Hayes: Wall Street’s shift to perps marks the biggest derivatives pivot in a decade

Arthur Hayes thinks the mood in traditional finance has flipped fast. Less than ten years after BitMEX launched 100x leverage perps and got mocked for it, major legacy exchanges now plan to copy the same product.

He wrote that SGX in Singapore and CBOE in the U.S. plan to launch perp-style contracts by the end of 2025. In the U.S. retail market, Coinbase already listed a version earlier this year.

Arthur also said a proposed CFTC sandbox could soon let new firms challenge the CME. After years of enforcement against crypto traders, he wrote that the CFTC now claims to support financial innovation.

Arthur said perps forced an “adapt or die” moment for Wall Street. He said global derivatives volume will shift from dated futures and options to contracts that never expire. He said the goal behind BitMEX perps was simple: one product, no expiry, full-time trading, and one deep pool of liquidity. He added that Hyperliquid now runs a Nasdaq‑100 equity perp through its HIP‑3 protocol, created by a firm called XYZ, and that this contract already trades more than $100 million per day.

The BitMEX creator said equity perps will be the hottest product of 2026 and that all major CEXs and DEXs will offer them next year.

BitMEX builds the perp under pressure

Arthur wrote that in May 2016 BitMEX had five staff: himself, Ben Delo, Sam Reed, Greg Dwyer, and Jinming Shao. OKCoin and Huobi controlled about 95% of crypto derivatives volume at the time.

BitMEX offered 100x leverage but had weak liquidity. The most liquid market back then was a Bitcoin‑margined quarterly future. BitMEX also ran daily, weekly, monthly, and quarterly contracts at once. Liquidity sat split too thin.

He said they wanted one product with no expiry. They also wanted something that felt like margin trading so users would stop asking questions about expiry and basis. Ben and Arthur asked Joseph Wang and Bhavik Patel for ideas. The result resembled a perpetual futures idea first published in 1993.

The first XBTUSD perp launched in May 2016. Longs and shorts exchanged cash based on Bitcoin and dollar funding rates from Bitfinex’s lending market. The margin system used insurance plus socialized loss, which the team joked about internally. They removed daily and monthly futures and kept quarterlies. Support tickets exploded. Traders said they did not understand funding. Many demanded that the product be removed. Inside the firm, one group wanted to kill the perp.

Bitcoin then surged. Arthur wrote that USD and BTC lending rates failed to react fast enough. With Bitcoin rising 10% to 25% a day, the perp traded at a large premium to spot. He gave an example: if the perp trades at $1,000 and spot trades at $500, the $500 basis forces extra margin on longs. He wrote that BitMEX marked positions to spot to avoid socialized losses, which made trading costly.

Arthur then fixed it by creating a look‑back index that turned the prior premium into the next funding rate. If the perp traded 1% above spot for eight hours, longs paid 1% to shorts at the next funding time. Funding was capped at 75% of the maintenance margin or 0.5%. With hourly funding, he said the daily max reached about 4.2%.

Retail leverage and equity perps go global

Arthur wrote that perps solved the two key retail needs: leverage and liquidity. Retail traders cannot access high leverage at legacy exchanges, so many turn to CFDs or short‑dated options. Options do not move one‑for‑one with price. Futures and perps do. He said perps give clean price exposure with extreme leverage.

He wrote that TradFi clearinghouses guarantee losses, so they chase traders through courts. In crypto, the most a trader can lose is posted margin. Crypto margin systems rely on insurance funds and socialized losses because blockchains cannot reverse payments. He said clearinghouses in traditional markets remain under‑collateralized and cannot survive crypto‑style volatility with high leverage.

BitMEX started with 3x leverage under guaranteed settlement and traded near zero volume for nine months. After switching to socialized loss, it moved to 100x by October 2015, and volumes surged. Arthur cited a trader comparison: a 10% Bitcoin move on a 100x perp with a 1% margin returns 10x on equity, while a one-month 30-vol option only returns about 3.1x.

Equity perps already trade over $100 million per day offshore. Arthur wrote that this will grow into the billions, adding that weekend hedging during political and military shocks will move to 24/7 equity perps.

Join a premium crypto trading community free for 30 days - normally $100/mo.