Perpetual Contracts + Tokenization: Behind the RWA Boom?

Written by Nina Bambysheva, Compiled by Forbes

: Saoirse, Foresight News

Today, let's talk about a seemingly unpopular but hidden mystery in the crypto circle: perpetual futures for tokenized real-world assets (RWAs). Sounds quite winding? However, many people in the circle feel that what can really ignite the RWA craze may not be the tokenized stocks that are currently in the limelight, but the derivatives hidden behind them. Let's take a good look at this doorway today.

A quick overview of "perpetual contracts"

Perpetual futures (or "perpetual contracts") are cryptocurrency derivatives that allow traders to bet on the future price of an asset without the contract expires. For example, if you are bullish on Bitcoin, you can buy Bitcoin perpetual contracts and hold them for as long as you want.

This type of trade does not require paying the full amount upfront, but only requires a margin – a small percentage of the transaction amount and the rest is covered by leverage. This means that small amounts of money can leverage large positions, which is one of the reasons why perpetual contracts are so popular among traders.

Of course, some people will ask: since there is no expiration date, how to prevent the contract price from being disconnected from the actual market? The answer is the "funding rate" mechanism. Every few hours, the two sides trading in opposite directions in the market settle fees: if the demand for the bulls is stronger, the bulls pay the shorts; If the market turns bearish, the bears pay the longs. This fee will be automatically deducted or credited to your account during the holding period. For example, if you hold a Bitcoin long contract of $10,000 and the funding rate is 0.01% for a certain period, you will need to pay $1 to the short at settlement. If you are short, you will receive $1.

It sounds complicated, but traders have a soft spot for 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. Decentralized exchanges also have a trading volume of $1.5 trillion.

The collision of tokenization and perpetual contracts

Let's talk about another hot topic in the cryptocurrency space: tokenization. Industry executives often say that "the market is going on-chain", and everyone from BlackRock's Larry Fink to Robinhood's Vlad Tenev has envisioned a future where Tesla stock, Apple stock, bonds, and maybe even grandmother's antique collection can be traded on the blockchain. The market is never closed, the settlement time is shortened from two days to a few seconds, and the funds deposited in the settlement process can also be reactivated.

While platforms like Robinhood, Kraken, and others have launched tokenized stocks, more trading activity occurs on perpetual contracts for these assets. The reason is simple: traders don't just want to hold tokenized Apple shares, but they want to profit by betting on their price movements.

For example, xStocks, launched in late June, as a tokenization product for stocks and ETFs, can be traded on centralized exchanges such as Kraken and Bybit, as well as decentralized exchanges such as Raydium and Jupiter on the Solana chain, and currently has a trading volume of US$558 million.

There is also iAssets launched by Injective Labs, the developer of the Injective blockchain, which is traded through the Helix decentralized exchange and has accumulated a trading volume of more than $1.7 billion. iAssets do not directly represent stocks, but are perpetual futures linked to companies such as the "Big Seven", Circle, and even SharpLink Gaming, which uses Ethereum as its core fund. Like most crypto perpetual contracts, iAssets supports leveraged trading, often up to 25x.

"Last week alone, the trading volume was $107 million, and the week before it reached $291 million." Eric Chen, co-founder and CEO of Injective, introduced. Trading fees are usually around 0.05%, and Injective does not actually own Circle or Nvidia shares, but uses "oracles" to obtain real-time stock prices in traditional markets, and iAssets simply tracks these prices, allowing traders to speculate on the underlying stock.

John Wang, Kalshi's new head of crypto, summed up the appeal of RWA perpetual contracts as follows: "Want to trade $1 billion in Apple-related assets? You don't have to actually raise $1 billion in stock, just long and short positions of the corresponding value." Simply put, no one is actually buying Apple stock, traders are just betting on price ups and downs, and these bets add up to a $1 billion deal. Add to that the role of leverage - with 25x leverage, $40 million can leverage a $1 billion position.

"Most RWAs are not assets that people want to hold for the long term. Traders don't care about dividends, transfer rights, or voting at shareholder meetings, they just want to trade: long the S&P 500 10 times, short Tesla, do oil bands based on CPI data, bet on interest rate trends ......"

This is not unreasonable. Some people joked that the core product in the cryptocurrency field is "tokens", and if this is the case, then new speculation methods may be the "real innovation" of this industry. This is part of the reason for the success of Polymarket, Pump.fun, and perpetual contract giant Hyperliquid, which holds 80% of the market share.

So the question arises: will perpetual contracts make their spot trading irrelevant until tokenized RWAs gain a foothold? Injective's Chen thinks not. He said that without tokenized Tesla stock as a market anchor, synthetic derivatives like iAssets would struggle with chaotic pricing and illiquidity.

In traditional finance, market makers who provide liquidity for derivatives (options or futures) of assets such as Tesla often hedge their risks by trading the underlying stock, and the same is true in the cryptocurrency space. Tokenized spot assets provide traders with a risk hedge – even if perpetual contract trading volume dominates, spot RWAs are the foundation.

Come to think of it, traders are actually betting on "derivatives of derivatives" from Tesla, Nvidia, etc., which sounds a bit ridiculous, as if cryptocurrencies have complicated things again. So why not trade options or futures directly with a regular broker?

Because for crypto players, these products are more "easy to use"!

"Perpetual contracts are much simpler than options." TK Kwon, co-founder of tokenization startup Theo, said, "The pricing and funding rate mechanisms are very basic and can be understood by anyone (although I have my doubts), and they are very capital-efficient." In practice, this means that traders can leverage large positions with a fraction of their capital upfront, renew them indefinitely, and worry about expiration dates or complex algorithms behind option pricing.

In contrast, trading stock options or futures in the U.S. is much higher – usually requiring an "accredited investor" or operating through a broker with access to platforms such as the Chicago Mercantile Exchange (CME).

TK Kwon hopes that Theo will eventually be able to operate both spot and perpetual contract markets, such as being able to buy tokenized gold (spot) and bet on the future price of gold (gold perpetual contracts) on the same platform. This model can lead to strategies such as "carry trading," where traders can take advantage of the small spread between the two. For professionals, this is routine; This increases liquidity for the market as a whole.

And that day could be soon: perpetual contract giant Hyperliquid is planning to upgrade its system to allow anyone to create a new perpetual contract market for almost any asset.

In the final analysis, the significance of tokenization is not only "Apple stock on the chain", but also a series of actions of traders after the chain: betting, hedging, and leveraging. The creativity of cryptocurrency developers cannot be underestimated, especially when it comes to designing new ways of trading (speculating) for the digital assets they create. This kind of creativity can be both a good thing and a problem.