Unlike traditional futures markets, crypto exchanges like Hyperliquid operate continuously, use digital collateral and can calculate margin requirements in real time. Those technological differences allowed exchanges to offer products with higher leverage and alternative liquidation mechanisms, including ADL, which automatically reduces winning positions when losing traders cannot cover their losses.
Wilson said those design choices should not be confused with perpetual futures themselves.
“I’m not a fan of ADL,” he wrote, adding that there is “no reason it needs to be used for perps.”
Instead, Wilson argued that digital payment rails create opportunities to improve risk management. Traditional clearinghouses generally calculate margin once a day, with market participants often having until the following business day to post additional collateral. Because markets can move significantly during that window, clearinghouses require relatively large initial margin buffers.
With real-time settlement, however, exchanges can recalculate margin continuously and require traders to post collateral immediately, reducing the need for large upfront margin requirements while maintaining the same level of protection, Wilson said. Whether exchanges choose to translate those efficiencies into higher leverage is a business decision, not a defining feature of perpetual futures.
Wilson said the real innovation of perpetual futures is that they eliminate the need for investors to repeatedly roll expiring contracts, reducing transaction costs, market impact and roll slippage while allowing positions to more closely track the front of the futures curve.
