Written by: Nina Bambysheva, Forbes
Translated by: Saoirse, Foresight News
Today, let's discuss a seemingly niche yet intricate area in the crypto space: perpetual futures for tokenized real-world assets (RWAs). Sounds convoluted? But many in the circle believe that what truly ignites the RWA craze may not be the currently popular tokenized stocks, but rather the derivatives hidden behind them. Let's thoroughly explore the nuances of this today.
Quickly understand “perpetual contracts”
Perpetual futures (or “perpetual contracts”) are a type of cryptocurrency derivative that allows traders to bet on the future price of an asset, and the contracts never expire. For example, if you are bullish on Bitcoin, you can buy a Bitcoin perpetual contract and hold it for as long as you want.
This kind of trading does not require full upfront payment, just a margin - a small portion of the trading amount, with the rest covered by leverage. This means that a small amount of capital can control a large position, which is one reason why perpetual contracts are favored by traders.
Of course, some may ask: Since there is no expiration date, how do we prevent the contract prices from decoupling from the actual market? The answer is the “funding rate” mechanism. Every few hours, the parties in the market trading in opposite directions will settle fees: if there is stronger demand from longs, the longs pay the shorts; if the market turns bearish, the shorts pay the longs. During the holding period, this fee will be automatically deducted from or added to the account. For example, if you hold a $10,000 Bitcoin long contract and the funding rate at a certain time is 0.01%, then at settlement, you need to pay the short $1; if you are holding a short position, you will receive $1.
It sounds complex, but traders are quite fond of it. According to CoinGecko data, the trading volume of perpetual contracts on centralized exchanges reached $58.5 trillion in 2024, more than three times that of the spot market; trading volume on decentralized exchanges also reached $1.5 trillion.
The Collision of Tokenization and Perpetual Contracts
Now let's talk about another hot topic in the cryptocurrency space: tokenization. Industry executives often say “the market is going on-chain,” with visions painted by Larry Fink of BlackRock to Vlad Tenev of Robinhood: in the future, Tesla stocks, Apple stocks, bonds, and even your grandmother's antique collection could be traded on the blockchain. The market never closes, settlement times are reduced from two days to a few seconds, and funds tied up in settlement can be reactivated.
Although platforms like Robinhood and Kraken have launched tokenized stocks, more trading activity occurs in the perpetual contracts of these assets. The reason is simple: traders not only want to hold tokenized Apple stock but also want to profit by betting on its price fluctuations.
For example, xStocks launched in late June as tokenized products for stocks and ETFs, can be traded on centralized exchanges like Kraken, Bybit, as well as decentralized exchanges like Raydium and Jupiter on the Solana chain, with current trading volume reaching $558 million.
There is also iAssets launched by Injective blockchain developer Injective Labs, traded through the Helix decentralized exchange, with cumulative trading volume exceeding $1.7 billion. iAssets do not directly represent stocks but are perpetual futures linked to “seven major tech giants,” Circle, and even companies like SharpLink Gaming, which is centered on Ethereum. Like most cryptocurrency perpetual contracts, iAssets support leveraged trading, usually up to 25 times.
“Just last week, the trading volume was $107 million, and the previous week even reached $291 million.” Injective co-founder and CEO Eric Chen introduced. Trading fees are typically around 0.05%, and Injective does not actually hold stocks from Circle or Nvidia but obtains real-time stock prices from traditional markets through “oracles.” iAssets only needs to track these prices to allow traders to speculate on the underlying stocks.
Kalshi's newly appointed cryptocurrency head John Wang summarizes the appeal of RWA perpetual contracts as follows: “Want to trade $1 billion worth of Apple-related assets? You don't really need to raise $1 billion in stock; just hold corresponding long and short positions.” In simple terms, no one is really buying Apple stock; traders are just betting on price fluctuations, and these bets add up to create a trading scale of $1 billion. Add in the effect of leverage - with 25x leverage, $40 million can control a $1 billion position.
“Most RWAs are not assets that people want to hold long-term. Traders don't care about dividends, transfer rights, or voting at shareholder meetings; they just want to trade: 10x long on the S&P 500, short on Tesla, oil swing based on CPI data, bet on interest rate trends...”
This statement has some merit. Some have joked that the core product in the cryptocurrency space is “tokens”; if that’s true, then the new speculative methods may be the “real innovation” of this industry. This is also part of the reason for the success of Polymarket, Pump.fun, and perpetual contract giant Hyperliquid, which occupies 80% of the market share.
So the question arises: Before tokenized RWAs establish a foothold, will perpetual contracts make their spot trading irrelevant? Injective's Chen believes it won't. He states that without tokenized Tesla stock as a market anchor, synthetic derivatives like iAssets would struggle due to pricing chaos and lack of liquidity.
In traditional finance, market makers providing liquidity for derivatives (options or futures) of assets like Tesla often hedge risks by trading the underlying stocks, and the same is true in cryptocurrency. Tokenized spot assets provide traders with risk hedging tools - even if perpetual contract trading volume dominates, spot RWA remains foundational.
Think about it: traders are actually betting on the “derivatives of derivatives” of companies like Tesla and Nvidia, which sounds a bit absurd, as if cryptocurrencies have complicated things further. So why not trade options or futures directly through a traditional broker?
Because for cryptocurrency players, these products are more “user-friendly”!
“Compared to options, perpetual contracts are much simpler.” said TK Kwon, co-founder of the tokenization startup Theo, “The pricing and funding rate mechanisms are very basic, anyone can understand (although I have my doubts about that), and they are very capital-efficient.” In fact, this means traders only need to prepay a small portion of capital to control large positions through leverage, and they can renew indefinitely without worrying about expiration dates or the complex algorithms behind option pricing.
In contrast, trading stock options or futures in the U.S. has a much higher threshold - usually requiring “qualified investor” status or operating through brokers that can access platforms like the Chicago Mercantile Exchange (CME).
TK Kwon hopes that Theo can ultimately operate both spot and perpetual contract markets simultaneously, for example, being able to buy tokenized gold (spot) and bet on future gold prices (gold perpetual contracts) on the same platform. This model can foster strategies like “arbitrage trading,” where traders can profit from small price discrepancies between the two. For professionals, this is routine; for the entire market, it can enhance liquidity.
And that day may come soon: perpetual contract giant Hyperliquid is planning to upgrade its system to allow anyone to create new perpetual contract markets for almost any asset.
Ultimately, the significance of tokenization goes beyond “Apple stock on-chain” to a series of actions by traders after going on-chain: betting, hedging, and leveraging. The creativity of cryptocurrency developers should not be underestimated, especially in designing new trading (speculative) methods for the digital assets they create. This creativity is both a good thing and could lead to trouble.