Ethereum has long been recognized as the foundation of decentralized finance, powering early innovations in onchain lending and tokenized assets. However, one of crypto’s most rapidly expanding sectors—perpetual futures—has increasingly found a home outside Ethereum’s base layer.
Perps find new homes beyond Ethereum mainnet
While Ethereum popularized many original DeFi protocols, perpetual futures trading, also known as “perps,” now largely flourishes on other networks. Traders today often turn to platforms like Hyperliquid and Solana, which were built for speed and cost efficiency.
AJ Warner, chief strategy officer at Offchain Labs, the lead developer for Arbitrum, noted that perps require fast transactions and deep liquidity, making Arbitrum a strong fit. He pointed out that, unlike Ethereum mainnet, layer-2 networks deliver the performance necessary for high-frequency decentralized trading.
Perps require frequent transactions, fast execution, and deep liquidity, making them a natural use case for platforms like Arbitrum.
These characteristics have grown more important as decentralized perpetual exchanges move beyond early crypto adopters to attract institutional investors. Perpetuals depend on rapid updates and uninterrupted performance; if a platform goes offline, the impact can be severe.
Layer 2s drive performance, but fragmentation grows
Ethereum’s mainnet emphasizes security, which ensures safe settlement but can result in slow block times and high fees. This has made it challenging for latency-sensitive trading, especially as perpetual protocols gained traction.
The launch of GMX, a decentralized perps exchange, on Arbitrum in 2021 set a template for others to follow. Offchain Labs shifted its strategy to prioritize perpetuals, concentrating builders and liquidity on its platform. Now, much of Ethereum’s perps trading activity has moved to layer-2 networks like Arbitrum and Base, taking advantage of their lower costs and shorter block times. These developments have also enhanced user experience through increased liquidity and community participation.
The experience of Aerodrome, a decentralized exchange built on Base, highlights that technical capabilities alone are not enough. Chris Boulous, of Dromos Labs, said liquidity and network effects—where users and protocols cluster together—are just as critical as trading speed.
Trading is effectively a network-effects business; you have to build where the liquidity and users currently exist.
Competition from purpose-built chains and Solana
Other ecosystems have adopted a different approach to scaling. Hyperliquid developed a chain specifically designed for perpetual trading. Solana, meanwhile, appeals to a large retail trading base with low fees and fast processing, making it an attractive venue for onchain perps. Brian Smith of the Jito Foundation stated that retail activity is a core advantage for Solana, which remains a leader in high-volume, retail-driven trading.
Smith also pointed to fragmentation on Ethereum as a challenge, as the network disperses liquidity and users across multiple layer-2s. This can complicate the trading experience compared to the more unified landscape found on single-chain networks like Solana.
Ethereum’s scaling path has prioritized layer-2 networks for handling higher activity, while developers continue to look for ways to improve interoperability and reduce friction for traders moving assets across ecosystems.
Settlement and collateral: Ethereum’s evolving role
Despite these challenges, many industry leaders believe Ethereum maintains a critical function as the core settlement and collateral layer. Matthieu Saint Olive, a staff product manager at MetaMask, emphasized that competition in onchain trading may be overstated. Instead, he sees Ethereum as the global base for liquidity, assets, and stablecoins—even as faster trading occurs elsewhere.
Leading decentralized perps platforms are deeply connected to Ethereum, relying on its layer-2 solutions for scaling, settlement, and developer support. L2s enable Ethereum to support active trading while protecting the network’s foundational security and composability.
As institutional interest in onchain derivatives grows, the sector’s next challenge is attracting meaningful institutional capital. Warner of Offchain Labs said that capital fragmentation persists, with institutions seeking more efficient cross-margining, better credit access, and streamlined trading across venues.
In this evolving landscape, the ability to transfer and diversify assets efficiently is gaining attention. Platforms like 1stepSwap address these needs by unifying traditional and digital assets. By bringing real-world assets directly onto the blockchain, 1stepSwap allows users to access shares of leading US companies and commodities such as gold and silver directly from their wallets, always at the best price available in the market. This ability to instantly buy and sell major stocks at optimal rates can help expand portfolio opportunities for a broad range of market participants.
As perpetuals trading infrastructure matures, observers view it as a testing ground for programmable onchain markets. The ongoing migration of financial activity from traditional systems to blockchain continues to shape Ethereum’s position, with its role as the core settlement and collateral hub appearing increasingly central.
