The Next Generation of On-Chain Perpetual Futures Trading: A Conversation With Brian Purcell

If there’s one sector in the crypto industry that has truly lived up to its expectations (not you, NFTs), it’s decentralized trading. However, while Uniswap, PancakeSwap, and other DEXs have been thriving for over five years, its decentralized derivatives have made the biggest splash recently. Monthly volumes, which averaged less than $50 billion in 2022 (with even lower numbers in 2023), have surged to over $200 billion on average so far in 2024, according to DeFiLlama.

\ One of the fastest-growing newcomers in the on-chain perpetual futures space is Bitoro. Branded as an “ecosystem for on-chain perp liquidity,” the platform has already exceeded $3 billion in volume and attracted over 50,000 traders since its launch at the end of March 2024, operating across two trading platforms on Orderly and Injective.

\ This September, the project announced the development of a brand-new “liquidity layer” built on ZKsync’s ‘Elastic Chain.’

\ To understand why Bitoro made this move, how it could benefit the decentralized derivatives landscape, and what other developments might be on the horizon, I spoke with Bitoro Founder and CEO Brian Purcell. Here’s what he had to say.

Brian: The significant shift towards decentralized derivatives exchanges, like Bitoro Network, is driven by a combination of factors rooted in the core values of the crypto community: transparency, security, and autonomy. While the unfortunate collapse of FTX certainly acted as a catalyst, it's important to recognize that this shift was already underway due to growing awareness and demand for decentralized solutions.

\ First, users are increasingly seeking platforms where they retain control over their assets. Decentralized exchanges (DEXs) like Bitoro ensure that users' funds remain in their wallets, mitigating the risk of a single point of failure or the misuse of customer assets—issues that came to the forefront with FTX's downfall.

\ Second, the collapse of FTX highlighted the inherent risks in centralized exchanges, including lack of transparency and the potential for corporate mismanagement. In contrast, DEXs operate on smart contracts with transparent and auditable code, offering users a clear view of how their trades are executed and how the platform operates. This transparency builds trust, which is paramount in the current market.

\ Additionally, the ability to trade without intermediaries aligns with the decentralization ethos that the blockchain community values. Users are becoming more sophisticated and recognize that decentralization offers not just a technological advantage but also a philosophical one, aligning with the original vision of cryptocurrencies.

\ The rapid innovation in the DEX space, including advancements in scalability, user experience, and liquidity, has also made these platforms more attractive. For instance, Bitoro's cutting-edge technology ensures low slippage, high liquidity, and fast execution, making it a compelling alternative to traditional centralized exchanges.

Brian:  Bitoro's expansion into another blockchain ecosystem (BitoroCore) is driven by our commitment to staying at the forefront of decentralized finance and ensuring that our users have access to the most advanced and efficient trading experiences. While our success within the Orderly and Injective ecosystems has solidified our position as a leading perpetuals DEX, we recognize that the DeFi landscape is dynamic, with new innovations and user demands constantly emerging.

\ Our decision to expand is not just about diversification but about leveraging the unique strengths of having our own native blockchain to enhance our platform's scalability, security, and user experience. By introducing BitoroCore, we can offer our users lower fees, faster transaction speeds, and access to a broader range of assets and liquidity pools. This move is part of our broader strategy to future-proof Bitoro and ensure we remain competitive in an increasingly multi-chain world.

\ Moreover, expanding to our own blockchain and the associated partnerships (ZKsync in particular) allows us to reach a wider audience, tapping into communities that prefer specific networks. This helps us grow our user base while fostering interoperability within the DeFi space. Ultimately, our goal is to provide a seamless and robust trading experience across multiple chains, ensuring that Bitoro remains the go-to platform for perpetual trading, regardless of the blockchain our users prefer.

Brian: BitoroCore is designed to be the backbone of our platform, enhancing the performance, security, and scalability of the Bitoro Network. One of the key reasons for building on Elastic Chain by ZKsync is to significantly increase transaction throughput. By integrating a Layer 2 scaling solution, we can handle a higher volume of transactions without compromising speed or efficiency. This is crucial for a perpetuals DEX, where users expect instant trade execution and minimal latency.

\ Similarly, Elastic Chain allows us to reduce gas fees, which is a significant advantage for our users. Lower transaction costs not only make trading more accessible but also improve the overall user experience, encouraging more activity on the platform.

\ Of course, Security is also a top priority for Bitoro, and the Elastic Chain’s use of zero-knowledge proofs ensures robust security while maintaining decentralization. This alignment with our decentralized ethos means we can offer our users trustless and secure trading, reinforcing confidence in the platform.

\ Last but not least, ZKsync is designed with interoperability in mind, which aligns with our long-term vision for Bitoro. As the DeFi ecosystem evolves, being on a platform that can seamlessly integrate with other blockchains and protocols is essential. This not only future-proofs our platform but also opens doors to new partnerships and innovations.

Brian: A native token is crucial for a decentralized exchange (DEX) like Bitoro because it aligns the interests of the platform, its users, and the broader ecosystem, creating a more sustainable and engaged community.

\ For example, it can be a powerful tool for incentivizing user engagement on our platform. We’re looking to reward users with tokens for activities like providing liquidity, staking, or trading, which in turn can drive greater participation and liquidity – both of which are critical for the success of a DEX. Additionally, token holders can stake their tokens for a guaranteed yield to incentivize long-term engagement with our ecosystem.

\ $BTORO holders can also participate in governance, by voting on proposals, protocol upgrades, and other important decisions, which is part of our effort to be as close to our users as possible. And finally, they will also receive exclusive privileges, such as reduced trading fees as well as access to premium features and events.

Brian: I believe that on-chain futures exchanges have made significant strides in recent years, but they are still evolving and not yet on par with centralized exchanges in every aspect. While decentralized exchanges offer unparalleled transparency, security, and user control, there are areas where centralized exchanges currently hold an advantage.

\ One of the biggest challenges DEXs face today is undoubtedly user experience. Thankfully, we’ve already reached a point where user interfaces and trading terminals of platforms like Bitoro are virtually on par with top centralized exchanges, including advanced features like stop-loss orders.

\ That said, traders are still required to connect their private wallets, which can be challenging for inexperienced blockchain users. Additionally, DEXs can’t provide direct crypto-to-fiat on or off ramps, which means that traders need to handle this aspect through other channels. The same applies to other features that most big CEXs are offering today, such as built-in trading bots, copy trading, and more (thankfully, these may be closer than some might think).

\ Perhaps most crucially, decentralized platforms still somewhat lag behind CEXs in terms of liquidity and order execution speeds. DEXs have come a long way in this regard and can definitely offer pretty decent liquidity and speed at this point, but in an industry where milliseconds matter, CEXs still have the edge for now.

\ With that being said, I have no doubt that decentralized solutions will continue to gain market share in the coming years as their technology develops and more and more users recognize the considerable advantages.