Analysis of Price Mechanism Comparison and Design Philosophy of Perptual Futures Trading platform

In March 2025, the JELLYJELLY contract triggered a market turmoil on a certain decentralized trading platform. The contract price surged 429% in a short period, almost triggering a massive liquidation. If liquidation occurs, short positions will be forced into the on-chain liquidity pool, causing huge floating losses. Amidst the market chaos, the platform's validators urgently voted to intervene, forcibly delisting and freezing trades, raising doubts about "decentralized" exchanges.

This event exposes the core issues of decentralized trading platforms: What determines the price? Who bears the risk? Is the algorithm truly neutral? This article will use this event as a starting point to compare and analyze the differences in the core mechanisms of Perptual Futures among three major trading platforms, exploring the financial philosophies and risk transmission mechanisms behind them.

Perptual Futures Trading Basic Components

Perptual Futures trading mainly includes three key elements:

1. Index Price: Tracks the changes in the spot market price and serves as a theoretical benchmark.

2. Mark Price: The decisive price used to calculate unrealized profit and loss and liquidation.

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

Comparison of Price Mechanisms of the Three Major Platforms

Index Price/Oracle Price

A certain decentralized platform adopts oracle prices independent of its own market, constructed by validator nodes. It uses a weighted median method to combat extreme volatility, with an update frequency of once every 3 seconds. This design is more resistant to manipulation, but updates are slower.

Mark Price

The marked price algorithm of a certain centralized platform A is based on the median of the contract market's buy/sell prices, transaction prices, and impact prices. Combined with EMA processing, it smooths the changes in the marked price, making it suitable for large capital layouts.

A certain centralized platform B only uses the bid-ask midpoint price as the source of the mark price, which is extremely sensitive to small trades, suitable for high-frequency and short-term operations.

A certain decentralized platform integrates multiple price sources: the EMA of the difference between the Oracle price and the contract mid-price, the median of the platform's own bid-ask prices and the last transaction price, as well as the weighted median of the perpetual mid-prices from several centralized platforms. Validators need to perform consistency verification on the input sources, enhancing the resistance to manipulation.

Funding Rate

A certain decentralized platform introduces a premium index based on traditional models, sampling every 5 seconds and calculating the hourly average. To compensate for the slow price regression, it adopts a high funding rate of up to 4% per hour, calculated based on Oracle price and charged hourly.

A certain centralized platform relies on a longer settlement period of (8 hours ), combining order book depth and borrowing rates to provide institutional investors with smooth and predictable funding costs.

The algorithm of a certain centralized platform B is relatively simple, calculated based on the deviation of the market price, with significant fluctuations, suitable for aggressive strategies.

Trading Strategies and Financial Philosophy Adapted to Different Platforms

( Centralized Platform A: The Design of Institutional Rationality

• Core concept: Making the market predictable
• Mechanism: Smooth marking price, refined funding rate modeling, multi-layer risk buffer
• Suitable for: Institutional investors and medium to long-term traders seeking stable returns

) Centralized platform B: The design of trading instinct.

• Core Idea: The market reflects human nature
• Mechanism: Sensitive Mark Price, Highly Volatile Funding Rate, Quick Liquidation
• Suitable for: high-frequency traders, short-term traders

A certain decentralized platform: Design of on-chain structuralists

• Core Concept: Algorithmic Order Setting
• Mechanism: Validator consensus price, HLP Vault backing, high-frequency funding rate, on-chain transparency
• Suitable for: on-chain arbitrageurs and extreme traders pursuing transparency

![Who is controlling your liquidation line? Unveiling the price wars and human dilemmas behind the perpetual futures of three major platforms]###https://img-cdn.gateio.im/webp-social/moments-dbd36e75c2ce0e3684568bb5d27a4d69.webp###

Conclusion

The price mechanism design of different platforms reflects varying understandings of the essence of the market. Some pursue stability, some embrace volatility, and others attempt to establish new orders through algorithms. However, in extreme cases, human intervention remains difficult to avoid, highlighting the tension between "code is law" and governance by man.

In the future financial world, algorithms will continue to expand their boundaries. But we must recognize that behind every piece of logic written in code lies a value judgment. Whether it is the pursuit of freedom, fairness, or transparency, humans must ultimately be responsible for their own values. Let us always maintain a sense of reverence for the market.