Crypto traders are increasingly using Perpetual Decentralized Exchanges (Perp DEXs) for their ability to trade perpetual futures contracts without intermediaries. Unlike centralized exchanges (CEXs), Perp DEXs run on blockchain tech, meaning they enable users to trade directly from their wallets without having to register or prove an identity. With such a variety of benefits available, such as lower fees, higher leverage, and permissionless access, it is no surprise that these decentralized platforms have become the go to choice for crypto leverage traders who want to begin trading to leverage without having to pay high amounts of fees or jump through too many hoops to do so.
What Are Perp DEXs?
Platforms that provide a use of perpetual futures contract, a derivative product that allows traders to speculate in the movements on the prices of various crytocurrencies are called perpetual DEXs. Perpetual contracts are different from traditional futures contracts, they don’t have an expiration date, so traders can keep positions forever as long as they sleeve the required margins.
Perp DEXs are, of course, non-custodial decentralized exchanges. What’s better than Perp DEX is that no centralized entity is required to hold users’ funds, as these exchanges use smart contracts and blockchain technology to facilitate peer to peer trading. This gets rid of the need to account, discover, and funds of wallet, the regular hallmarks of centralized exchanges. It always works with users need to just connect their cryptocurrency wallet (such as MetaMask or Coinbase Wallet) and start trading.
Perp DEX vs. CEX: Key Differences
Perp DEXs work or function differently when compared to Centralized Exchanges (CEX). All Centralized Exchanges (CEXs) allow users trade crypto assets but each have a different working model. Centralized platforms for exchanging where a user deposits funds into the custodial wallet of the exchange, that is, controlled by the exchange. Most of these platforms pair buyers and sellers by way of order books and the transactions occur through the exchange’s servers.
However, with Perp DEXs, they use blockchain technology for decentralized trading. Instead, they do away with an intermediary by letting users execute trades directly via smart contracts with other users. What this implies means that users always have control over their funds so there is the least amount of risk from hacks and exchange failures. Additionally, Perp DEXs tend to have lower fees, better privacy and accessibility since they do not require users to complete KYC (Know Your Customer).
Choosing the Best Perp DEX
When choosing a Perp DEX to use for trading, there’s a few things to take into account to ensure a trouble free and secure trading experience. These factors include:
1. Security: Look for a well established track record for security and checking if the platform is audited. Check for audit regularly, payout for bug bounty and insurance fund for protection of users in the event they are at a loss.
2. Liquidity & Fees: Make sure to check the liquidity on the platform, as high liquidity really is important in order to have smooth execution on trades and to not deal with slippage. At the same time, analysis the trading fees, funding rates and any network or withdrawal fees that come with.
3. Trading Features: Take a look at the types of assets and leverage options that are available on the platform. Third, look for advanced trading features such as charting tools, stop loss orders and risk management options like partial liquidations.
4. User Experience: The platform should be easy to use able and experience should run smoothly. No less important to traders who are looking to place trades quickly are fast execution speeds and mobile support.
How to Use a Perp DEX?
If you’re familiar with decentralized finance (DeFi), it is rather straightforward using a Perp DEX. The first thing is that you will need a compatible crypto wallet that you can use like the MetaMask or Coinbase Wallet and a bit of funds in order to do the trade. Perp DEXs are most of them run on Ethereum or other blockchain network, therefore you will need ETH to pay gas fees and both USDT or USDC to trade.
After that, once your wallet is connected, you can start exploring available assets and placing trades. Usually, Perp DEXs offer leverage and you can amplify your positions and earn more money. But when done right, leverage can be used in your favor, also increasing your chances of liquidation if the market develops against you.
Conclusion
Perpetual DEXs are revolutionizing the world of leveraged crypto trading by introducing decentralised, non custodial architectures that give traders greater flexibility and control than ever. If you are a crypto enthusiasts, these platform have become a favorite of means with features such as fee style platforms, high leverage and trading of perpetual contracts.
Just like any trading platform, Perp DEXs have their own risks. For traders, due diligence is essential; they need to choose their platforms to trade, platforms with good liquidity and finally having an understanding of the intricacies of leverage trading. Best practices and keeping yourself updated with the latest DeFi happenings can help make sure you’re able to benefit the most from DeFi while pushing any risks to the minimum.
Disclaimer: The content provided reflects the authors personal opinions and is influenced by current market conditions. Conduct thorough research before making any cryptocurrency investments. The author and the publication are not liable for any financial losses you may incur.
