Monish Muralidharan
5
min read
Sep 25, 2025
Perpetual futures (or perps) are crypto derivatives that let traders speculate on an asset’s price without any expiration date. They have surged in popularity, with major centralized exchanges (CEXs) processing trillions of dollars in perpetual volume each year. Decentralized exchanges (DEXs) now also offer perpetual contracts, also known as perps, providing traders with additional options. This guide compares perpetual futures trading on CEXs versus DEXs, covering key differences in custody, fees, slippage, liquidity, leverage, user experience, and U.S. regulation.
Check out our previous blog on “What Are Perpetual Futures in Crypto? A Beginner’s Guide to Perps Trading”.
Crypto perps dominate derivatives trading: in 2024, the top 10 CEX perpetual futures exchanges traded approximately $58.5 trillion in volume, and decentralized perpetual volumes exceeded $1.5 trillion. For perspective, Grayscale data shows over $10 trillion in crypto perpetuals traded across CEXs and DEXs in the first half of 2025 alone. This far exceeds spot-market volumes around $3.1T in the same period, reflecting how derivatives drive crypto market activity.
Trading Perpetuals on Centralized Exchanges (CEXs)
On a centralized exchange, perpetual futures operate much like in traditional finance. A trader opens an account with a CEX, completes any required KYC/ID checks, and deposits funds (often stablecoins or fiat) into the exchange’s wallet. Once funded, the trader can place orders on the exchange’s internal order book. CEXs typically use limit and market orders; many perp markets use an internal ledger so that settlement seems instant to the user. For example, Alice might deposit 1000 USDT and open a 10x long position on a Bitcoin perpetual. Her exchange updates its internal ledger to reflect the position immediately, even though the actual Bitcoin never leaves the exchange.
CEXs often offer deep liquidity, especially for major assets. They use high-speed off-chain matching engines, allowing millisecond execution and large order books. This lets traders execute large perps orders with minimal slippage on high-volume pairs. However, centralized custody means the exchange holds your funds (“not your keys, not your coins”). If the CEX is hacked or malfunctions, user funds can be at risk. For example, the collapse of FTX in 2022 showed how centralized platforms can fail and leave users unable to withdraw their assets. CEXs may help mitigate risk with insurance funds or audits, but the ultimate custodian is the company.
Funding rates and margin work similarly on most CEXs: the exchange sets funding intervals (commonly every 8 hours) and charges or pays traders to anchor the perp price to spot. Traders earn or pay funding based on market direction. The exchange also handles liquidations via its risk engine. On big CEXs, partial liquidations and large insurance pools often soften crashes, meaning traders may avoid 100% losses if positions move against them.
Example (CEX): Bob opens a 5x short position on Ethereum perpetuals using $200 collateral. The trade is placed on the exchange’s order book and executed immediately. If ETH’s price moves against him, the CEX’s automated system may liquidate or reduce his position. Bob’s funds remain on the exchange, and he pays a maker/taker fee (for example, 0.02% as a maker) on the trade. He also pays any funding payments when due. If Bob wants his profit, he submits a withdrawal request; the exchange then sends crypto to his wallet, a process that can take minutes or more (and may incur a withdrawal fee).
Trading Perpetuals on Decentralized Exchanges (DEXs)
Decentralized exchanges allow self-custody trading of perps through smart contracts on a blockchain. Instead of depositing funds to a company, a trader connects a web3 wallet (like MetaMask, ASI Wallet) and trades directly from their wallet balance. For example, Carol can open a crypto wallet, acquire some collateral (ETH or USDC), and interact with a perpetual contract on a DEX. When she executes a trade, her wallet sends a transaction to the blockchain; the DEX’s smart contract adjusts her collateral and position on-chain. Execution and settlement both happen on-chain, confirmed in one or a few blockchain blocks (often seconds). Crucially, the DEX never takes custody of Carol’s funds outside the smart contract she signed – she retains control of her crypto keys.
DEXs use various mechanisms to provide liquidity. Some perpetual DEXs (like those on Ethereum or Layer-2 networks) use automated market maker (AMM) pools or concentrated liquidity, where liquidity providers deposit paired assets to back the contracts. Others run on-chain order books (for instance, on specialized chains with ultra-fast consensus). In any case, DEX perps rely on oracles for price data, funding rate calculations, and automated liquidation rules coded into contracts. When Carol opens a 10x long, the smart contract locks her margin and issues a corresponding position token; if ETH’s price rises, the contract credits her; if it falls, the contract can liquidate her position automatically on-chain.
Example (DEX): Carol uses a DEX to go long on a Bitcoin perpetual with 3x leverage. She connects her self-custodied wallet, selects the perp, and places a trade. The DEX interface constructs a blockchain transaction that Carol approves. Once mined, the smart contract confirms her position. Carol keeps full custody of her wallet and keys. She must pay a network gas fee (for example, Ethereum gas or L2 fees) for the trade. Later, Carol exits her position by sending another transaction. The DEX smart contract settles any funding payments automatically from her wallet when due. Because everything happened on-chain, Carol’s trade is transparent in blockchain history.
Compared to CEXs, trading perps on a DEX means no KYC or approval is needed, and no deposit wait time. However, it also involves extra steps like paying gas fees and managing a crypto wallet. Some DEX interfaces provide limit orders or abstraction layers, but users must be comfortable with on-chain transactions. DEXs operate 24/7 without central downtime, but trades can be slowed or fail if the blockchain is congested.
Custody and Control
The most fundamental difference is custody. On a CEX, the exchange holds your deposited crypto. This centralized custody means you trust the exchange with your assets; if it fails (via hack, bankruptcy, or fraud), you can lose access. In contrast, DEXs are non-custodial: your funds remain in your own wallet until you trade. As the saying goes, “not your keys, not your coins”. In fact, Grayscale research notes that on DEXs, “deposited funds remain user-controlled, and every transaction … is transparently recorded on-chain, reducing counterparty risk”. This architecture removes a single point of failure. The recent history of exchange hacks underscores this: users on DEXs did not suffer the losses that centralized customers did when platforms were compromised.
That said, DEX safety depends on smart contracts. If the code has bugs or is exploited, users can still lose funds (for example, due to a liquidity pool exploit). A well-constructed DEX aims to be transparent and auditable, but it shifts the trust from a company to software. CEXs mitigate this with insurance funds, audits, or regulatory oversight, but historically, many have required user trust with security deposits.
Fees and Transaction Costs
Trading Fees: CEXs typically use maker/taker fee models. High-volume traders or market makers can get fees as low as 0.02% (maker) or pay up to 0.075% (taker) on some platforms. On average, in 2025, centralized perp fees have been around 0.04% (4 basis points). DEXs usually charge a fixed protocol fee (often ~0.1–0.3% per trade) plus blockchain gas. According to Grayscale, volume-weighted average perp fees are roughly 0.06% on DEXs versus 0.04% on CEXs. (Spot trading fees are comparable to ~0.12% DEX vs ~0.15% CEX on average.)
Image: Average trading fees on CEXs and DEXs, by asset type. CEXs tend to offer slightly lower perp fees on high-volume tokens.
Funding Rates: Both venues charge funding at intervals (often 8 hours on CEXs, and varying on DEXs). The purpose is identical: to peg the perp price to spot. CEX funding rates are typically derived from the exchange’s internal pricing, whereas DEXs use on-chain oracles (like Chainlink) to feed prices into the funding formula. Funding amounts can differ slightly due to these pricing differences, but in practice, they fluctuate similarly. US-regulated perp products (like those on Coinbase Derivatives) may adjust funding frequency or contract details to meet compliance.
Network and Other Fees: A key DEX cost is gas. Each transaction (open/close trade, funding, withdrawals) requires a blockchain fee. These fees vary by network and congestion. For example, on Ethereum mainnet, a perp trade might cost a few dollars or more in gas (though many DEXs now run on cheaper layer-2 chains to mitigate this). CEX users pay withdrawal fees when moving crypto off the exchange (a fixed cost per coin) and may pay for fiat on/off ramps. DEXs have no withdrawal fees because assets are never left in the user’s wallet. Overall, small- to medium-sized trades can sometimes be cheaper on a DEX (no maker/taker structure, no withdrawal fee), especially on fast chains, but large or very frequent trades may incur significant gas costs.
Liquidity and Slippage
Liquidity – the depth of available orders or pool size – directly affects slippage (the price impact of your trade). CEXs generally have much deeper liquidity for major perpetual contracts (like BTC and ETH). In fact, top centralized exchanges account for over 90% of the notional volume in Bitcoin and Ether perps. This deep liquidity means a large order can be filled at a near-continuous price range, resulting in minimal slippage and tight bid-ask spreads. CEXs also feature millisecond matching and often provide liquidity incentives (maker rebates) to further tighten spreads.
DEX liquidity is traditionally lower, especially for less popular tokens. DEXs use either on-chain order books or AMM pools. In an AMM pool, slippage depends on the pool size: a small pool backing a large position will see a greater price move (worse execution price). When pools are thin or trades are large, DEX users can face significant slippage. One analysis explains, “On DEXs, where trades are executed through liquidity pools rather than an order book, price slippage can be more pronounced, especially for large trades”.
To summarize: on CEXs, slippage stems from the order book depth (large market orders eat through multiple price levels). Exchanges mitigate it by offering limit orders. On DEXs, slippage is driven by pool depth, trade size, and block confirmation speed. Traders can set a slippage tolerance on a DEX (so a trade fails rather than executes at a worse price). In practice, deep markets on CEXs give them an edge in order execution. Newer AMM designs (concentrated liquidity) and on-chain order books (on custom chains) are closing the gap, but currently, most large-volume trades still prefer CEXs to minimize slippage.
Leverage and Risk Management
Leverage magnifies both gains and losses. CEXs are known for offering very high leverage (20x, 50x, even up to 100x or more on some contracts). Professional traders often use up to 100x on CEX perps. These platforms support cross-margin and isolate-margin modes, and they maintain insurance funds and auto-deleveraging to handle extreme moves. Liquidation engines on CEXs are sophisticated: they may auto-liquidate partially or spread liquidations over time to protect both the trader and the exchange’s solvency.
DEX perps currently offer more modest leverage. Many decentralized perpetual platforms cap leverage (commonly between 5x and 20x) to limit liquidation risk, though some specialized protocols have reached 50x on major assets. DEX traders typically use isolated margin: each position has its own collateral and liquidation price. Because everything is on-chain, liquidations are automatic and instantaneous when a position goes under collateral. Some DEXs maintain transparent insurance pools funded by fees to cover bad debt. The trade-off is that DEX liquidations are often strict (no human discretion) and can be swifter due to oracle updates.
Risk managers often advise using lower leverage on DEXs due to potential delays in price feeds or chain congestion. For instance, on-chain funding and oracle updates introduce latency that doesn’t exist in CEX’s internal systems. One trading guide suggests conservative leverage (e.g., 3x–5x) on decentralized futures during volatile conditions. In any case, traders must be aware: a 100x position on a CEX might liquidate instantly if the price ticks slightly, and similarly on a DEX – but on a CEX, there might be an insurance mechanism to partially reimburse, whereas on a DEX the position simply goes to zero. Always check the maximum leverage and insurance terms before trading.
User Experience and Accessibility
User experience differs greatly between CEXs and DEXs. CEXs provide polished web interfaces, mobile apps, and customer support. They often integrate directly with banks for fiat deposits/withdrawals, making them more user-friendly for beginners. Almost all CEXs require identity verification (KYC) and have 24/7 help desks. To a U.S. trader, CEX platforms that comply with regulations offer peace of mind: they have to follow reporting rules, have security audits, and (for regulated futures) meet CFTC standards.
In contrast, using a DEX requires a crypto wallet and some technical comfort. There is no KYC, which means privacy is higher, but also that DEXs operate in a gray regulatory zone. A U.S. user can trade without ID, but also has no formal customer support or fraud protection – if you lose funds (say by sending to the wrong address), there is no “undo” or help desk. DEXs may be open source and transparent, but user error (approving the wrong contract or falling for a scam token) is a real risk, as noted in trading guides.
DEXs do excel in offering access. They list tokens quickly; anyone can create a new perpetual market via governance. For example, if a new crypto emerges, DEXs can list it permissionlessly, while CEXs may take weeks or refuse listing altogether. Also, DEX trading is borderless: if a platform is deployed on a public blockchain, any user in any country with crypto can trade it (unless the DEX implements geoblocks). For U.S. users, that’s a double-edged sword: you can trade assets not offered on U.S. exchanges, but you may be violating regulations if those assets are securities or if the DEX is considered an unregistered venue.
Transaction speed and fees also affect experience. CEX trades happen instantly on their servers. DEX trades need one or more blockchain confirmations. This means a DEX trade might take a few seconds to a minute to finalize, and if the network is congested, it could even fail or revert. However, on the positive side, DEX trades are fully transparent on-chain – you can audit exactly what happened and when.
Regulatory Considerations (U.S. Perspective)
From a U.S. regulatory standpoint, there is a clear split. Perpetual futures are considered commodity derivatives in the U.S., subject to Commodity Futures Trading Commission (CFTC) oversight. Historically, U.S. exchanges could not offer crypto perps (until recently) because they weren’t registered. This forced U.S. traders to use offshore CEXs or DEXs with VPNs, which carried legal risks.
Regulators are now closing the loop. The CFTC has explicitly targeted decentralized platforms. For example, it publicly noted that “Deridex created a decentralized exchange where users could trade perpetual contracts” and has vowed to enforce that such trading should occur only on regulated venues. In practice, this means a DeFi perp platform offering leverage to U.S. citizens could be deemed an illegal futures market. U.S. enforcement agencies have shown readiness to act on DeFi that replicates centralized exchange products.
Meanwhile, compliant options are emerging in the U.S. Coinbase announced the launch of perpetual futures contracts on a regulated U.S. exchange. These U.S.-approved perps are tweaked for regulations: they technically expire every five years (to fit futures law), and funding rates are set twice per day instead of every 8 hours.
In contrast, DEXs operate in a murky legal space. They have no corporate entity to regulate, and they often host anonymous traders. While U.S. citizens can access them, doing so might breach trading laws. There are no KYC checks, and trades happen peer-to-peer across borders. Regulators have sent mixed signals, but the emphasis is clear: commodity derivatives need to trade on licensed exchanges. Thus, trading perps on a DEX carries regulatory uncertainty for U.S. users. It’s a risk that each trader must consider: convenience versus compliance.
Hot Take!
Perpetual futures on CEXs and DEXs offer traders powerful tools with both overlaps and contrasts. CEXs deliver high liquidity, sophisticated risk management, and user-friendly interfaces, but require you to relinquish custody of your crypto and submit to KYC and withdrawal limits. DEXs offer self-custody, privacy, and borderless access to new tokens, but often have lower liquidity, higher gas costs, and no official support. Fees, slippage, and leverage vary: on average, CEX perps have slightly lower trading fees and more leverage available, while DEX perps embed gas costs and typically cap leverage.
For a U.S. trader today, regulated CEX perps are becoming available domestically (with some restrictions), making compliance simpler. Using a DEX might still be appealing for innovation or privacy reasons, but it carries legal gray areas. In all cases, perpetual trading involves high risk. Make sure you understand funding costs, liquidation rules, and platform policies before entering a trade.
Mettalex.ai is building toward this future: soon, users will be able to create and trade option contracts on-chain, permissionlessly leveraging AI agents. Stay updated at Mettalex.ai.