Stock Contract Track Deep Research Report: The Next Trillion-Dollar Battlefield of On-Chain Derivatives

Author: Huobi Growth Academy

Summary

Stock contracts, as innovative products connecting traditional financial markets with the crypto derivatives ecosystem, are rapidly reshaping on-chain trading patterns. We will delve into the product essence, growth logic, technical architecture, and market ecology of this emerging sector, and systematically analyze the regulatory challenges and future prospects it faces. Research indicates that perpetual stock contracts are not merely a conceptual innovation but are built upon the over $160 trillion market capitalization of global stock markets, combined with the structural opportunities of mature perpetual contract trading paradigms. Currently, leading Perp DEXs such as Hyperliquid, Aster, and Lighter have taken the lead in establishing a complete stock perpetual product matrix, forming clear advantages in trading depth, user experience, and asset coverage. However, regulatory uncertainty remains the biggest constraint for this sector, and exploring compliant pathways will directly impact its long-term development space. From a trend perspective, perpetual stock contracts are expected to drive the on-chain derivatives market from crypto-native assets toward “full-asset perpetualization,” becoming a potential growth pole with a scale of trillions of dollars.

1. Product Essence: Structural Integration of Traditional Assets and On-Chain Derivatives

The essence of perpetual stock contracts is an on-chain synthetic derivative anchored to the price fluctuations of traditional stocks. Users deposit stablecoins as margin to gain long and short exposure to the price movements of US stocks such as Apple, Tesla, and Nvidia, without actually holding the stocks themselves or enjoying shareholder rights like dividends or voting. This product design cleverly combines the asset base of traditional financial markets with the mature perpetual contract mechanisms of crypto markets, creating a new financial instrument that retains stock price risk characteristics while offering on-chain trading flexibility.

From a product positioning perspective, it is essential to clearly distinguish between perpetual stock contracts and tokenized stocks (RWA Stock Tokens). Tokenized stocks are typically held by custodians who own the actual stocks and issue tokens representing real equity on-chain, with legal attributes and regulatory frameworks closely aligned with traditional securities. In contrast, stock perpetual contracts do not involve equity relationships; they track stock prices via oracles and build a pure price risk trading market on-chain based on funding rates, margin, and liquidation mechanisms. This difference places them in entirely different tracks: the former is a custodial and transfer scheme for on-chain assets, while the latter is an innovation in risk derivatives.

The rise of stock perpetual contracts is not accidental but the result of multiple factors working together. On the demand side, there is a long-suppressed global user demand for US stock trading—traditional broker account opening processes are cumbersome, cross-border fund flows are restricted, and trading hours are fixed—forming a stark contrast with crypto users’ “7×24 hours, stablecoin settlement, high leverage, and flexible trading habits.” Stock perpetual contracts provide an alternative path for users to bypass traditional financial systems and directly participate in US stock price movements. On the supply side, since 2025, the maturation of oracle technology, the proliferation of high-performance blockchain infrastructure, and fierce competition among Perp DEXs have provided the technical foundation and market momentum for productizing stock perpetual contracts. More importantly, stock perpetual contracts sit at the intersection of two major narratives: “RWA real-world assets” and “on-chain derivatives,” combining the vast capital base of traditional assets with the high growth potential of crypto derivatives, naturally attracting market attention.

2. Underlying Mechanisms: Price, Liquidation, and Leverage — Three Major Challenges

The stable operation of stock perpetual contracts relies on a meticulously designed underlying mechanism covering price discovery, asset synthesis, risk control, and leverage management. Among these, the price source (oracle) is the cornerstone of the entire system. Since on-chain protocols cannot directly access real-time quotes from NASDAQ or NYSE, they must rely on decentralized oracles to reliably transmit traditional market price data to the blockchain. Current mainstream solutions include Pyth Network, Switchboard, Chainlink, and some protocols’ self-developed oracle systems. Pyth collaborates directly with market makers and exchanges to obtain primary quotes, emphasizing high-frequency updates and anti-manipulation; Switchboard offers highly customizable price aggregation solutions, allowing protocols to switch update strategies based on different periods; Chainlink relies on decentralized node networks to provide robust, continuous, and verifiable price feeds. A few leading protocols like Hyperliquid use self-developed oracles, aggregating multiple data sources, constructing internal indices, and performing off-chain risk checks to achieve greater pricing autonomy.

The core issues that oracles need to address go far beyond data transmission. US stock markets have unique structures such as trading hours restrictions (not 24/7), pre-market and after-hours volatility, and suspension mechanisms. This requires oracles to intelligently handle market state transitions. Mainstream solutions incorporate market open/close markers, TWAP smoothing algorithms, and outlier filtering to ensure that prices on-chain do not deviate from real-world anchors during market closures, while also avoiding manipulation risks due to low liquidity. For example, after US markets close, oracles may automatically switch to low-frequency update modes or generate internal reference prices based on the last valid price and on-chain supply/demand, maintaining trading continuity while controlling tail risks.

At the synthesis layer, stock perpetual contracts do not mint tokens representing actual stock ownership but create virtual positions linked to the stock’s price via smart contracts. Users deposit stablecoins like USDC as margin to open long or short positions, with profits and losses determined solely by the contract’s price and settlement rules. The protocol adjusts the long-short balance through a funding rate mechanism—when one side’s position becomes overly concentrated, the funding rate guides users to open positions in the opposite direction, maintaining overall system neutrality. Compared to crypto perpetuals, stock perpetual contracts’ funding rates also need to consider overnight costs and real market trading rhythms of US stocks, presenting more complex cyclical features.

The liquidation mechanism is a core part of risk control for stock perpetuals. The challenge lies in dealing with two asynchronous market fluctuations: US stocks trade only during specific hours, while crypto markets operate 24/7. When US markets are closed but crypto markets experience sharp volatility, collateral value can rapidly decline, risking liquidation of stock perpetual positions. To address this, mainstream protocols introduce cross-asset risk engines and dynamic parameter adjustments. During US market closures, the system automatically raises maintenance margin requirements, lowers maximum leverage, and adjusts liquidation thresholds to cope with discontinuous information and gap risks. When US markets reopen, risk parameters gradually return to normal. This design preserves on-chain trading continuity while reducing systemic risks caused by cross-market mismatches through dynamic risk management.

Leverage design also reflects differences between traditional assets and crypto products. In crypto perpetuals, some platforms offer leverage of hundreds of times or more, but in stock perpetuals, mainstream protocols generally cap leverage at 5× to 25×. This is due to multiple considerations: first, stock prices are influenced by fundamentals such as earnings reports, macro events, and industry policies, with volatility structures different from crypto; second, US stocks have unique scenarios like gap openings and after-hours trading, where high leverage can trigger chain reactions of liquidations; third, regulators remain cautious about stock-related derivatives, and restraining leverage helps reduce compliance risks. Even if platforms display a maximum of 20× leverage, actual usable leverage often varies dynamically based on market conditions, liquidity, and user positions, forming a “superficially flexible, fundamentally strict” risk control system.

3. Market Landscape: Differentiated Competition and Ecosystem Evolution among Perp DEXs

Currently, the stock perpetual contract market has formed a competitive landscape led by Hyperliquid, Aster, Lighter, and ApeX, with each exhibiting distinct technical architectures, product designs, and liquidity strategies.

Hyperliquid leverages its self-developed high-performance blockchain and the HIP-3 third-party framework, rapidly entering the stock perpetual sector through projects like Trade.xyz. Its core advantage lies in deep order book liquidity and institutional-grade trading volume—XYZ100 (a Nasdaq 100 index synthetic contract) can reach daily trading volumes of around $300 million, with large-scale commodity products like SILVER and GOLD maintaining open interest in the tens of millions of dollars. Hyperliquid adopts a multi-source median pricing mechanism, combining external oracle prices, internal EMA smoothed values, and order book market prices to generate robust mark prices for liquidation and margin calculations. This “professional-grade matching + synthetic pricing” dual-channel design balances high-frequency trading and risk control effectively.

Aster innovatively offers a dual-mode architecture with Simple and Pro modes, catering to different risk preferences. The Simple mode uses AMM liquidity pools, allowing one-click opening and closing, zero slippage trading, suitable for high-frequency, small, short-term operations, with a leverage cap of 25×. The Pro mode relies on on-chain order books, supporting limit and hidden orders, providing deeper liquidity and more precise strategy execution, with a leverage cap of 10×. Data shows that in Pro mode, contracts like NVDA maintain daily trading volumes of several million dollars, with open interest steadily growing, indicating sustained participation by professional traders. Aster’s “traffic entry + deep market” dual-layer design enables effective user segmentation and ecosystem expansion.

Lighter emphasizes zk-rollup proof-based matching, with all trading and settlement processes verifiable on-chain via zero-knowledge proofs, highlighting transparency and fairness. Its stock perpetual contracts currently support 10 US stocks, with a uniform leverage of 10×, reflecting a relatively conservative risk approach. Liquidity is concentrated among top players—COIN (Coinbase) often exceeds $10 million in daily trading volume, while stocks like NVDA have moderate trading volume but high open interest, indicating long-term strategic capital presence. Lighter balances user experience and professional needs: a minimalistic front end for quick onboarding, while the underlying remains a professional order book.

Notably, the traffic entry points for stock perpetuals are expanding from single official websites to multiple ecosystem integrations. Based.one aggregates Hyperliquid’s contract engine for a more consumer-friendly trading interface; Base.app embeds Lighter as a trading module, allowing users to open positions without leaving their wallets; UXUY and other super apps further simplify operations, packaging stock perpetuals into Web2-like experiences. This “underlying protocol + application layer entry” collaboration reduces user participation barriers and promotes the evolution of stock perpetuals from niche professional tools to mainstream trading products.

4. Regulatory Challenges: Balancing Innovation and Compliance

The greatest uncertainty facing stock perpetual contracts stems from regulatory considerations. Although there is no specific legislation targeting such products globally, regulators are highly attentive to their potential risks. The core issue concerns legal classification: do stock perpetual contracts constitute unregistered securities derivatives?

In practice, the US SEC generally adopts a substance-over-form approach to securities-based derivatives. As long as the product’s economic substance is closely related to regulated securities, regardless of its technical packaging, it may fall under securities law jurisdiction. The European ESMA, under the MiCA framework, has repeatedly emphasized that on-chain derivatives anchored to traditional financial assets still need to comply with existing financial regulations. This means that although stock perpetual contracts do not involve actual custody of shares, their close linkage to US stock prices could lead to classification as securities derivatives or CFDs, triggering licensing, disclosure, and investor protection requirements.

Current regulatory focus remains on tokenized stocks directly mapping physical assets, but for “synthetic risk exposure” like stock perpetuals, attitudes are still observational. Future regulatory pathways may include: strengthening compliance responsibilities of front-end operators (such as trading interfaces and liquidity providers); requiring transparency of price indices and oracle data sources; restricting high leverage, enhancing KYC and regional access controls; and explicitly incorporating these products into existing derivatives regulatory frameworks.

For protocols, strategies to reduce compliance risks include: clearly distinguishing “price tracking” from “equity tokens,” emphasizing the synthetic and hedging nature of the products; adopting multi-source decentralized oracles to prevent manipulation; setting reasonable leverage caps and risk parameters to prevent excessive speculation; and fully disclosing product risks and legal disclaimers in user agreements. Long-term, compliant development of stock perpetuals may involve exploring licensed institutional partnerships, restricted jurisdiction services, or innovation pilots within regulatory sandboxes.

Beyond regulatory risks, stock perpetuals face a series of market and technical risks. Oracle failures or malicious manipulations could cause erroneous liquidations; cross-market volatility mismatches may amplify tail risks; insufficient liquidity could trigger extreme slippage and position liquidation difficulties; smart contract vulnerabilities might be exploited, leading to funds loss. These risks necessitate protocols to establish multi-layered risk control systems, including but not limited to: multi-oracle redundancy and anomaly detection, dynamic margin adjustments, insurance funds, security audits, and bug bounty programs.

5. Future Outlook: From Niche Innovation to Mainstream Financial Infrastructure

In terms of market scale, the potential space for stock perpetual contracts is enormous. The total market capitalization of listed companies worldwide approaches $160 trillion, with over half outside the US, forming a massive asset pool of approximately $80 trillion. Even a tiny fraction of this capital participating via perpetual contracts could easily reach hundreds of billions of dollars in scale. Given that trading volume of crypto perpetuals already exceeds spot trading by a factor of three, stock perpetuals are poised to replicate similar derivatives trends in traditional assets.

Product evolution suggests that stock perpetuals are just the beginning of the “full-asset perpetualization” wave. As pricing mechanisms, clearing systems, and liquidity infrastructure mature, macro assets such as commodities (gold, oil), stock indices (S&P, NASDAQ), foreign exchange (EUR, JPY), and even interest rates could be incorporated into perpetual contract frameworks. Perp DEXs will gradually evolve from crypto-native trading platforms into comprehensive derivatives markets covering multiple asset classes, becoming key interfaces connecting traditional finance with on-chain ecosystems.

Regulatory environments are expected to become clearer from ambiguity. Over the next 2-3 years, major jurisdictions are likely to introduce classification guidelines and regulatory frameworks for on-chain derivatives, clarifying the compliance boundaries for stock perpetuals. While this may cause short-term disruptions, it will ultimately benefit industry cleanup and standardization. Those who proactively develop compliance capabilities, establish risk management systems, and maintain communication with regulators will gain competitive advantages under new rules.

In summary, stock perpetual contracts are at a critical breakthrough stage from zero to one. They are an inevitable choice for Perp DEXs seeking new growth narratives and serve as a testing ground for the integration of traditional assets with crypto finance. Despite ongoing technical challenges and regulatory uncertainties, the enormous market demand and asset scale behind them make this a sector that cannot be ignored. In the future, stock perpetuals may not only become a pillar of the on-chain derivatives market but also reshape how retail investors participate in US stocks and global assets, truly realizing borderless, 24/7, and democratized financial markets. In this process, protocols capable of balancing innovation, risk, and compliance are most likely to become the builders of the new era’s financial infrastructure.