Perpetual futures have become one of crypto’s signature financial products, but DRW Chief Executive Don Wilson says the public and regulators often misunderstand what those contracts actually are.
In a series of posts on X, Wilson said perpetual futures, or perps, are simply futures contracts with no expiration date. Many of the features people commonly associate with crypto perps, he argued, do not come from the contract itself. They come from how certain crypto exchanges chose to build and run those products.
“Most of what people think they know about ‘perps’ ... has nothing to do with the contract itself,” Wilson wrote.
Debate grows as regulated U.S. markets look at perps
Wilson’s comments come as interest in bringing perpetual futures into regulated U.S. markets continues to build. Several exchanges and market participants have explored launching perpetual futures outside crypto, though there are still open questions about how those products should be regulated and whether they belong under existing futures or swaps frameworks.
Kalshi is one recent example. After launching perps and seeing trading activity surge, the exchange recently submitted a proposal to regulators to expand those offerings into precious metals.
Wilson’s point was that the market should not confuse exchange-specific mechanics with the definition of perpetual futures.
Leverage, ADL and round-the-clock trading are implementation choices
Unlike traditional futures markets, crypto venues such as Hyperliquid run continuously, use digital collateral and can calculate margin requirements in real time. Those technological differences made it possible for exchanges to offer higher leverage and alternative liquidation systems, including auto-deleveraging, or ADL, which cuts winning positions when losing traders cannot cover their losses.
Wilson said those features should not be treated as core elements of perpetual futures themselves.
“I’m not a fan of ADL,” he wrote, adding that there is “no reason it needs to be used for perps.”
Instead, Wilson argued that digital payment rails create room to improve risk management. Traditional clearinghouses usually calculate margin once a day, and market participants often have until the following business day to post additional collateral. Markets can move sharply during that gap, which is why clearinghouses require relatively large initial margin buffers.
With real-time settlement, exchanges can recalculate margin on a continuous basis and require traders to post collateral immediately, Wilson said. That can reduce the need for large upfront margin requirements while preserving the same level of protection. Whether an exchange chooses to turn that efficiency into higher leverage is a business choice, he added, not a defining characteristic of perpetual futures.
Wilson says the real innovation is removing the need to roll contracts
Wilson said the main innovation behind perpetual futures is that investors do not need to keep rolling expiring contracts. In his view, that lowers transaction costs, reduces market impact and cuts roll slippage, while allowing positions to track the front end of the futures curve more closely.
Focus on economic substance, not legal labels
Wilson also urged regulators to look at economic substance rather than legal labels when deciding how perpetual futures should be treated.
“There’s no reason to treat perpetuals as swaps simply because they don’t expire,” Wilson wrote. “Economically, they’re futures.”
He ended by arguing that perpetual futures should be available across a wider range of markets, including commodities, securities and crypto. In his view, they should be treated as another tool for price discovery and risk management, rather than as an innovation unique to the crypto market.