markets" are fading. These platforms are moving towards "on-chain financial markets"—any asset with a price source can be traded 24/7, fully self-custodial and transparently settled.

The spot trading model—buying and physically settling assets—will continue to exist. However, in price discovery, hedging, and capital-efficient speculation, perpetual contracts will dominate.