For years, Ethereum has been synonymous with decentralized finance.
It pioneered onchain financial tools like lending protocols and tokenized assets, which today underpin much of the crypto economy
But one of crypto’s fastest-growing sectors, perpetual futures, or “perps”, has largely flourished elsewhere. Ask traders where onchain perpetuals live today, and the answer is more likely to be Hyperliquid or Solana than Ethereum. That is because perpetuals demand something Ethereum’s base layer was never designed to optimize for: extremely fast, low-cost, high-frequency trading. “Perps require frequent transactions, fast execution, and deep liquidity,” said AJ Warner, chief strategy officer at Offchain Labs, the main developer firm behind the layer-2 Arbitrum. “That makes them a natural use case for the Arbitrum platform.” The distinction has become increasingly important as decentralized perpetual exchanges mature from crypto-native products into markets attracting institutional attention.
Why Ethereum L1 fell behind Perpetuals are one of the most demanding applications in crypto. Their exchanges require thousands of rapid-fire updates, liquidations, funding payments, and order executions, all without interruption. “Perps onchain are really hard,” said Brian Smith of the Jito Foundation. “It’s not just the average performance that matters, it’s the 99.99% success rate. If your perps platform goes down, that’s existential risk.” Ethereum’s security-first architecture made it an ideal settlement layer, but historically, its block times and gas costs made it an expensive place to run latency-sensitive trading applications.