Introduction: Crypto's Best Product
Perps were introduced in crypto by Bitmex in 2016 and quickly became the dominant derivatives product in this ecosystem. Since then, the crypto industry has been trying to “pitch” perps to TradFi, with limited success so far. In 2025, Hyperliquid introduced HIP-3, a framework that lets third parties launch their own perpetual markets, including equity perps, directly on chain. Wall Street realizes its potential and starts shilling it everywhere. Equity volumes start to grow. It's the first time in history where you can trade equity perps on chain with CEX-like liquidity, but still, despite some known TradFi guys like Citrini trading there and the efforts of some Wall Street players, TradFi isn't here yet.
Why?
For US citizens the main reason is straightforward: access is heavily constrained. Only a handful of venues currently offer these products to US customers.
For the rest of the world the answer is less obvious. The explanation that keeps coming back is education and language.
Derivative traders in TradFi mostly use CFDs and options. Crypto natives often do not really understand how these instruments work, so even if we want to attract TradFi users, we do not speak their language or frame perps in terms that make sense to them.
This article explains what CFDs and options are and why perps can be a superior tool for most cases.
1/ CFDs (Contracts for Difference)
CFDs are derivatives that track the price of an underlying asset in a similar way to perpetual futures. They are banned for retail traders in the United States but remain very popular in Europe and Asia.
They differ from perps in two major ways:
- The counterparty is a broker, not another trader. In a CFD you are trading against the broker. This creates a structural conflict of interest because the broker controls execution, spreads and liquidations. Some brokers operate fairly, but others can widen spreads, delay fills or trigger aggressive liquidations, since your losses are effectively their gains.
- The funding is paid daily and calculated differently Perps use a funding mechanism based on the difference between the perp price and the spot index price. It is usually paid every hour and flows between traders with opposite positions.
CFDs, by contrast, charge a daily financing cost based on interest benchmarks plus a broker markup. This is not a mechanism to anchor the derivative price to spot. It is simply the cost of leveraged exposure and it goes directly to the broker.
CFDs are not inherently bad if the broker operates transparently, but the trader is usually at a structural disadvantage because of higher spreads, daily financing charges and the lack of visibility into how the broker manages pricing and risk. Without independent auditing, you cannot really verify whether the broker behaves neutrally or acts aggressively as your counterparty.
Why are CFDs so popular? Because brokers make so much money that they can afford to pay sketchy private community leaders to drive their members to trade there (they can also spend heavily on marketing sure).
2/ Options
Options are globally permitted derivatives that give you the right, but not the obligation, to buy or sell an asset at a specific strike price before or at a specific expiration date. You pay a premium for this right.
At expiration you can decide whether you want to exercise the option and buy or sell the asset at the strike price, or simply let it expire worthless. In practice most retail traders do not exercise. They trade the option itself in the secondary market before expiry.
Options do not have funding. Their cost over time comes from time decay (theta), which reduces the option's value as the expiration date approaches.
Your counterparty is not a broker or another individual. In listed options your counterparty is the clearinghouse, for example the OCC in the United States. This eliminates direct counterparty risk.
Options are more transparent and regulated than CFDs, but most retail traders still use them to speculate over short time horizons. This creates situations where they may be directionally correct on the underlying asset but still lose money on the option because of changes in implied volatility, time decay, or shifts in the option's sensitivity.
One example of these situations is the IV crush, which happens when implied volatility collapses after a major event such as earnings. Even if the underlying asset moves in the expected direction, the sudden drop in implied volatility can push the option's value down so much that the trader ends up losing money despite being right about the price movement.
3/ Perps
Perps are derivatives that let you trade a contract that tracks the price of its underlying asset through a mechanism called funding rates.
They are allowed globally, but access for US citizens has been heavily restricted due to regulatory uncertainty. This started to change recently, as Coinbase launched one of the first CFTC regulated venues to offer perp-style futures to US customers.
Funding rates are calculated using the relationship between the perp price and the spot index price. They can be positive (longs pay shorts) or negative (shorts pay longs), and their purpose is to keep the perp anchored to the real market price.
The counterparty is usually the market, meaning another trader. However, most centralized exchanges operate similarly to CFD brokers because internal market makers, owned or controlled by the exchange, often take the opposite side of user trades. They have structural informational advantages, which creates a conflict of interest similar to what happens in CFDs.
This problem is removed in perpetual DEXs such as Hyperliquid, where all order flow and funding data are transparent, and the internal market maker (the HLP) is a user-owned liquidity pool instead of a proprietary desk controlled by the exchange.
Perps also have the advantage of being open 24/7 with no trading halts, unlike options or traditional equities. This allows real-time price discovery as soon as new information hits the market, rather than waiting for regular market hours.
They do have downsides, such as systemic liquidation events like the 10/10 incident, where the ADL mechanism (designed to avoid bad debt in extreme volatility) was triggered across several venues, leading to unexpected losses for some traders. Although in well-designed systems retail traders should not normally be affected, it is still a risk to be aware of.
Final Thoughts
In the end, TradFi does not avoid perps because they are worse products, but because incentives, regulation and familiarity all push traders toward CFDs and options. Brokers make more money with the tools they already offer, compliance prefers products it fully understands and most traders simply stick to what they know. Perps are cleaner, simpler and more transparent, but until the industry learns to explain them in TradFi’s own language, adoption will remain slow.
It's in our hands now.
If you never tried perps and would to, send a DM to @try_supercexy and we'll get you started right away.
Hyperliquid.
Addendum for context
Before closing, it is important to clarify the audience. Everything explained here is meant for retail level traders, the type of users who operate on platforms like Robinhood or retail CFD venues. These traders can understand the advantages of perps once presented in familiar terms and they do not depend on the institutional market structure that large funds require. For sophisticated financial institutions the situation is very different. Their operations rely on prime brokers, netting agreements, central clearing, cross portfolio margining and legal frameworks that guarantee senior creditor rights if something breaks. None of this exists yet in onchain environments. They also face frictions around collateral quality, capital efficiency and operational workflows that make perps unsuitable for their current infrastructure. Institutional adoption will take much longer and will require a deeper stack of financial, legal and operational tooling. The comparison made in this article applies to retail and small professional traders, for whom perps already offer a cleaner and more transparent instrument. For large financial entities we are still far from the point where perps can be integrated into their systems.
