Don Wilson, the founder and CEO of trading giant DRW, went on a tear against regulators over their understanding of perpetual futures. In a series of posts on X on July 28, Wilson laid out a case that the people writing the rules for perps are fundamentally confused about what these instruments actually are.
His core argument is deceptively simple: perpetual futures are just futures contracts without expiration dates. That’s it. The scary stuff, like 100x leverage and auto-deleveraging mechanisms, comes from choices made by specific crypto exchanges, not from anything baked into the contract structure itself.
The distinction regulators keep missing
The high leverage that makes perps controversial? That’s a parameter set by exchanges like Binance or Bybit. Auto-deleveraging, the mechanism where profitable traders get their positions forcibly reduced when the insurance fund runs low? Wilson calls that unnecessary for the proper functioning of perps. It’s a band-aid solution that specific platforms chose to implement, not a fundamental requirement of the instrument.
In Wilson’s framing, perps reduce transaction costs, minimize market impact, and provide more efficient tracking of the futures curve compared to traditional dated contracts that need to be rolled every month or quarter.
