Comparison of Perptual Futures Trading Mechanisms between CEX and DEX: Hyperliquid, Binance, and OKX

In March 2025, the JELLYJELLY contract caused a market upheaval on a decentralized trading platform. The contract price skyrocketed by 429% in a short period, almost triggering a massive liquidation. If liquidation occurred, the short positions would be forced into the on-chain liquidity vault, resulting in huge floating losses. Meanwhile, a large centralized exchange also quickly launched JELLYJELLY's Perptual Futures trading.

As the crisis was about to erupt, validators of the decentralized platform urgently voted to intervene, forcibly delisting, liquidating, and freezing transactions, which raised doubts in the community about "decentralized" exchanges. This incident exposed a core issue: what determines the price on decentralized trading platforms? Who ultimately bears the risk? Is the algorithm really neutral?

This article will use this event as a starting point to analyze the algorithmic differences in the core mechanisms of perpetual futures on three major platforms, specifically regarding index price, mark price, and funding rate (, and discuss the underlying financial philosophies and risk transmission mechanisms. We will see how different algorithms shape trading styles, serve different types of operators, and how they affect traders' situations amid market fluctuations.

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Perptual Futures Trading Overview

Perptual Futures Trading consists of three key elements:

1. Index Price: Tracks the price fluctuations of the spot market as a theoretical benchmark.

2. Mark Price: The decisive price used to calculate unrealized profits and losses, liquidation, and other key events.

3. Funding Rate: An economic mechanism that connects the spot and Futures Trading markets, guiding the contract price to revert to the spot.

Comparison of the Mechanisms of Three Major Platforms

) Index Price/Oracle Price

The index price of a certain decentralized platform is called the oracle price, completely independent of its own market, constructed by validator nodes. It uses a weighted median method to combat extreme price fluctuations, with an update frequency of once every 3 seconds. This design enhances resistance to manipulation, but the update speed is relatively slow.

Mark Price

The marked price algorithm of a large centralized exchange is based on the principles of "price smoothness" and "market depth reflection". The formula combines the mid-price of the contract market's best bid/ask, transaction prices, and impact prices, and uses EMA for processing. This design allows for smooth changes in the marked price, strong resistance to price spikes, making it suitable for stable positioning and arbitrage strategies for large funds.

Another centralized exchange adopts a more aggressive approach, using only the mid-price of the buy and sell orders as the source of the mark price. This algorithm is extremely sensitive to small trades, with significant price fluctuations, but can quickly revert to the spot price, making it suitable for high-frequency trading and short-term operations.

The mark price structure of the decentralized platform combines the two methods mentioned above. It integrates oracle prices, the platform's own prices, and the perpetual mid-price weighted median from multiple centralized exchanges. Validators are responsible for periodically updating prices and conducting consistency checks, enhancing the system's resistance to manipulation.

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) Funding Rate

The decentralized platform has introduced a premium index in the funding rate algorithm, sampling every 5 seconds and calculating the hourly average to prevent short-term volatility. To compensate for the slow speed of price regression, the platform has adopted three special settings:

1. Funding rates can be as high as 4% per hour in extreme cases.
2. The funding fee is calculated based on the oracle price rather than the mark price.
3. Charge one eighth of the 8-hour funding rate every hour

The funding rate of a certain large centralized exchange relies on a longer settlement cycle ###, usually 8 hours (, calculated in conjunction with order book depth and lending rates. This design provides institutional investors and medium to long-term traders with a smoother expectation of funding costs.

The funding rate algorithm of another centralized exchange is relatively simple, calculated based on the deviation of the bid and ask prices in the order book, with a longer settlement period. This design leads to significant fluctuations in the funding rate, making it suitable for high-frequency and aggressive short-term strategies.

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Trading Strategies and Financial Concepts Adapted to Different Platforms

) A large centralized exchange: The design of institutional rationality

The overall design leans towards "institutionalization and moderation", with the core idea being "making the market predictable". This design is suitable for institutional investors and medium to long-term traders who pursue stable returns and controllable risks.

Another centralized exchange: the design of trading instinct.

The strategy design approaches "fast, fierce, and accurate"; the philosophy is "the market is a reflection of human nature." This mechanism attracts high-frequency traders, "spike traders," and short-term traders, who are skilled at capturing instantaneous price deviations.

Decentralized Platform: The Design of On-Chain Structuralists

Attempting to create a new financial paradigm: decentralized governance + programmable price mechanisms. Its philosophy is: algorithms do not predict the market, but rather set order. This design attracts traders seeking to rebuild trust systems through verifiable code and distributed governance.

Conclusion

Different trading platforms attempt to establish trust in an invisible market through their respective algorithm designs. Whether it's institutional buffers, market behavior supremacy, or on-chain consensus, they all reflect different understandings of market order.

However, when the market is in extreme situations, algorithms may retreat, and human factors remain important. Ultimately, prices are not determined by algorithms, but by whom we choose to trust to decide. In the future financial world, algorithms will continue to expand their influence, but behind every piece of logic written in code, there casts a shadow of value judgment.

Traders need to realize that what they pursue is not just price, but an illusion of order. Regardless of which trading platform they choose, they must be responsible for their values and always maintain a sense of reverence for the market.

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