BitMEX published its “State of Crypto Perpetual Swaps 2025” report on January 8, concluding that the era of easy, passive yield from perpetual funding rates has ended.
The BitMEX report identified compressed funding rates, a liquidity shock driven by auto-deleveraging (ADL), and a widening trust gap between transparent matchers and predatory counterparties. Funding-rate arbitrage, once a reliable source of passive income, compressed sharply—often falling below 4% by mid-2025—after exchanges introduced delta-neutral margin products that saturated the strategy.
On October, exchanges experienced an unprecedented liquidation cascade that the report estimated at roughly $20 billion. That event exposed ADL feedback loops: market makers using classic long-spot/short-perp hedges were auto-deleveraged, left with unhedged spot exposure and withdrew liquidity, producing some of the thinnest order books since 2022.
The findings matter because they reshape how market participants harvest yield and select counterparties, and they push innovation toward new derivative formats rather than repeatable, low-friction funding arbitrage.
Trust, manipulation vectors and new product frontiers
BitMEX documented a growing divide between so-called fair matchers and “B-Book” platforms that invoked “abnormal trading behavior” clauses to reverse or confiscate profits, a practice the report said eroded trust.
The migration of volume to high-performance perpetual DEXs also revealed novel on-chain attack vectors: illiquid pre-token listings and oracle weaknesses allowed targeted manipulation that leveraged public order-book transparency to create liquidation maps.
A concise assessment from the report framed the year as a turning point: “the conclusion of an era characterized by effortless yield generation from perpetual swaps,” according to BitMEX, underscoring the scale of the structural change.
For traders and venue operators, the practical takeaway was clear: model and stress-test for ADL scenarios, factor counterparty behavior into venue selection, and treat funding-rate exposure as an active, volatile asset rather than a passive income stream.
Investors and product teams are now focused on whether Equity Perps and funding-rate derivatives can sustain trading volume and provide meaningful hedging utility. The durability of those products over the next quarters will serve as a practical test of the report’s thesis about a genuine “post-yield” market structure.
