I. Product Essence: Structural Integration of Traditional Assets and On-Chain Derivatives

The essence of stock perpetual contracts is an on-chain synthetic derivative that anchors the price fluctuations of traditional stocks. Users can gain long and short exposure to the price movements of U.S. stocks such as Apple, Tesla, and Nvidia by depositing stablecoin collateral, without actually holding the stocks themselves or enjoying shareholder rights such as dividends and voting. This product cleverly combines the asset base of traditional financial markets with the mature perpetual contract mechanism of the crypto market, creating a new financial instrument that retains the risk characteristics of stock prices while offering the flexibility of on-chain trading.

From a product positioning perspective, it is essential to clearly distinguish the fundamental differences between stock perpetual contracts and tokenized stocks (RWA Stock Tokens). Tokenized stocks are typically held by custodians who actually own the corresponding stocks and issue tokenized certificates representing real equity on-chain, with legal attributes and regulatory frameworks highly consistent with traditional securities. In contrast, stock perpetual contracts do not involve any equity relationship; they solely track stock prices through oracles and construct a pure price risk trading market on-chain based on funding rates, collateral, and liquidation mechanisms. This difference places the two in entirely different tracks: the former is a custody and circulation solution for asset tokenization, while the latter is an innovative derivative for risk trading.

The rise of stock perpetual contracts is not accidental but the result of multiple factors working together. On the demand side, there has been a long-suppressed demand from global users for U.S. stock trading—traditional brokerage account opening processes are cumbersome, cross-border capital flows are restricted, and trading hours are fixed, contrasting sharply with the crypto users' habits of "24/7 trading, stablecoin settlement, and high leverage flexibility." Stock perpetual contracts provide users with an alternative path to bypass the traditional financial system and directly participate in U.S. stock price fluctuations. On the supply side, since 2025, the maturity of oracle technology, the proliferation of high-performance chain infrastructure, and the intense competition among Perp DEXs have provided the technical foundation and market impetus for the productization of stock perpetuals. More importantly, stock perpetuals happen to stand at the intersection of the two major narrative lines of "RWA real-world assets" and "on-chain derivatives," possessing both the vast capital base of traditional assets and the high growth potential of crypto derivatives, naturally becoming the focus of market attention.

II. Underlying Mechanism: The Triple Challenge of Price, Liquidation, and Leverage

The stable operation of stock perpetual contracts relies on a set of precisely designed underlying mechanisms that encompass multiple dimensions, including price discovery, asset synthesis, risk control, and leverage management. Among these, the price source (oracle) is the cornerstone of the entire system. Since on-chain protocols cannot directly access real-time quotes from Nasdaq or the New York Stock Exchange, they must reliably transmit traditional market price data to the blockchain through decentralized oracles. Current mainstream solutions include Pyth Network, Switchboard, Chainlink, and some protocols' self-developed Oracle systems. Pyth emphasizes high-frequency updates and anti-manipulation by collaborating directly with market makers and exchanges to obtain first-hand quotes; Switchboard offers a highly customizable price source aggregation solution, allowing protocols to switch update strategies based on different time periods; Chainlink relies on a decentralized node network to provide robust, continuous, and verifiable price feeds. A few leading protocols, such as Hyperliquid, adopt self-developed oracles to achieve a higher degree of pricing autonomy through multi-source quote aggregation, internal index construction, and off-chain risk control verification.

The core issues that oracles need to address go far beyond data transmission. The U.S. stock market has unique structures such as trading hour restrictions (not 24/7), pre-market and after-hours volatility, and suspension mechanisms, which require oracles to intelligently handle market state transitions. Mainstream solutions ensure that on-chain prices do not deviate from real-world anchors during U.S. market closures by introducing market open/close markers, TWAP smoothing algorithms, and outlier filtering mechanisms, while also avoiding price manipulation risks due to insufficient liquidity. For example, after the U.S. market closes, oracles may automatically switch to low-frequency update modes or generate internal reference prices based on the last effective price combined with on-chain supply and demand, maintaining trading continuity while controlling tail risks.

In terms of synthetic asset construction, stock perpetual contracts do not mint tokens representing real equity but instead create virtual positions linked to the underlying stock price through smart contracts. Users deposit stablecoins like USDC as collateral to open long or short positions, with profits and losses entirely determined by the contract price and settlement rules. The protocol adjusts the long-short balance through a funding rate mechanism—when positions in one direction become overly concentrated, the funding rate will guide users to open positions in the opposite direction, keeping the system's overall risk exposure relatively neutral. Compared to crypto perpetuals, stock perpetuals' funding rates also need to consider additional factors such as the overnight costs of U.S. stocks and the trading rhythm of the real market, presenting more complex cyclical characteristics.

The liquidation mechanism is the core link of the risk control system for stock perpetuals, with the challenge of simultaneously addressing two asynchronous market fluctuations: U.S. stocks trade only during specific hours, while the crypto market operates 24/7. When the U.S. market is closed and the crypto market experiences significant volatility, the value of user collateral may rapidly shrink, leading to liquidation risks for stock perpetual positions. To address this, mainstream protocols have introduced cross-asset risk engines and dynamic parameter adjustment mechanisms. During U.S. market closures, the system automatically raises the maintenance margin rate, lowers the maximum leverage limit, and adjusts the liquidation threshold in advance to cope with the gap risk caused by information discontinuity. Once the U.S. market opens, the risk control parameters gradually return to normal. This design preserves the continuity of on-chain trading while reducing systemic risks arising from cross-market mismatches through dynamic risk control.

Leverage design also reflects the differences between traditional assets and crypto products. In crypto perpetual contracts, some platforms offer leverage of hundreds of times or even higher, but in the stock perpetual domain, mainstream protocols generally keep leverage limits between 5 to 25 times. This is due to multiple considerations: first, stock prices are influenced by fundamental factors such as company earnings reports, macro events, and industry policies, resulting in a volatility structure different from that of crypto assets; second, the U.S. market has unique scenarios such as gap openings and after-hours trading, where high leverage can easily trigger chain liquidations; finally, regulators have always maintained a cautious attitude towards equity derivatives, and restraining leverage helps reduce compliance risks. Even if the platform interface displays a maximum leverage of 20 times, the actual available leverage is often dynamically adjusted based on market conditions, underlying liquidity, and user position concentration, forming a "superficially flexible, fundamentally strict" risk control system.

III. Market Landscape: Differentiated Competition and Ecological Evolution of Perp DEXs

The current market for stock perpetual contracts has formed a competitive landscape dominated by leading Perp DEXs such as Hyperliquid, Aster, Lighter, and ApeX, each showing significant differentiation in technical architecture, product design, and liquidity strategies.

Hyperliquid quickly entered the stock perpetual space through its self-developed high-performance chain and the HIP-3 third-party construction framework, leveraging projects like Trade.xyz. Its core advantage lies in deep order books and institutional-level liquidity—XYZ100 (Nasdaq 100 index synthetic contract) can achieve daily trading volumes of up to $300 million, while the open interest for commodities like SILVER and GOLD remains stable at tens of millions of dollars. Hyperliquid employs a multi-source median pricing mechanism, integrating external oracle prices, internal EMA smoothed values, and order book market prices to generate robust mark prices for liquidation and margin calculations. This "professional-level matching + synthetic pricing" dual-channel design strikes a good balance between high-frequency trading and risk control.

Aster innovatively launched a dual-mode architecture with Simple and Pro modes, covering different risk-averse user groups. The Simple mode adopts an AMM liquidity pool mechanism, allowing users to open and close positions with one click and zero slippage, suitable for high-frequency, small-scale, short-term operations, with a stock perpetual leverage limit of 25 times. The Pro mode, based on an on-chain order book, supports advanced order types such as limit orders and hidden orders, providing deeper liquidity and more refined strategy execution, with a stock perpetual leverage limit of 10 times. From a data performance perspective, contracts for tech stocks like NVDA in Pro mode maintain daily trading volumes in the millions of dollars, with steadily increasing open interest, indicating ongoing participation from professional traders. Aster achieves effective user segmentation and ecological expansion through this "traffic entry + deep market" dual-layer design.

Lighter's core selling point is its zk-rollup provable matching system, where all trading and liquidation processes can be verified on-chain through zero-knowledge proofs, emphasizing transparency and fairness. Its stock perpetual currently supports 10 U.S. stock targets, with a uniform leverage set at 10 times, demonstrating a relatively robust risk control orientation. The liquidity structure shows a clear concentration of leading assets—COIN (Coinbase) often exceeds $10 million in daily trading volume, while targets like NVDA, despite moderate trading volumes, have high open interest, reflecting the presence of medium to long-term strategy funds. Lighter cleverly balances user experience: the front-end interaction is minimal, suitable for beginners to quickly get started; the underlying structure remains a professional order book, meeting institutional execution needs.

It is noteworthy that the traffic entry for stock perpetuals is expanding from a single official website to a diverse ecosystem. Based.one aggregates Hyperliquid's contract engine to provide a more consumer-friendly trading interface; Base.app incorporates Lighter as a built-in trading module, allowing users to open positions without leaving their wallets; super applications like UXUY further simplify operational paths, packaging stock perpetuals into an experience close to Web2 products. This "underlying protocol + application layer entry" division of labor is lowering the barriers to user participation, driving stock perpetuals from niche professional tools to mainstream trading products.

IV. Regulatory Challenges: Finding Balance Between Innovation and Compliance

The greatest uncertainty facing stock perpetual contracts comes from the regulatory side. Although there has yet to be specific legislation targeting such products globally, regulatory agencies have maintained a high level of attention to their potential risks. The core issue lies in the definition of legal attributes: do stock perpetual contracts constitute unregistered securities derivatives?

From regulatory practice, the U.S. SEC has consistently adopted a substance-over-form principle for derivatives based on security prices. As long as the economic substance of a product is highly correlated with regulated securities, regardless of its technical packaging, it may fall under the jurisdiction of securities law. The European ESMA has also repeatedly emphasized under the MiCA framework that on-chain derivatives anchored to traditional financial assets must still comply with existing financial regulations. This means that although stock perpetuals do not involve real equity custody, their close association with U.S. stock prices may classify them as securities derivatives or contracts for difference (CFDs), triggering a series of compliance requirements such as licensing, disclosure, and investor protection.

Current regulatory focus remains on products like tokenized stocks that directly map to physical assets, while the regulatory attitude towards synthetic risk exposures like stock perpetuals is still in the observation stage. Possible future regulatory paths include: strengthening the compliance responsibilities of front-end operating entities (such as trading interface providers and liquidity facilitators); requiring price indices and oracle data sources to be publicly transparent; limiting high leverage, strengthening KYC and regional access; and clearly incorporating products into existing derivatives regulatory frameworks.

For protocols, strategies to reduce compliance risks include: clearly distinguishing "price tracking" from "equity tokens," emphasizing the synthetic and risk-hedging attributes of the product; adopting multi-source decentralized oracles to avoid price manipulation suspicions; setting reasonable leverage limits and risk parameters to avoid excessive speculation; and fully disclosing product risks and legal disclaimers in user agreements. In the long run, the compliant development of stock perpetuals may require exploring paths such as partnerships with licensed institutions, services in restricted jurisdictions, or innovative pilot projects based on regulatory sandboxes.

In addition to regulatory risks, stock perpetuals also face a series of market and technical risks. Oracle failures or malicious manipulation may lead to erroneous liquidations; cross-market volatility mismatches may amplify tail risks; insufficient liquidity may trigger extreme slippage and difficulty in closing positions; and smart contract vulnerabilities may be exploited, resulting in financial losses. These risks require protocols to establish multi-layered risk control systems, including but not limited to: multi-oracle redundancy and anomaly detection, dynamic margin adjustments, insurance fund buffers, contract security audits, and bug bounty programs.

V. Future Outlook: From Niche Innovation to Mainstream Financial Infrastructure

In terms of market size, the potential space for stock perpetual contracts is vast. The total market capitalization of publicly listed companies globally has approached $160 trillion, with non-U.S. markets accounting for more than half, forming a massive asset pool of about $80 trillion. Even if only a tiny proportion of funds participate through perpetual contracts, the absolute scale can easily reach hundreds of billions of dollars. Referring to the structural characteristic where the trading volume of crypto perpetual contracts has exceeded that of spot by more than three times, stock perpetuals are expected to replicate a similar trend of derivativeization in the traditional asset domain.

In terms of product evolution, stock perpetuals may only be the starting point of the "full asset perpetualization" wave. As pricing mechanisms, liquidation systems, and liquidity infrastructure mature, macro assets such as commodities (gold, oil), stock indices (S&P, Nasdaq), foreign exchange (euro, yen), and even interest rates may be introduced into the perpetual contract framework. Perp DEXs will gradually evolve from crypto-native trading platforms into comprehensive derivative markets covering multiple asset classes, becoming a key interface connecting traditional finance and on-chain ecosystems.

The regulatory environment will gradually shift from ambiguity to clarity. It is expected that within the next 2-3 years, major jurisdictions will issue classification guidelines and regulatory frameworks for on-chain derivatives, clarifying the compliance boundaries for stock perpetuals. This may bring short-term pain but will benefit the industry’s clearing and standardized development in the long run. Platforms that can proactively build compliance capabilities, establish risk management systems, and maintain communication with regulators will gain competitive advantages under the new rules.

In summary, stock perpetual contracts are at a critical breakthrough point from zero to one. They are not only an inevitable choice for Perp DEXs seeking new growth narratives but also a testing ground for the integration of traditional assets and crypto finance. Although the road ahead is still filled with technical challenges and regulatory uncertainties, the enormous market demand and asset scale behind them determine that this is a track that cannot be ignored. In the future, stock perpetuals may not only become a pillar category in the on-chain derivatives market but also reshape the way global retail investors participate in U.S. and even global asset trading, truly realizing a borderless, around-the-clock, and democratized financial market. In this process, protocols that can balance innovation, risk, and compliance are most likely to become the builders of the new era's financial infrastructure.