Sixteen years on, cryptocurrencies have gone from a geeky toy to an industry with a market capitalisation of more than $2.8trn. One popular way to make money in the market is trading perpetual futures contracts.
Together with the decentralised exchange (DEX) KiloEx, we examine this instrument and explain how to save on fees without putting assets at risk.
What are perpetual futures
Perpetual futures (perps) are futures contracts with no expiry date. Traders can open such positions with leverage to increase potential returns.
To keep a perpetual future’s price close to that of the underlying asset, trading venues use a funding rate. Every eight hours, holders of long positions pay holders of short positions, and vice versa.
“The ability to magnify small investments through leverage is one of the key advantages of perpetual futures contracts. That is why, on centralised exchanges, the crypto-derivatives market has already turned into a sector with trading volumes in the trillions of dollars a year,” KiloEx representatives say.
Yet, in their view, trading perpetual futures on a CEX has several drawbacks:
- Lack of control over funds in custodial storage. Exchanges impose withdrawal limits and fall victim to hacks. On a DEX, clients’ assets always remain in their own wallets.
- The need to make deposits, transfers and withdrawals. Decentralised platforms work with non-custodial wallets, reducing the number of steps in trading.
- Opacity. For example, the FTX collapse was caused by spending client funds. All operations on a DEX are executed on-chain. This rules out chart manipulation and prevents the misappropriation of assets.
- Regulatory restrictions in some countries. These are impossible to apply to decentralised exchanges.
The market for perpetuals already has big players such as GMX, dYdX and KiloEx, which are bringing innovation to decentralised trading.
How to trade on a DEX without fees
CEXs are not perfect, but they have a key advantage: they can process client operations at minimal cost. By contrast, users of DEXs must always pay transaction fees.
Decentralised exchanges tackle this in two ways:
- They cover gas costs. Clients trade without fees, but the platform processes transactions more slowly and gives up profit that could be used to develop the ecosystem.
- They implement gasless technology at the smart-contract level, for example the EOA Based Paymaster (EIP-4337) and Meta Transaction (ERC-2771), which KiloEx has chosen.
After refining its smart contracts, the exchange created a trading environment with near-zero gas costs. KiloEx notes that this method needs further work on some blockchains, but it is already implemented in EVM-compatible networks: opBNB, BNB and Base.
In addition, KiloEx has enabled one-click trading and optimised execution speed. According to the exchange, this is higher than 90% of derivatives DEXs on the market.
KiloEx in brief
KiloEx is a decentralised protocol for trading perpetual contracts with leverage of up to 125x. It supports more than 70 digital assets, including bitcoin (BTC), Ethereum (ETH), memecoins, DeFi and AI tokens across six blockchains.
At the time of publication, the DEX ranks 13th on DeFi Llama with a TVL of $42.5m and serves more than 800,000 users.
Daily trading volume on KiloEx exceeds $128m. The platform leads by this metric in the opBNB network and in derivatives markets on Manta.
The TGE of the exchange’s utility token KILO is planned for April 2025. After the event, clients will be able to swap KILO for xKILO at a 1:1 ratio. Stakers of the latter will receive a share of the platform’s fees and VIP privileges.
The crypto exchange was created by former employees of Binance and OKX. In 2022, KiloEx took part in the sixth season of Yzi Labs’ incubation programme (formerly Binance Labs), where it became the most valuable project (MVB).
Investors include Yzi Labs, Foresight Ventures, Crescendo Ventures, Manta Foundation and others.
“KiloEx is rethinking the standards of perpetuals trading, implementing the philosophy ‘CEX experience, DEX control’. Our team sees huge potential in crypto-derivative instruments and believes that only sustained product work and ecosystem building truly contribute to mass adoption,” exchange representatives say.
Other features of KiloEx include:
- trading via two interlinked liquidity pools (Base Pool and Buffer Pool). This eliminates slippage and reduces the impact of extreme market swings;
- allocation of 30% of fees to a Hybrid Vault consisting of base assets and USDT. This allows earnings even amid high volatility. For example, staking STONE on Manta can yield 8% per year in USDT;
- distribution of 40% of fees among the platform’s partners via smart contracts;
- support for the BNB Chain, opBNB, Manta, Taiko and Base blockchains. The team plans integration with Solana and other networks.
The KiloEx team has simplified the interface so that opening and closing trades takes no more than three steps.
At the same time, the exchange’s position-closing mechanisms limit losses to avoid deposit wipeouts from a single market move.
Conclusions
Perpetual futures are a tool for experienced traders, allowing returns to be enhanced through leverage. Their popularity speaks to a maturing industry in which high-risk instruments are supported by increasingly sophisticated infrastructure.
Growing interest in decentralised crypto-derivatives platforms such as GMX, dYdX and KiloEx could help shape a more transparent ecosystem in which users control their assets without sacrificing trading convenience.