Navigating Bluefin and the Future of Perpetual DEXes

As one of Bluefin’s main market makers, we’ll go over the exchange’s intricacies and evaluate why perpetual futures decentralized exchanges may onboard new users in the future. By examining new Perp-DEX trends, opportunities, challenges, and technical variables, we’ll share our outlook on what’s needed for these venues to succeed in secondary markets.

Major Learnings

  • Shift from CEX to DEX is evident in spot markets, but lagging in perpetual markets, indicating potential expansion in the upcoming years for Perp-DEXs. 
  • Keyrock proactively engages with Perp-DEXs, focusing on emerging ecosystems. 
  • Bluefin’s low-latency trading experience, focus on user experience, and upcoming V3 will position it to be a strong contender in the Perp-DEX space. 
  • Keyrock has performed around $3 billion in volume, with 95% of our orders being maker orders, representing 25% of all the trades on Bluefin. 
  • Bluefin broke over $5 billion in traded volume in the last month, with a maximum daily volume of over $500 million – showcasing the ability to operate at scale with their early product.

The Evolution of the Perpetual DEX Ecosystem

Centralized exchanges (CEXs) have engaged in a war to offer the lowest fees, the deepest, and the fastest execution to their users. Can decentralized exchanges (DEXs) compete with such strong value propositions?


When inspecting historical volumes, a tangible shift from CEXs to DEXs can already be seen in the spot markets. Currently, DEXs have grown to take around <10% of the current volume, even reaching 15% through 2023. This signals that there’s a growing number of users who want to trade on-chain.



However, adopting on-chain trading has yet to happen when it comes to the perpetual futures markets. This slower adoption echoes the pre-DeFi-Summer landscape regarding the spot markets, which were mainly happening on centralized exchanges before DEXs came as strong competitors. As a result, such similarity raises the hypothesis about a similar shift happening in favor of perpetual future adoption of DEXs, translating to more volume on these venues.



It might seem logical to attribute the lag in the Perpetual DEX vs. CEX adoption to the overall lack of adoption of perpetuals trading. However, this is not the case. As seen below, the volume of Perpetuals on CEXs increased 25 times from 2019 to 2021.



When investigating the volumes of perpetuals on decentralized exchanges, we’ve observed a strong contrast between periods.


During the later part of the last bull run (late 2021), we can observe values of around $20 to $30 billion a week. However, during the 2022 bear market, there was a significant decrease in volumes, which is consistently below $10 billion–with the notable exception of the roughly $20 billion spike in on-chain volumes in November 2022 due to the FTX collapse.


Nevertheless, the future looks bright. Despite prices, sentiment, and peak euphoria not at an all-time high, the on-chain volumes have picked up and closely resemble those of late 2021. As time passes and the market matures, we can expect more sophisticated actors to move to crypto, taking part in their activities on-chain.


As on-chain trading activity grows and the tech stack improves, protocols will become better equipped to accommodate this higher flow of onboarding users. We seem to be on the brink of a breakthrough, signaling a period of significant expansion and opportunity within the Perp-DEX ecosystem.



Engaging with DeFi goes beyond strategic market-making or investments; instead, it serves as a gateway for financial innovation. Keyrock embraces these DeFi’s values, including self-custody of assets, interoperability, accessibility, and transparency.


As facilitators, we are actively looking for protocols that develop user-friendly infrastructure and interfaces that simplify integration so that we can enable Perp-DEXs to absorb the flows of traders looking to trade on-chain. We seek to facilitate the continued growth in Perp-DEXs by improving liquidity and creating efficient and accessible markets for all.


Rise of Perps DEXes – The Case of Bluefin

Due to the nature of blockchains, one of the biggest challenges for perpetual exchanges is to launch a fully decentralized CLOB. This is because on blockchains, each change in the state, for example, a transaction trading token A for token B, has to be committed to the chain itself, incurring gas fees per transaction. Moreover, due to the long time to finality, it might no longer be the expected outcome of the trade the user initially had by the time the trade is settled.


In that context, Bluefin emerged as a unique protocol, with its newest version offering noteworthy features. By utilizing a distinctive architecture that interacts with the Sui blockchain, the exchange challenges the current status quo in the trading landscape, which will be the topic of our following analysis.


Bluefin states, “Derivatives trading in DeFi requires high-performance blockchains, and no decentralized protocol has yet matched the success of a leading centralized exchange because of the user experience challenges with on-chain trading.” Leveraging Sui, Bluefin is now poised to change that.


Bluefin utilizes Sui’s owned objects for transaction processing (via Byzantine Consistent Broadcast), avoiding consensus and locking only relevant data for parallel processing. It achieves low-latency validation by processing transactions individually and efficiently submitting transactions through a quorum driver. Scalability is ensured via causal ordering, allowing for extensive parallelization and sharding across multiple machines.


Coupled with Bluefin’s off-chain matching engine, the protocol sequences transactions from individual accounts while allowing parallel processing for distinct accounts. Users primarily interact with the off-chain order book and cross-margining engine, experiencing an impressive end-to-end latency of 30ms.


Transactions are then processed sequentially on the Sui blockchain. Owned object transactions ensure a quick, finalized on-chain output for the confirmations provided by the Bluefin cross-margining engine.

Bluefin’s Performance

Thanks to the above-mentioned features by Bluefin and Sui, we’ve been able to provide liquidity in a similar manner to how we might on a centralized exchange. This led us to achieve a much higher capital efficiency compared to what can be achieved on oracle-based Perp-DEXs.


By operating at the top of the book, we’ve offered the best prices available in the market – offering maximum liquidity closest to the midpoint. As a result, we’ve been able to maintain an exceptionally tight spread in our quotes. On Bluefin, our liquidity has facilitated around $3 billion–95% of which have been maker orders–in volume out of a total of $11.5 billion. This means we’ve been supporting roughly 25% of all the trades happening on Bluefin since its launch on SUI.


Fast trade settlements and our trust in Bluefin’s optimistic trade confirmation when entering and exiting trades have given us a tighter grip on managing our inventory risks, especially when compared to what can be seen across other Perp-DEX platforms. These parameters are what allow us to market make at the same level we would on centralized venues.



Our efficiency can be measured by how much of the marker volume share we have. Our performance has been consistent, as BTC and ETH market share oscillates between 20% and 50%, making us one of the largest market makers while keeping our operations’ uptime to an average of 97%.



Our performance with improving liquidity on Bluefin has supported the exchange as it has rapidly scaled. Bluefin saw over $5 billion traded in the last month, with an exceptional surge of over $500 million on February 14.



By efficiently facilitating order flow, we’ve helped Bluefin attract rapidly growing volumes, showcasing our experience and expertise in the market.


Looking Forward

We believe that similarly to how Spot-DEXs have gained market share throughout DeFi summer and currently take around 10% of all the spot trading, Perp-DEXs will experience a comparable boom. As they’re growing from their current market share of around 2 to 5%, Perp-DEXs have strong grounds to achieve a more even distribution. This gap between CEX and DEXs will narrow down through further advancements in technology and user experience.


Despite the current challenges, such as L1 limitations, we remain confident that the infrastructural issues will be solved with newer and better technologies. Even if the “euphoria” is not at all-time highs, we can’t overlook the new heights volume has reached on-chain, with levels not seen since the peak of the 2021 bull run.


Bluefin’s upcoming improvements, including an expanded selection of trading pairs (up to 100 by the end of the year) and account abstraction (users will be able to sign up, deposit funds, and trade with just a Google account), will further drive this shift. Market participants are encouraged to explore Bluefin and try out its features aimed at delivering an optimized trading experience.


As a market maker on Bluefin, Keyrock is committed to providing liquidity and supporting the growth of decentralized trading ecosystems.


Get in touch to discuss how we can collaborate. Stay on track with our liquidity research by following us on X and LinkedIn.