Cryptocurrency Derivatives Are Now a Core Infrastructure for DeFi
Cryptocurrency derivatives are moving beyond mere speculative instruments to become core elements of decentralized finance (DeFi). In particular, perpetual futures (perps) and options are being reshaped beyond high-risk, high-return strategies into "DeFi powerhouses" that enhance liquidity and capital efficiency.
Market experts predict that this shift will accelerate in 2025. David Duong, head of investment research at Coinbase Institutional, recently stated on X (formerly Twitter) that "derivatives are being integrated across DeFi and their influence is expanding."
Explosive growth... Monthly transactions of 1,730 trillion won
Perpetual futures trading has grown rapidly, with monthly volume exceeding $1.2 trillion (approximately KRW 1,730 trillion) on decentralized exchanges. In particular, Hyperliquid, a decentralized exchange with a high-speed matching system, is rapidly expanding its market share.
This growth stems from the stagnation of the altcoin spot market. Due to stagnant price growth, traders have shifted en masse to derivatives trading, which offers greater returns than direct purchases.
Derivatives are gaining popularity because they allow for leverage of up to 50x or more, allowing for large profits (or losses) with small investments. In fact, speculative positions in derivatives reached 10% of the total market in the first half of 2025, but after the massive liquidation in October, this figure fell to around 4%.
From Speculation to Strategy: The Expanding Role of Derivatives in DeFi
Duong stated, "Derivatives are now being used as 'foundational building blocks' of DeFi." He explained that they are being used for complex financial strategies beyond simple speculation, linking them with liquidity pools, lending platforms, and other tools.
For example, traders can hedge price risk and simultaneously provide liquidity through perpetual futures, generating passive income. Furthermore, the practice of using perpetual futures as collateral to participate in profitable products is also gaining attention.
Institutional Accessibility and Strategic Utilization Drive DeFi Evolution
This trend is evidence that DeFi is no longer an early experiment, but is evolving into a mature financial infrastructure that maximizes capital efficiency and liquidity.
DeFi's accessibility and strategic scope are expanding as derivatives are increasingly utilized by not only traditional financial investors, institutions, and sophisticated traders, but also individual investors.
๐ Market Interpretation
Derivatives are moving beyond their traditional role as extreme speculative instruments to become a liquidity and risk management tool for DeFi. This reflects the maturity and strategic diversification of the cryptocurrency market.
๐ก Strategy Points
- Multifunctional use of perpetual futures, such as providing liquidity or using them as collateral.
- Leverage is used, but risk management settings that take liquidation risk into account are necessary.
- Investment decisions can be made by looking at the degree of derivatives integration on the DeFi platform.
๐ Glossary
- 'Perpetual Futures (perps)': Futures contracts that can be maintained without an expiration date.
Leverage: Expanding investment through borrowing; amplifying profits and losses.
- 'Liquidity Pool': A structure where users deposit assets to provide liquidity and receive fees or rewards.
- 'Hedge': A strategy that takes the opposite position to avoid risk.
๐ก Want to know more? AI-prepared questions for you:
A. Perpetual futures offer both leverage and liquidity, making them ideal for integration into the DeFi ecosystem. This makes them a key component, enabling more efficient risk management, profit generation, and capital utilization strategies.
A. This is because the slump in the altcoin spot market has led to a surge in profit-seeking funds into leveraged derivatives. At the same time, improvements in decentralized exchange technology and increased accessibility to regulated US platforms have also contributed.
A. Some DeFi protocols recognize perpetual futures positions as assets, allowing them to be used as collateral for loans or investments in yield-generating products. This allows for multi-layered capital utilization strategies.
A. High leverage carries the risk that even small price fluctuations can liquidate a position. Therefore, thorough risk management, including setting stop-loss levels, diversifying funds, and identifying expected liquidation prices, is essential.
A. As demand concentrates, the liquidity and strategic diversity of DeFi platforms increase, enabling participation from a wide range of investors, from institutional to retail. Ultimately, the DeFi ecosystem will evolve into a more robust and practical financial system.
TP AI Precautions
This article was summarized using a TokenPost.ai-based language model. Key points in the text may be omitted or inaccurate.
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