ΞdouardM

@haikane @blockworksDAS @drwconvexity @DRWTrading 👀

@blockworksDAS @drwconvexity @DRWTrading at least 15% of Nasdaq total revenue is from MEV journals.uchicago.edu/doi/full/10.10…

"MEV — that ability for people to reorder transactions to extract value, something that happens on top of Ethereum and Solana — that's just not suitable for financial markets." @drwconvexity @DRWTrading

Perpetual futures will become a primary venue for price discovery in TradFi markets, but they will not replace dated futures and options. Today, price discovery happens across different instruments. Equities and FX primarily trade on spot markets, while commodities and energy rely on dated futures. USDC-settled perpetuals offer structural advantages that make them a strong alternative for trading and liquidity concentration: 1. They trade 24/7 2. They aggregate liquidity into a single order book and are structurally standardized 3. They enable higher capital efficiency through continuous margining Importantly, many of these advantages are structural. Traditional financial markets are not 24/7 not only due to historical inertia, but because risk management and settlement operate in discrete cycles. Margining is not continuous, and collateral transfers and custody updates occur in batches, requiring system-wide coordination. At the same time, traditional derivatives markets fragment liquidity. Dated futures split liquidity across expiries, while options spread it further across expiries and strikes. As a result, liquidity is distributed across many instruments. Perpetuals reverse this dynamic by consolidating liquidity into a single instrument per asset and providing a standardized structure across markets, with no rolling and simpler basis management. This makes them easier to hedge and trade. Perpetuals also allow for more capital-efficient use of margin through continuous risk management and liquidation mechanisms, although this comes with different risk trade-offs compared to the more conservative, discrete systems used in TradFi. Given these dynamics, USDC-settled perpetuals will become a primary venue for trading and price discovery in TradFi assets over time. However, several challenges remain: 1. Trust and inertia: Institutions will need time to build confidence in crypto-native infrastructure and adapt their internal processes and risk frameworks, for example moving from futures term structure to perp funding dynamics. 2. Index definition: Perpetual markets depend on a clear and reliable reference price. For TradFi assets, this requires consistent and widely accepted methodologies. This means spot-based references for equities and FX, and derived spot prices from futures for commodities and energy. In practice, areas like futures roll and non-trading hours are not yet fully standardised across the industry. We also recognise that the current approach used by Extended is not yet ideal, and we are actively working to improve the definition of a fair and robust reference price. Even if perps become dominant for trading, they will not replace dated futures and options, as these serve different purposes: 1. Dated futures provide time-specific hedging and a strong link to the real economy through physical delivery and convergence to spot at expiry. 2. Options provide convex payoffs and enable trading and hedging of volatility. In summary, perpetuals are structurally better suited for liquidity aggregation and continuous trading, and will play a leading role in price discovery. However, they will coexist with dated futures and options, which remain essential for time-specific hedging and non-linear risk management. Bridging perps and TradFi represents one of the largest and most durable opportunities in financial markets and is a core focus for Extended.

@0xmattegoat @extendedapp 👀👀

With all the RWA perps weekends like this are so interesting, if you're not running any automated strategy here is a bunch of alpha for you that you can capture by hand: - You’re currently getting paid ~40% annualized funding to short EUR/USD on @extendedapp. Weekend EUR/USD is basically an oil trade in disguise: with US–Iran risk, crude will gap on the reopen as the market reprices Hormuz / supply disruption, and Europe eats the shock via a worse energy terms-of-trade → EUR tends to be the release valve. A lot of people are complaining that we hit the max weekend move on CL on @tradexyz if you want “oil-shock” exposure with size over the weekend, EUR/USD perps are one of the cleanest ways to express it. - PAXG systematically overshoots moves when there is a lot of volatility. This is a less known alpha, but you can capture 10-20% by shorting PAXG right before the CME opening, long CME at the opening and wait for the convergence usually happening mid monday. You'll also get paid some nice funding on you' GOLD short. - Find metals mispricings. Most of the metals are being priced as GOLD beta during those moves, but the supply/demand profile are pretty different during those big moves. Small hint: look at the less traded ones.

All happening fully onchain and non-custodial 👀

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@0xmattegoat Lfg

I told you...

The perps vs CFDs debate is the wrong one, the real debate should be perps vs 0DTE, especially in the short term. To simplify there's roughly 2 categories of flow for a stock perp instrument: speculation and hedging. Given how early we are, liquidity is order of magnitude worse than what you could get on any broker. It would be a big strategic mistake for any exchange to target the hedging flow, because it's a highly price sensitive flow. The only way to even stand a chance to compete with the traditional financial market in the long term is to first attract the speculative flow through a high leverage offer 24/7. Good news is retail traders are starving for this kind of products, just take a look at the 0DTE retail volume growth. How is a perp superior to 0DTE for speculation? It's far easier to understand, you just need a slider for leverage and one for margin + a button and you directly understand your exposure, you get no theta bleeding and it's a far better experience for micro sizing. Just take a look at the @liquidtrading UX, in 2 clicks you get linear exposure to any underlying Only after winning this segment can you start thinking about winning the hedging battle. And this is where it gets interesting, why would any hedge fund prefer a perp exposure over their current combination of futures + options + TRS? It seems very clear to me that perps (in a mature stage with predictable funding rates and spreads) are a better hedging tool than futures, especially because there's no need to roll positions. The TRS flow, the institutional twin of CFDs, is also realistically absorbable by perps, because it has the same payoff, and having a shared margin would make it more efficient. And btw if one instrument absorbs the flow of two different ones, it will be much more liquid, and thus efficient. Only the option stack should remain here, because of their convexity. There are still many things that could go wrong, especially with oracles, and the path to deep liquidity, but I think at this point given the multiple world class teams going after it that it's not an if question but a when question.

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