A perpetual exchange is a trading platform that facilitates the buying and selling of perpetual futures contracts for cryptocurrencies. These contracts differ from traditional futures by lacking an expiration date, allowing positions to remain open indefinitely. They use a funding rate mechanism to keep contract prices aligned with the underlying spot market. This enables leveraged trading without direct asset ownership.
Context
Perpetual exchanges represent a substantial portion of cryptocurrency trading volume, offering derivatives exposure to a wide range of digital assets. Regulatory scrutiny around these platforms is intensifying due to their leveraged nature and potential for significant market impact. Debates persist about the risks associated with high leverage and the robustness of liquidation mechanisms. New decentralized perpetual exchanges are gaining traction, challenging centralized incumbents.
Hyperliquid's introduction of USDH, a native stablecoin, strategically internalizes liquidity control and yield capture, reducing external stablecoin reliance for its derivatives exchange.
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