Introduction

Blockchain technology, proposed by Satoshi Nakamoto in 2008, has rapidly transformed various industries by leveraging machine trust as its foundational principle. Its core features include decentralization, transparency, and traceability. A particularly notable application of blockchain in the financial sector is decentralized finance (DeFi), which leverages blockchain to provide traditional financial services such as lending and trading, all without the need for centralized institutions, by utilizing smart contracts.

As a vital component of the DeFi ecosystem, decentralized exchanges (DEXs) trace their origins to the early days of Bitcoin and Ethereum. Over time, driven by technological advancements and growing market demand, DEXs have evolved to support a broader range of trading functionalities. Unlike centralized exchanges (CEXs), DEXs allow users to retain custody of their assets, as they execute trades directly on the blockchain through smart contracts. This significantly enhances the transparency of financial transactions.

This article delves into the DEX derivatives market, exploring how decentralized mechanisms ensure secure, fair, and efficient trading in the high-risk realm of derivatives. It summarizes strategies for user growth and outlines future trends in the DEX derivatives market, offering valuable insights for investors and developers.

Source: tokeninsight

What is a DEX?

Definition

A decentralized exchange (DEX) is a trading platform that operates on a blockchain, free from the control of any single entity or central authority. Users trade assets via smart contracts, with all transactions executed and recorded on the blockchain. Leveraging the inherent characteristics of blockchain technology—decentralization, security, and traceability—DEXs offer enhanced user control and greater privacy protection.

Since 2024, the approval of Bitcoin and Ethereum ETFs has significantly fueled institutional interest in the broader crypto market. At the same time, ongoing regulatory pressure on centralized exchanges (CEXs) has driven more users toward decentralized trading solutions. This trend suggests that DEXs are likely to capture an increasingly substantial share of the crypto derivatives market in the future.

Source: New Tokens Appearing on DEXs

Historical Evolution

Early Stage (2011–2016)

Following the birth of Bitcoin, several early platforms began exploring decentralized exchange (DEX) models. For instance, BitShares, launched in late 2014, aimed to provide high-performance financial services tailored to personal finance. It introduced a blockchain-based decentralized order book mechanism built on a high-performance Graphene blockchain architecture, which allows users to conduct peer-to-peer trading without intermediaries.

In 2016, EtherDelta on Ethereum further advanced the development of DEXs. As one of the first platforms to support ERC-20 token trading, EtherDelta enabled users to utilize smart contracts for automated matching and secure transactions. However, limitations persisted, such as the need for on-chain synchronization of order book updates and a complex interface that offered a less user-friendly experience than traditional centralized exchanges (CEXs).

Initial Expansion (2016–2020)

Starting in 2016, decentralized exchanges (DEXs) experienced a period of rapid growth, with a number of innovative platforms emerging to focus on decentralized trading. A prime example from this phase is IDEX, which specialized in decentralized perpetual contract trading. IDEX adopted a hybrid model that combined off-chain order books and matching engines with on-chain custody, striking a balance between the efficiency of centralized exchanges (CEXs) and the security and transparency offered by blockchain technology.

Another standout project was KyberSwap, a multi-chain DEX focused on delivering high returns for liquidity providers (LPs). KyberSwap efficiently aggregated liquidity from various sources, supporting multiple networks such as Ethereum, Polygon, BNB Chain, and Optimism.

This phase marked a significant leap in trading efficiency while introducing multi-chain support and innovative liquidity mechanisms. It represented a pivotal moment in DEX evolution, transitioning from basic infrastructure to a more mature and sophisticated development stage.

Rapid Growth (2020–Present)

The rapid expansion of Ethereum’s ecosystem fueled the ‘DeFi Summer’ of 2020, triggering a surge in liquidity and infrastructure development. This helped establish Ether as a highly popular asset, second only to Bitcoin, with its significant volatility further amplifying trading volumes in the derivatives market.

The integration of Layer 2 solutions and the continual refinement of automated market maker (AMM) models, particularly with platforms like Uniswap, introduced innovations such as concentrated liquidity pools and multi-asset pool designs. These advancements significantly improved capital efficiency and market depth. Meanwhile, industry focus shifted toward enhanced privacy protections and deeper decentralization in trading.

Liquidity aggregators such as 1inch and Paraswap have enhanced trading efficiency by optimizing trade routes and consolidating liquidity across multiple DEXs, ensuring users get the best possible prices. These innovations have collectively propelled DEXs toward greater user-friendliness, contributing to the DeFi ecosystem’s long-term growth.

Future Trends (Post-2024)

As DEXs mature, their offerings have expanded beyond traditional financial instruments such as futures and options to encompass more diverse asset classes. Notably, the inclusion of non-fungible tokens (NFTs) has opened new market opportunities for DEXs, allowing trading in emerging asset categories like digital art and collectibles. This evolution provides users with a richer array of trading options and greater liquidity.

A notable emerging trend is blockchain abstraction, which is reshaping DEX design philosophies. Blockchain abstraction aims to hide the complexities of underlying blockchains, enabling seamless trading across different blockchains without requiring users to have in-depth knowledge of each one. This technological advancement simplifies cross-chain transactions, laying the groundwork for a more flexible financial market architecture in the future.

What Are DEX Derivatives?

Definition

Like traditional derivatives, decentralized derivatives derive their value from underlying assets but are traded on blockchain-based protocols. Crypto-backed derivatives are the most prevalent in DeFi; however, decentralized derivatives can also be created for other asset types, such as stocks.

Decentralized derivative protocols typically have low entry barriers, enabling anyone to connect through a crypto wallet without the cumbersome processes of traditional financial markets. This article focuses on smart contract-driven decentralized derivative trading, where users can leverage these contracts to profit from predicting underlying assets’ future price movements or hedge their investment risks in a transparent and trustless environment.

Source: ScienceDirect

Market Dynamics of DEX Derivatives

Demand for Risk Hedging
Similar to the traditional financial markets, the primary demand for derivatives in the crypto market stems from risk hedging. For example, miners can generally predict the amount of Bitcoin they will receive over a specific period and their stable mining costs, but Bitcoin’s price remains unpredictable. To mitigate price volatility risks, miners can trade Bitcoin derivatives to lock in future revenues. Additionally, other market participants encounter comparable risks, especially during major events that often lead to heightened price volatility. Leveraging derivatives trading enables these entities to effectively mitigate and manage their risk exposure.

Source: Hedging, Speculation - FasterCapital

High-Return Incentives
In the DEX derivatives market, ultra-high leverage—sometimes up to 500x—has become standard practice. This allows speculators to amplify returns through minimal margin and the leverage effect of contract trading, while benefiting from the convenience of 24/7 operations. This feature significantly bolsters trading activity in the sector. However, while such high leverage inherently carries greater risk, it can also stimulate market volatility during periods of stagnation, thus shortening contract holding cycles and providing extra liquidity. As a result, the allure of high returns has been a critical catalyst for the expansion of the DEX derivatives market.

Source: A Guide to Crypto Derivatives

Types of DEX Derivatives

Leading DEX Derivative Protocols

GMX

Platform Overview

GMX is a decentralized platform for spot and perpetual trading. It offers a robust liquidity system with leverage of up to 50x, enabling traders to amplify their market positions beyond initial capital.

Supporting 32 cryptocurrency pairs, GMX covers both popular and unique assets. It features low swap fees and minimal price slippage. Additionally, GMX ensures that traders can effectively manage risk during market fluctuations through its carefully designed liquidation thresholds.

Source: app.gmx.io

Strategically, GMX focuses on selected assets to enhance trading liquidity while generating additional income for investors. Thus, it demonstrates strong performance even during bear markets. Dedicated to becoming a robust, community-driven platform, the GMX trading application operates on Arbitrum and Avalanche and owns a dynamic token ecosystem comprising GMX, GLP, GLV, and GM tokens.

However, GMX currently lacks a mobile application, which is a notable drawback. Additionally, its high cross-margin collateralization requirements have been criticized in community governance forums. To address these challenges, GMX is implementing a series of revitalization strategies, including launching synthetic assets, optimizing the user interface, and expanding to more blockchain networks, to regain its competitiveness in the decentralized derivatives market.

Technical Principles

Oracle-Based Pricing

GMX employs Chainlink oracles and a customized price feed mechanism to fetch median prices from major centralized exchanges like Binance, Coinbase, and Bitfinex and update prices at the beginning of each block. This design reduces the risks of slippage and front-running. However, this system is not entirely immune to potential price manipulation.

Isolated Liquidity Pools

The isolated liquidity pools in GMX V2 represent a significant innovation. This design creates independent liquidity pools for each asset type, with parameters tailored to their characteristics. For example, blue-chip assets (such as BTC and ETH) are supported by native tokens as the underlying assets, offering good liquidity and lower transaction fees to attract more liquidity. In contrast, medium- and small-sized assets, due to their higher price volatility, typically use highly liquid assets like USDC as collateral and set higher fee rates to offset potential risks.

Automatic Deleveraging (ADL)

GMX’s ADL mechanism serves as a critical safeguard to maintain system solvency. It dynamically manages risk by intervening when a trader’s profitable position exceeds the available liquidity in the pool. This prevents the pool from depleting due to large payout demands.

While this mechanism effectively mitigates the risk of overconcentration in a single large trading pair liquidity pool, it can also force traders with advantageous positions to close prematurely, potentially causing them to miss out on further profits.

Tokenomics

Gains Network

Platform Overview

Gains Network provides a high-leverage trading platform spanning multiple asset classes, leveraging the gDAI Vault as the counterparty to all trades. When traders profit, their payouts come from the vault; when they incur losses, the vault accrues those funds.

Similar to GMX, Gains Network’s model emphasizes composability, allowing other protocols to integrate gDAI and build diverse financial products on top of it. This innovative structure enhances liquidity and flexibility as well as expands trading and investment opportunities for users.

Technical Principles

At the core of Gains Network’s architecture is the gDAI Vault, a dynamic fund management system. The vault processes payouts to profitable traders and absorbs funds from losing trades. All trade requests are executed via smart contracts, ensuring automation and transparency. Built-in risk management strategies further secure the vault’s stability.

Gains Network’s advanced composability enables seamless integration of gDAI by other DeFi protocols, facilitating the creation of more complex financial products while boosting the platform’s interoperability and scalability. Additionally, data oracle services ensure accurate trading prices and market information, further strengthening the platform’s reliability and user experience.

Source: x

Tokenomics

dYdX

Platform Overview

dYdX is the first decentralized platform specializing in derivatives trading, supporting up to 50x leverage, 164 crypto assets, and 147 trading pairs. Its latest version is dYdX v4. With its core architecture built on an independent blockchain within the Cosmos ecosystem, it leverages the Cosmos SDK and CometBFT POS mechanisms. It operates using a proof-of-stake (PoS) consensus model supported by two node types: validators - responsible for storing orders, relaying transactions, and generating new blocks through the consensus process; and full nodes - handle transaction relay and process new blocks but do not participate in the consensus mechanism.

Unlike the popular Automated Market Maker (AMM) model, dYdX employs an order book model and utilizes a hybrid infrastructure of off-chain order books and on-chain settlement. This approach ensures non-custodial, on-chain settlement while leveraging a low-latency matching engine for off-chain operations.

Technical Principles

The core architecture of dYdX v4 is its proprietary dYdX Chain, built on the Tendermint PoS consensus protocol. This design ensures high decentralization while delivering exceptional performance and customizability. The key technical components include:

Order Book Mechanism
Within the dYdX Chain architecture, each validator operates an in-memory order book, which does not reach consensus on the blockchain but is processed off-chain. Order creation and cancellation are propagated through the network, similar to traditional blockchain transactions. Validators’ order books ultimately synchronize to maintain consistency.

This mechanism allows orders to be matched in real-time across the network, with completed trades submitted to the blockchain in each block. This allows dYdX Chain to offer high order throughput while maintaining decentralization, guaranteeing rapid execution and data consistency.

Source: v4 Technical Architecture Overview - dYdX

Cosmos SDK Development Framework
As an independent blockchain, dYdX Chain is built using the Cosmos SDK, benefiting from complete customizability in blockchain functionality and validator operations. The framework allows dYdX Chain to be finely tuned to meet specific requirements, offering flexibility from the protocol level to the user interface.

This customizability provides dYdX with substantial room for innovation, enabling the platform to adapt its architecture and features to evolving market demands.

Cosmos SDK Architecture
Source: learnblockchain

Token Economics

SynFutures V3

Platform Overview

Source: SynFutures Perp Launchpad

SynFutures is a leading decentralized perpetual contract trading platform, committed to offering a decentralized, always-accessible derivatives market. SynFutures utilizes a business model similar to Amazon’s, breaking traditional trading’s limitations. It allows users to freely trade any asset and instantly create and list derivative contracts within seconds. This openness and innovation have positioned SynFutures as a key player in the decentralized derivatives trading space.

Technical Principles

Ⅰ. Unique Market-Making Mechanism: The V3 Oyster AMM is the first unified AMM and on-chain order book model in the industry. It is designed to enhance capital efficiency and accommodate different types of traders, enabling traders to execute transactions in an efficient, low-slippage environment while ensuring low capital usage costs.

Ⅱ. Single-Token Concentrated Model: Traditional liquidity models usually focus on the spot market. SynFutures introduces a single-token concentrated liquidity model specifically for the derivatives market. In this model, liquidity can be concentrated within a specific price range, while leveraging capital efficiency. This simplifies the trading process and enhances market capital usage efficiency.

Ⅲ. On-Chain Order Book: SynFutures V3 combines the on-chain order book model with concentrated liquidity, reducing asynchronous issues in dual-execution systems. This represents a significant advancement in the derivatives trading market, as it eliminates reliance on centralized administrators, prevents censorship during the trading process, meets the needs of active traders, and provides a valid contribution opportunity for passive liquidity providers.

Tokenomics

Latest Market Trends

Competitive Landscape

Source: DefiLlama

According to TokenInsight data, the collapse of the 2022 valuation bubble and the large-scale capital withdrawal caused a significant decline in lending protocols and yield aggregators, with month-on-month drops of 80.5% and 85.3%, respectively. In contrast, the derivatives market performed relatively well, with an overall year-on-year decrease of 65.0%, while its market share increased to 7.9%. This growth is primarily attributed to the strong performance of decentralized perpetual contract exchanges such as GMX and Gains Network.

According to The Block, the ratio of spot to derivatives trading volume for the two main cryptocurrencies, Ethereum and Bitcoin, is 0.13 and 0.23, respectively, indicating that derivatives volume far exceeds spot trading. In the first half of 2024, the ratio of DEX to CEX spot trading volume reached 13.76%. Analysts predict that as the cryptocurrency market matures, its development trajectory will follow that of traditional financial markets, with the size of the derivatives vertical continuing to expand and surpassing spot trading.

Source: CoinMarketCap

Since the second half of 2024, the total value locked (TVL) in the DEX derivatives market has shown a significant upward trend. Currently, the leading platforms in this market are SynFutures v3 and dYdX v4, with a TVL of $1.473 billion and $1.372 billion, respectively, capturing 31.75% and 29.58% of the market share. Other decentralized derivatives platforms generally show stable or upward trends, reflecting the overall expansion of the market.

Additionally, platforms such as Hyperliquid, Kine Protocol, and Drift Protocol hold significant positions in the market. Hyperliquid, with 127 active trading pairs, demonstrates its strength in product diversity, offering users a wide range of asset exchange options. In comparison, Kine Protocol and Drift Protocol rely more on their liquidity pools to solidify their market positions.

Source: Gryphsis Academy

Some platforms, such as Perpetual Protocol, have recently experienced significant price fluctuations, reflecting the inherent risks of the DEX derivatives market. High leverage mechanisms and active trading volumes remain key drivers of market growth. For instance, dYdX v4’s daily trading volume has reached billions of dollars, with the overall market showing a significant expansion trend, making it increasingly attractive. The platform is expected to capture a larger share of the DeFi ecosystem in the future.

Latest Technological Innovations

Breakthrough in Consensus Mechanisms

Taking the rapidly growing Hyperliquid as an example, it has emerged as a representative of the next generation of decentralized perpetual contract exchanges. With its advanced technological architecture and innovative concepts, Hyperliquid is becoming an important reference for the industry’s future direction. For instance, it has introduced the unique HyperBFT consensus algorithm, which significantly improves upon the traditional Tendermint mechanism. This allows transactions to continue being sequenced without waiting for the execution of the current block hash, greatly enhancing block generation speed and stabilizing confirmation delays to meet the high-speed demands of DeFi trading.

Blockchain Abstraction Technology

Perpetual Protocol has introduced blockchain abstraction technology by designing an abstract middleware layer that hides the complexities of different blockchain protocols, standards, and operational logics. With this technology, the multi-chain environment becomes a unified ecosystem where users no longer need to manually switch networks or manage multiple wallets. As such, blockchain abstraction is considered one of the key development directions for the Web3 ecosystem. It facilitates interoperability between blockchains and helps transition blockchain technology from a single-chain era to a multi-chain collaborative era. This technology not only enhances user experience but also brings more innovative possibilities to fields such as DeFi, gaming, NFTs, and cross-chain interoperability.

Unique Bridging Solution

HyperLiquid operates a native bridge protected by the same validator set as HyperLiquid L1. Deposits are confirmed after being signed by L1 validators, and withdrawals are held on L1. If malicious withdrawals are detected, the system enters a dispute period during which the bridge will be locked until two-thirds of the validators provide cold wallet signatures. Balancing security and efficiency, this solution provides a reliable mechanism to ensure the liquidity of on-chain assets.

Cross-Margin Feature

Traditional trading platforms typically require users to manage margins separately across different trading pairs. However, HMX’s cross-margin feature allows users to share margins across multiple trading pairs or contracts. This means that users can use surplus margin in one market to trade in another market, thus offering greater capital efficiency and flexibility while reducing the idle capital.

Multi-Asset Collateral Support

The HMX protocol no longer limits users to a single type of cryptocurrency as collateral. Instead, it supports using various types of cryptocurrencies as collateral, such as Bitcoin, Ethereum, stablecoins (e.g., USDT, DAI), and other ERC-20 tokens. This provides traders with more diverse operational flexibility, reduces the impact of price volatility of a single asset on margin requirements, and increases the capital’s ability to withstand risks.

Current Regulations

Hong Kong: Dual License System

Hong Kong currently implements a dual license system, with separate regulations for the trading of security tokens and non-security tokens. Regarding the DeFi sector, the Hong Kong Securities and Futures Commission (SFC) generally requires compliance with regulations similar to those for traditional financial institutions to ensure market compliance and stability. Specifically:

a. Security Tokens: Trading platforms must apply for licenses under the Securities and Futures Ordinance for regulated activities such as Type 1 (securities trading) and Type 7 (providing automated trading services) licenses.

b. Non-Security Tokens: Trading platforms must apply for a virtual asset service provider (VASP) license according to the “Anti-Money Laundering and Counter-Terrorist Financing (Amendment) Bill 2022.

Source: apps.sfc.hk

European Union: MiCA Regulation

The European Union’s Markets in Crypto-Assets (MiCA) regulation is the first comprehensive global framework for crypto asset regulation, covering almost all non-security tokens. As part of the Crypto Asset Service Provider (CASP) category, exchanges must meet various requirements, including governance, risk management, and disclosure obligations.

The current MiCA regulation does not include decentralized exchanges (DEXs). However, Article 22 under this regulation states that fully decentralized crypto asset services without intermediary involvement are exempt from its scope. Additionally, the European Systemic Risk Board’s 2023 report titled “Crypto Assets and Decentralized Finance – Systemic Implications and Policy Options” suggests potential policy options, which signals that new regulations may be introduced in the future to cover DeFi and DEX.

United States: Regulation changes with the government’s shifting stance

In the U.S., the government is working toward regulating both centralized exchanges (CEX) and decentralized exchanges (DEX) under the Securities Exchange Act. In 2022, the U.S. Securities and Exchange Commission (SEC) proposed amendments to the Securities Exchange Act and its rules, introducing the term “communication protocols” to the definition of exchanges and modifying the criteria to recognize exchanges as platforms that “aggregate buyers and sellers using trading interests” and “facilitate interactions between the parties”.

The 2023 Economic Report of the President reflected on the role of crypto assets, stating that, thus far, cryptocurrencies have not delivered the promised benefits and instead pose potential risks. The report emphasized the need for an effective regulatory framework to protect consumers, investors, and other parts of the financial system from the volatility, market manipulation, and fraud associated with cryptocurrencies.

Recently, with the re-election of Donald Trump as president, the stance on crypto asset regulation is expected to become clearer. The Republican Party tends to support innovation, reduce regulatory burdens, and promote market freedom, which may lead to the loosening of crypto asset regulations in an effort to attract more crypto companies and investors into the market.

Future Trends

The DeFi Summer led to the rise of numerous emerging protocols, while the decentralized derivatives market is facing increasingly fierce competition. Against this backdrop, DEX derivatives protocols must innovate and breakthrough in multiple areas. We believe the DEX derivatives market will advance following these key trends:

Firstly, the rise of Ethereum Layer 2 will drive improvements in trading performance. In the past, many DEX protocols chose to deploy on Alt Layer 1 blockchains like BSC and Solana to reduce transaction costs and increase throughput, which sacrifices some security in the process. As the Layer 2 ecosystem matures, more projects originally deployed on Alt Layer 1 are shifting to Ethereum-based Layer 2 networks, such as GMX and Level Finance. Leveraging Ethereum’s unmatched security, lower costs, and higher speed, these projects offer superior underlying infrastructure. These performance improvements will be key in determining whether DEX perpetual contract protocols can continue to attract liquidity.

Secondly, derivatives aggregators will change the market landscape. While aggregators in the spot market have seen great success, derivatives aggregators are still in their early stages, with immense potential. By integrating liquidity from various protocols, derivatives aggregators optimize trading paths and balance the liquidity depth typical of CEXs with the decentralized advantages of DEXs. Aggregators enhance the user experience and optimize price differences through algorithms, thus offering more competitive pricing than a single protocol. As this model matures, it will significantly accelerate the growth of the DEX derivatives market and drive decentralized trading from single assets to diversified asset classes.

Thirdly, social features will expand the practical use cases. On-chain copy trading will bring transparency to trading strategies and allow ordinary users to replicate successful portfolios, thus lowering the barrier to entry and capturing more trading opportunities. With social trading and decentralized finance integration, on-chain copy trading will become an essential tool for DEX derivatives platforms to expand their user base. While the number of perpetual contract DEX protocols offering this feature is currently limited, notable protocols such as Perpy Finance and SFTX are relevant examples.

Finally, DEXs will expand into traditional asset markets. The traditional derivatives market is massive, and although the penetration of decentralized trading remains low, DEXs have inherent advantages such as permissionless access, censorship resistance, and 24/7 trading. Through asset tokenization, DEXs can overcome the geographical, time, and regulatory restrictions of traditional futures markets, thus offering decentralized trading scenarios for real-world asset (RWA) derivatives markets, including agricultural products, metals, and energy. In the future, DEXs are likely to carve out a place in the traditional asset derivatives market by offering differentiated asset classes and unique trading models, meeting the diversified hedging needs of the market while promoting the tokenization and standardization of real-world asset trading.

Conclusion

In the decentralized derivatives trading market, token incentives for liquidity providers (LPs) remain an effective short-term strategy to attract users. However, in the long term, innovative and groundbreaking mechanisms will be the key to addressing the industry’s challenges. In this context, if decentralized exchanges (DEXs) wish to stand out in the competition, they must undergo comprehensive improvements in both technology and operational models.

Firstly, decentralized exchanges can leverage the technological advancements of blockchain platforms like Ethereum to enhance system throughput and trading efficiency. With the Ethereum 2.0 upgrade and the ongoing evolution of Layer 2 solutions, DEXs can leverage these advancements to enable more efficient decentralized contract trading, minimize transaction delays and costs, and ultimately enhance the overall trading experience for users.

Secondly, decentralized exchanges should integrate liquidity from multiple sources through aggregators, optimizing market depth and price discovery mechanisms. This improves liquidity for trades and enhances the user experience by maintaining the advantages of decentralization while minimizing slippage and price volatility due to insufficient liquidity. This approach will attract more beginners and retail users, thus increasing platform activity and expanding the ecosystem.

Most importantly, DEXs can extend beyond the crypto world by embracing the transparency and decentralization advantages of blockchain technology in traditional asset derivatives markets. By aligning with traditional financial markets, DEXs can help meet the growing global demand for financial derivatives, particularly as innovations and demand for futures, options, and other derivatives continue to rise. In this regard, DEXs are poised to become an important part of the global financial market.

However, DEXs also face numerous regulatory challenges. Financial regulators worldwide have yet to establish uniform policies for DEXs, and balancing decentralized financial innovation with compliance requirements, such as anti-money laundering regulations, remains a pressing issue for the industry. Regulatory uncertainty may hinder the long-term development of DEXs, particularly in cross-border transactions and the inclusion of traditional assets. Avoiding compliance risks and securing regulatory approval are key challenges for DEXs as they aim to enter mainstream financial markets.

Therefore, it is evident that as long as DEXs preserve their core advantages—such as non-custodial operations and transparency—while providing user experiences, liquidity, and market depth on par with centralized exchanges, their market potential will be immense. With ongoing technological advancements and the growing diversification of market demands, the era of decentralized derivatives trading platforms may already be here, and they are poised to play a significant role in the future of the global financial system.