Perpetual futures are entering regulated markets, and the objection to them is serious: retail-driven, high-leverage instruments will import systemic risk. But the critique is aimed at the wrong target. Systemic risk in a derivatives market is a property of the venue on which the perpetuals are traded, not the contract. The risk is set by venue choices: leverage caps, margin, funding design, default management. None inherent to a no-expiry contract.
The concern isn’t baseless. Crypto’s sharpest deleveraging episodes — with the October 2025 cascade among the most recent — have many causes: macro shocks, stablecoin de-pegs, exchange outages, oracle failures, over-leverage and thin liquidity. What turns a sell-off into a systemic event is the risk transmission mechanism, and in crypto that is usually the liquidation cascade: forced liquidations depress prices, transmit to other venues through shared reference pricing and arbitrage,…
