Trade everything, never close: RWA Perpetual Contracts — The final piece of the puzzle where DeFi engulfs Wall Street (Part 2)

In the third chapter of the “Previous Article,” we focused on projects like Synthetix, Gains Network, and Ostium. This article will build upon that foundation and further explore other representative cases.

III. Key Projects and Architectural Battles: Oracle Pricing + Pool-Based vs. Order Book

3.3 Order Book Representation: Hyperliquid HIP-3 Ecosystem

In the order book (Orderbook) track, the Hyperliquid HIP-3 ecosystem accounts for the vast majority of trading volume and open interest. Outside of Hyperliquid, platforms like Lighter and Vest Markets have also launched competing initiatives.

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Hyperliquid & HIP-3: Decentralized Nasdaq Infrastructure

Hyperliquid has completed a strategic transformation from a single perpetual contract exchange to a “high-performance clearing and matching infrastructure layer” through the HIP-3 upgrade. Its core vision is to split traditional financial functions—specifically, DCM (Designated Contract Market) and DCO (Derivatives Clearing Organization)—on-chain. Under this architecture, Hyperliquid itself acts as a unified DCO, providing the underlying matching engine, risk control, and settlement; third-party teams serve as “Deployers,” taking on the DCM role, responsible for front-end customer acquisition, market operations, and asset onboarding. This layered design aims to create a “decentralized Nasdaq,” with a unified settlement layer supporting perpetual trading of various assets.

Illustration: The above diagram summarizes Hyperliquid’s goal to become “a more open, transparent, and efficient financial system” in response to CFTC concerns about perpetual contracts and 24/7 trading. For example: replacing traditional DCO reliance on banking systems with 24/7 automated clearing protocols, eliminating bulky FCM intermediaries with non-custodial technology, and reconstructing DCM regulatory logic using real-time on-chain data—demonstrating how blockchain technology can directly overcome the physical time lag and efficiency bottlenecks of traditional finance.

HIP-3 Ecosystem RWA Perps Projects

Project Overview

• Trade.xyz, developed by Hyperliquid’s official asset layer team HyperUnit, was the first to launch the XYZ100 perpetual contract tracking the Nasdaq 100 index, along with several major US tech stocks. Leveraging extensive asset bridging (supporting cross-chain liquidity injection for BTC, ETH, SOL, and other mainstream assets via HyperUnit), Trade.xyz currently leads all HIP-3 perpetual exchanges in trading volume, contributing about 90% of market transactions.
• Markets.xyz, launched by Kinetiq, a Liquid Staking project on Hyperliquid, is an RWA Perps DEX. Its focus differs slightly from Trade: it concentrates on indices and offers various macro/perpetual contracts (covering S&P 500, US tech indices, Euro, US Treasury, energy indices, etc.). It also uses USDH as margin collateral, significantly reducing trading fees and increasing rebates—creating a cost advantage to compete with Trade (USDH is a native stablecoin issued by Native Markets, designed to compete with cross-chain asset projects like Unit through fee discounts and rebates).
• Felix initially was Hyperliquid’s lending and stablecoin protocol, issuing synthetic USD (feUSD) via CDP, and providing a “Felix Vanilla” matching lending market. After HIP-3 launched, Felix expanded its scope and became one of the deployers for HIP-3 perpetual markets. Felix’s settlement currency is also USDH stablecoin.
• Dreamcash, incubated by Beam, is a mobile-focused platform positioning itself as a mobile trading terminal for RWA perpetual contracts.

Core Pricing Mechanism: Market-Driven Pricing + Oracle Risk Control

For 24/7 RWA Perps projects built on the Orderbook model, the main technical challenge is how to provide fair and robust pricing when the underlying assets are closed for trading. Taking Trade in the HIP-3 ecosystem as an example, its core design involves a dual mechanism of market-based pricing and oracle risk control.

• Price Discovery: Determined by the market, not the oracle

Unlike pool-based models that directly use oracle quotes as transaction prices, Trade’s transaction prices are entirely generated by buy-sell interactions on its order book. Oracles do not set the price but act as “referees,” providing prices mainly for risk management.

• Mark Price: Used for calculating user P&L and liquidation decisions

Profit/loss calculations, funding rates, and liquidations do not rely on instantaneous transaction prices but on a more stable mark price. Trade’s mark price is generated by taking the median of three components: oracle price, long-term deviation from the mean, and the immediate order book price. This design aims to smooth out market noise and prevent malicious manipulation, ensuring users are not wrongly liquidated due to flash crashes on the order book.

• Data source switching for oracles during all trading hours: To enable 24/7 operation, the oracle data sources switch seamlessly based on US stock trading hours: during normal trading hours, external oracles like Pyth are used; during after-hours, prices from ATS (alternative trading systems, e.g., Blue Ocean) are referenced; on weekends and market closures, internal pricing modes are activated.

3.4 Comparison of Ostium vs. Trade Pricing Logic and Oracle Roles

Ostium opts for higher security and price accuracy at the expense of some usability (unavailable on weekends). Trade prioritizes availability and gameability, sacrificing some price stability (possible de-pegging or high funding rate volatility on weekends). The role of oracles differs significantly: in Ostium’s pool-based model, oracles are the price setters (determine trades), whereas in Trade’s model, oracles act as referees (influence funding rates and liquidation decisions, but do not directly set transaction prices).

Chapter 4: Regulatory Restrictions on RWA Perps

4.1 Core Logic of US Derivatives Regulation: Underlying Asset Classification Determines Compliance Path

In the US financial regulatory system, the primary step in listing a derivative and determining its regulatory pathway is to establish the legal nature of its underlying asset. This directly influences jurisdiction and the licensing requirements for exchanges.

Assets like gold, silver, forex (FX), and Bitcoin are legally defined as “commodities” in US law. Perpetual contracts based on such assets fall under the commodity futures category, which are regulated primarily by the CFTC. Exchanges only need to register as a DCM (Designated Contract Market) and connect to a DCO (Derivatives Clearing Organization) to operate.

However, if the underlying is a single stock or a narrow-based security index, the regulatory landscape changes fundamentally: derivatives involving single securities or narrow indices must be jointly regulated by the SEC and CFTC.

The requirement for joint SEC and CFTC regulation is the main reason why compliant stock perpetual contracts are virtually absent in the US market today. This stems from a regulatory turf war in the 1980s between SEC and CFTC over emerging stock futures and narrow index futures. The resolution was the 1982 Shad-Johnson Agreement, which effectively banned trading single-stock futures and narrow index futures on US exchanges to avoid further conflicts. Although the 2000 Commodity Futures Modernization Act (CFMA) amended this ban to allow “security futures products,” it imposed strict conditions: such products must be jointly regulated by SEC and CFTC, creating a significant legal barrier to innovation in equity derivatives.

Any platform wishing to offer stock perpetuals to US retail clients must obtain both licenses:

• Register with the CFTC as a DCM or SEF
• Register with the SEC as a national securities exchange

This entails complying with two sets of standards—often conflicting in margin calculations, disclosure, and reporting—raising the compliance bar to a level that effectively acts as a de facto ban on retail stock perpetuals in the US.

4.2 Exchange Architecture Conflicts: Why Compliance Migration Is Costly

If US exchanges like Coinbase or Robinhood truly want to launch Equity Perps, they face not only licensing hurdles but also fundamental infrastructure conflicts.

Most crypto exchanges use a “vertical integration” architecture, while US regulations demand a risk-isolated “three-tier” separation. To be compliant, crypto exchanges must dismantle their efficient tech stacks and adapt to traditional clearing processes.

Comparison of Crypto vs. TradFi Market Architectures:

Thus, US exchanges aiming to list Equity Perps must solve both the “dual licensing” legal challenge and the physical contradiction between “24/7 trading” and “non-24/7 banking settlement.” This infrastructure mismatch is currently the biggest bottleneck.

4.3 Offshore Market Window: Regulation S Opportunity

Given the short-term difficulty of breaking through US regulatory barriers, most stock perpetual liquidity is pushed offshore. Offshore exchanges (serving non-US clients) typically rely on the SEC’s Regulation S exemption, which states that securities issued and sold entirely outside the US, with no targeted US sales efforts, do not require SEC registration. This requires platforms to implement strict geofencing and legal disclaimers to block US IP addresses and users.

In this context, RWA Perps DEXs have a unique market window. They can partner with traditional offshore brokers to create a mutually beneficial distribution model:

CFD Broker + RWA Perps DEX Partnership:
This model could appeal to traditional brokers, especially as regulatory restrictions tighten on CFD products (e.g., EU ESMA leverage limits). On-chain perpetuals often fall into regulatory gray areas and can offer higher leverage. Brokers only need to handle front-end KYC/AML, outsourcing margin management, clearing, and hedging to on-chain protocols—significantly reducing back-office costs. The DEX’s self-custody nature also addresses trust issues related to fund misappropriation by small brokers.

For Equity Perps DEXs, this approach solves the critical customer acquisition challenge. Crypto-native retail interest in US stocks is limited, but traditional brokers hold large pools of retail clients seeking US exposure. Embedding as a backend for brokers allows DEXs to leverage existing customer bases, while brokers handle onboarding and compliance, enabling scalable growth.

4.4 Potential Legal Risks

Despite the business viability of offshore and DeFi models, US regulators’ “long arm” enforcement remains a concern. If offshore protocols fail to effectively block US users (via front-end checks or IP blocking), or if their activities are deemed to involve the US market, they risk severe penalties.

Chapter 5: External Variables—The Dual Impact of NYSE’s 24/7 Plan

News that ICE, the parent company of NYSE, plans to launch a 24/7 trading platform presents a major external variable for RWA perpetual contracts. If realized, this could have profound dual effects on DeFi. If users can trade Tesla stocks legally and securely on regulated NYSE or Interactive Brokers 24/7, DeFi’s “around-the-clock trading” advantage may diminish. To survive, DeFi protocols might need to innovate with higher leverage, permissionless access, or complex, composable financial products.

Core Drivers and Mechanisms: Moving from “T+2” to “On-Chain 24/7”

NYSE’s planned 24/7 platform aims to tokenize US stocks and ETFs, utilizing blockchain tech for instant settlement (T+0), stablecoin deposits, and multi-chain custody. This would break the traditional separation of trading and settlement, reducing risks like those exposed during the GameStop saga. It’s a strategic move to compete with Nasdaq and other incumbents, transforming from an electronic order book to a comprehensive on-chain infrastructure—merging DeFi efficiency with regulatory standards.

Catalyzing and Challenging RWA Ecosystem: Liquidity and Price Discovery

NYSE’s entry would endorse RWA tokenization, solving liquidity issues caused by weekend market closures and price gaps. 24/7 spot price flows could lower arbitrage costs and reduce funding rate volatility, deepening markets. While the “walled garden” compliance approach may squeeze out some non-compliant or synthetic assets, it also guides stablecoins and clearing facilities toward compliance. Native crypto RWA projects should leverage this window before 2026 to differentiate—offering high leverage, no barriers, and cross-protocol interoperability.

Future Outlook: Deep Integration of Traditional and Crypto Finance

Despite debates over “24/7 surveillance” and regulatory pressures, on-chain finance is an irreversible trend. In the medium to long term, traditional giants will reshape value chains, pushing brokerages and custodians to innovate. The future will feature a hybrid ecosystem: regulated platforms providing trusted liquidity, while DeFi continues to innovate in derivatives and global asset allocation. As boundaries blur between crypto and traditional assets, the global capital markets will enter an era driven by AI, real-time pricing, and atomic settlement.

Summary

• Structural upgrade in Delta One (linear derivatives) demand. Retail traders currently rely on inefficient tools for directional leverage. US 0DTE options suffer from unnecessary Theta decay; offshore CFD markets face opaque broker risks. RWA Perps, by removing time decay and centralization risks, offer a transparent, mathematically linear on-chain alternative for this persistent market need.
• Architectural trade-offs in asynchronous markets. Connecting 24/7 crypto infrastructure with traditional markets constrained by trading hours forces protocols to choose between high leverage, continuous trading, and risk externalization. Two models have emerged: Ostium’s active hedging pools prioritize solvency by halting trading during closures; Trade.xyz (Hyperliquid-based) transforms weekend volatility into dynamic funding rates and spreads, maintaining 24/7 trading.
• Offshore distribution strategies. Facing SEC and CFTC dual jurisdiction, compliant retail stock perpetuals are currently unfeasible in the US. Early growth of RWA Perps will depend on offshore markets via Regulation S exemptions. Future models may involve partnerships with traditional CFD brokers, outsourcing onboarding and compliance while focusing on on-chain margin and settlement.
• Adapting to 24/7 traditional finance infrastructure. NYSE’s push for continuous trading could erode DeFi’s “all-day trading” edge. While this reduces weekend gap risks, it compels DeFi to diversify strategies. Long-term, RWA Perps must differentiate through permissionless access, capital efficiency, and higher leverage, evolving into a high-speed layer built on regulated spot markets.

Looking ahead, RWA Perps are not just shadow markets for Nasdaq or CME; they represent a fundamental rearchitecture of pricing, liquidity distribution, and risk transfer mechanisms. As liquidity infrastructure matures, they will become the optimal on-chain vehicle for global leverage demand.