In May, Hyperliquid captured a record 6.63% of the crypto derivatives market—$200 billion out of $3 trillion. Over the past year, perpetual DEXs have emerged as one of the most significant trends in the crypto landscape.

The first generation of perpetual DEXs demonstrated the viability of on-chain derivatives trading. Now, the market is entering a new phase where execution quality, liquidity, and user experience are paramount. Using AFX as a case study, we explore the direction of this segment and the infrastructure for the next cycle.

First Wave

Perpetual contracts first appeared on centralized exchanges. In 2016, BitMEX was the pioneer in offering this tool to traders. A key feature was the funding rate—periodic payments between participants with long and short positions, which kept the futures price close to the spot price.

Subsequently, Web3 developers migrated this model to the blockchain, eliminating custodial fund storage and mandatory KYC. During the "DeFi summer" of 2020, the first perpetual DEXs emerged, splitting into two directions:

  • dYdX and its followers, including Hyperliquid, retained the order book and matching mechanism familiar from centralized exchanges;
  • Perpetual Protocol and GMX abandoned the traditional order book and built trading around a virtual automated market maker (vAMM), where liquidity is determined by smart contract parameters.

Each direction had its trade-offs. The order book in early hybrids kept the off-chain matching engine, which solved speed issues but maintained centralization. The vAMM removed counterparty matching, but large positions faced price slippage.

A common limitation was Ethereum. The first wave of projects implemented order acceptance, margin calculation, and liquidation on-chain, but network throughput and transaction costs became weak points. This pushed teams toward layer-two solutions and their own blockchains. For instance, in 2024, dYdX transitioned to a standalone network (dYdX Chain) based on Cosmos SDK. In this architecture, validators manage the order book off-chain, while positions, trades, and calculations are recorded on-chain.

Second Wave

The first generation proved that perpetual futures could be traded on-chain. The next stage expands the range of available tools, enhances execution quality, and builds infrastructure for a broader participant base.

Hyperliquid has become one of the most visible signals of this shift. It combined traditional order book trading with on-chain transparency, demonstrating that decentralized derivatives have evolved from niche experiments into a distinct trading category with proven product-market fit. Hyperliquid's growth has also raised the bar for the entire market: users expect speed, liquidity depth, and reliability from perpetual DEXs. Newer platforms like Lighter are following the same path.

Source: DefiLlama.

Trading volumes on perpetual DEXs continue to follow overall market cycles: in October 2025, they peaked at $1.36 trillion, then dropped to $596 billion by May 2026. Despite this, user demand for higher execution quality and access to a wide range of markets remains strong.

Trading perpetual futures imposes much stricter infrastructure requirements than spot AMM platforms. Traders prioritize minimal latency for order placement and cancellation, predictable liquidation mechanisms, deep liquidity, and stability during high volatility periods.

Simultaneously, real-world assets (RWA) open new opportunities for decentralized derivatives: traders can engage with instruments beyond cryptocurrencies while maintaining non-custodial fund storage, transparent settlements, and on-chain verification. Instead of using separate platforms for trading digital assets, commodities, and stocks, traders can operate with all these instruments on a single on-chain platform.

“Previously, there was debate about whether derivatives could even be moved to the blockchain. Now that question is settled—the market has proven the model's viability. Today, the discussion has shifted to what infrastructure this segment needs for further scaling and whether it can deliver execution quality, market breadth, and liquidity comparable to centralized platforms,” said AFX Growth Head Ken S.

Infrastructure for the Next Cycle

AFX is a sovereign L1 for decentralized derivatives. Its mainnet launched on May 18, 2026, with accumulated trading volume exceeding $1 billion in just over a month.

In its blog, the project describes itself as a Sovereign Trading Layer—a dedicated architecture where the transparency of perpetual DEXs combines with the speed and depth of centralized platforms.

According to the project, the median latency is under 100 ms, and throughput exceeds 100,000 transactions per second.

For professional traders, the network offers two additional solutions:

  • zero gas fees for order placement and cancellation;
  • MEV protection through a dedicated mempool.

AFX places a strong emphasis on risk management. The settlement price is calculated as the median of quotes from multiple independent sources. Liquidations occur in four stages, with the LP Vault pool serving as a buffer between losing positions and the broader market. Auto-deleveraging remains a last-resort mechanism. ForkLog has detailed this model in a separate article.

AFX trades USDC-margin linear perpetual contracts. Initially, it offered Bitcoin, Ethereum, gold (XAU), and oil (CL). Since then, the list has expanded to include commodities, stocks, and ETFs.

Designed for AI Agents

A key question for the next generation of perpetual DEXs is who will trade on them. Currently, most volume is generated by humans through web interfaces. AFX anticipates that a significant portion of activity will be taken over by autonomous trading agents.

AI agents place orders differently than retail traders. They require fast execution, predictable order processing, stable APIs, verifiable records, and clear risk limits. Platforms designed solely for human traders cannot meet such high demands.

AFX highlights four key features of its architecture for AI agents: finalization within 100 ms, a dedicated mempool with fair queuing, verifiable on-chain records, and native API access. For automated strategies, even small delays, opaque errors, or unstable execution directly impact trade outcomes.

This approach also applies to risk management. AFX is developing a system with isolated wallets, sub-accounts, risk limits for individual trading instruments, and the ability to instantly halt an agent's operations. This allows users to entrust capital to AI management without granting unrestricted access to their accounts.

Ken S. noted that, according to the project's roadmap, trading tools and storage managed by AI will emerge at a later stage of the platform's development. Additionally, in the second season of the AFX points program, a competition among AI agents is planned, which will serve as a public test of this functionality.

How to Trade on AFX

Onboarding consists of three steps. First, log in using an email or a Web3 wallet: MetaMask, Rabby, Coinbase Wallet, or WalletConnect protocol.

Source: AFX.

Next, deposit: transfer USDC to the trading account on the Arbitrum network.

Source: AFX.

After that, select a pair, leverage, margin mode, and open a position.

Source: AFX.

The maximum leverage depends on the market and risk level, reaching up to 100x. Both cross and isolated modes are available. The fee is 0.01% for makers and 0.06% for takers, with the funding rate recalculated every four hours.

In addition to trading, there are earning tools. The AFX LP Vault is open to everyone—APY exceeds 14%.

The Vaults section on AFX. Source: AFX.

The referral program allows users to earn up to 35% from the commissions of referred traders. Users with VIP status enjoy reduced fees and a share of the platform's revenue.

At the time of writing, a user rewards program is active on the platform. The first season lasts eight weeks—from May 25 to July 20, 2026.

Points are awarded not only for trading volume but also for overall activity: executing trades, working across different markets, and providing liquidity through the LP Vault. Accruals occur weekly on Mondays.

Points earned in all three seasons of the program will be converted into tokens after the TGE.

What the Next Stage Will Show

At AFX, it is believed that in the coming years, AI agents will become one of the main participants in the on-chain derivatives market. However, new architectures will still face significant tests of extreme volatility and mass liquidations.

Business models based on token incentives remain uncertain. The history of the crypto market shows that a significant portion of liquidity comes for rewards and leaves after the TGE.

The regulatory landscape is also an open question. The CFTC and SEC have already begun reviewing rules for crypto derivatives, including perpetual futures. This could significantly impact the market's future development.