As perpetual futures push further into regulated markets, a fresh wave of criticism has cast the contracts themselves as a systemic-risk time bomb. Chris Tyrer, President of Bullish Exchange, argues the critics are pointing at the wrong culprit entirely. “Systemic risk in a derivatives market is a property of the venue on which the perpetuals are traded, not the contract,” Tyrer writes, framing the debate as one about exchange design rather than product design.
Tyrer's starting point is the deleveraging cascade that rattled crypto markets in October 2025. That episode, he writes, was set off by a combination of macro shocks, a stablecoin de-peg, exchange outages, oracle failures, excessive leverage and thin liquidity. The damage spread because forced liquidations pushed prices down, that drop transmitted to other venues through shared reference pricing and arbitrage, and the resulting price moves triggered yet more liquidations elsewhere.
Where the Real Controls Live
Rather than blaming the perpetual structure, Tyrer points to specific venue features that determine whether a cascade turns into a crisis: manipulable price indices that can trigger liquidations on false prices, and auto-deleveraging mechanisms that claw back profitable trades from unrelated traders to cover a shortfall elsewhere. The safeguards that actually matter, in his view, are segregated customer funds, a registered clearing entity, active supervisory oversight, leverage caps, margin requirements, funding-rate design and clear default-management protocols — the operational plumbing of an exchange rather than the terms of the contract traded on it.
Institutional Appetite Is Narrower Than Assumed
Tyrer also pushes back on an adjacent assumption: that institutions are eager to adopt perpetuals wholesale. He cites a JPMorgan note finding limited institutional appetite for the product, with large traders treating perpetuals as speculative instruments rather than a substitute for regulated futures. The reasons are structural — perpetuals have no term structure, carry basis risk relative to dated futures, involve funding costs that cannot be locked in, and lack a delivery mechanism.
Where institutions do use perpetuals on Bullish's venue, Tyrer says, it is typically to hedge the delta, or directional exposure, of options positions — not as a stand-in for dated futures, but because that is where liquidity concentrates. He attributes that concentration to institutions prioritizing execution over elegance, while retail traders gravitate toward the no-expiry, continuously-traded format.
Two Very Different Ways to Handle a Default
The clearest contrast Tyrer draws is between regulated clearing and typical exchange auto-deleveraging. Under a regulated clearing model, a defaulter's own margin and fund contribution absorb the initial loss, the position is worked off through the order book or auctioned to other clearing members, and a pre-funded guaranty fund — built to regulated clearinghouse standards — stands behind it. Broad loss-sharing across the market only happens beyond that guaranty fund, and rarely. Exchange auto-deleveraging, by contrast, socializes losses by force-closing profitable offsetting positions at off-market prices, spreading the pain to traders who had nothing to do with the default.
“The question was never ‘are perpetuals dangerous?’ It is ‘when the market is under stress, how does a venue handle a default?’”
Bullish, which has filed with the CFTC to operate as a regulated contract market and clearinghouse, has an obvious stake in this argument — CoinDesk itself is owned by Bullish, a conflict of interest the outlet discloses alongside the piece. But the underlying point stands apart from who is making it: as perpetual futures move from offshore crypto exchanges toward CFTC-regulated venues, the meaningful distinction won't be which contract is traded, but which rulebook governs what happens when a large position blows up.
