Key Takeaways
What’s the projection for equity perps?
Ethena founder Guy Young said equity perpetuals could unlock a market opportunity over 30 times larger than crypto’s.
Which projects will be beneficiaries of the boom?
Perps DEXes like Hyperliquid and delta-neutral players like Ethena could benefit first.
Crypto speculation has hit a fever pitch. On-chain perpetuals, leveraged Derivatives that you can hold forever, provided you pay Funding Rates, are now being rolled out for equities.
According to Ethena [ENA] Founder Guy Young, the equity perps trend could offer a massive upside potential. He noted,
“Crypto created 1x >$200b business and >4x $10-100b businesses with perpetuals on a $4tn asset class. Equities alone are >30x the size.”
Here, he was referring to major crypto exchanges offering perpetuals like the Binance [BNB] exchange.
Other businesses like Ethena’s synthetic USDe that leverage yield from delta-neutral strategies from perpetual Funding Rates have also benefited from the trend.
Young added,
“In my view, the potential upside for this product is larger than the current market cap of Robinhood.”
Source: X
Is equity perps the next catalyst?
Young’s acknowledgment of the opportunity hinted that they may be preparing to make a move if the market matures.
Jose Macedo, Co-Founder of analytics firm Delphi Research, echoed a similar stance and added,
“Equity perps expand Ethena’s yield TAM from the $3 trillion crypto market to $120 trillion global equities market. This is not priced in.”
The retail player Robinhood has a market cap of $129 billion. For Young, however, the equity perps could birth businesses worth way more than this figure.
For perspective, Ethena’s USDe is now the third-largest stablecoin by market cap ($10 billion) because of traditional crypto perps. The firm buys a spot and opens a corresponding short on Futures (perps) to pocket the price difference or yield that backs USDe.
Perp DEX boom adds momentum
Crypto is only a $4 trillion market. Now, imagine scaling into a $120 trillion market with a similar delta-neutral strategy?
That’s the likely bet Young could be eyeing, especially after regulatory clarity and liquidity improve.
Source: X
Meanwhile, the overall crypto perps space has been on a tear. In October alone, perp DEXes hauled $1.2 trillion in volume. This was nearly double the $739 billion seen in September, underscoring the massive speculation interest.
Source: DeFiLlama
Whether Ethena will tap into the broader perps growth and drive ENA’s value remains to be seen.