Comparison of Perpetual Futures Algorithms between CEX and DEX: Hyperliquid, Binance, and OKX

Perptual Futures trading has become an important part of the cryptocurrency market. This article will delve into the algorithmic differences in the core mechanisms of three major platforms - Hyperliquid, Binance, and OKX in Perptual Futures, exploring the financial philosophies and risk management approaches behind them.

Key Elements of Perpetual Futures Trading

Perptual Futures trading is mainly composed of three key elements:

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

2. Mark Price: The decisive price used to calculate unrealized profits and losses, trigger liquidation, and other key events.

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

Comparison of Algorithms from Three Major Platforms

Index Price/Oracle Price

Hyperliquid uses oracle prices independent of its own market, constructed by validator nodes, employing a weighted median method to withstand extreme price fluctuations. This method is more resistant to manipulation, but the update frequency is relatively slow ( once every 3 seconds ).

In contrast, the index prices of Binance and OKX are more dependent on their own platform data and data from other major exchanges.

Mark Price

The mark price algorithm of Hyperliquid integrates multiple data sources:

1. The 150-second exponential moving average of the difference between the Oracle price and the contract price.
2. The median of the platform's own buy/sell price and the last transaction price.
3. Weighted median of the price in multiple centralized exchanges' Perptual Futures.

This design aims to enhance the reliability of prices and resistance to manipulation.

Binance's mark price algorithm is based on the median of the contract market's buy/sell bid prices, transaction prices, and impact prices, processed through an exponential moving average. This method makes price changes relatively stable, suitable for large capital stable allocation.

OKX adopts a simpler method, using only the midpoint price of the buy one/sell one order book as the source of the mark price. This algorithm is extremely sensitive to small trades, making it suitable for high-frequency trading and short-term operations.

Funding Rate

The funding rate algorithm of Hyperliquid introduces a premium index based on the Binance model and uses Oracle prices instead of index prices. To accelerate price regression, Hyperliquid adopts three distinctive settings:

1. Funding rate of up to 4% per hour in extreme cases.
2. The funding fee is based on the Oracle price rather than the mark price.
3. Charge 1/8 of the 8-hour funding rate every hour

The funding rate of Binance depends on a longer settlement cycle (, usually 8 hours ), calculated based on the order book depth and fixed borrowing rates. This design provides institutional investors and medium to long-term traders with a smoother funding cost.

The funding rate algorithm of OKX is relatively simple, calculated based on the deviation between the bid and ask prices on the order book, with a longer settlement period. This leads to significant fluctuations in the funding rate, making it suitable for high-frequency and short-term strategies.

Trading Strategies Adapted for Different Platforms

Binance: The Choice of Rational Institutional Investors

Binance's design leans towards "institutionalization and moderation," with the core concept being "making the market predictable." This design attracts institutional investors and medium to long-term traders who seek stable returns with controllable risks.

OKX: The Paradise for Trading Instincts

The strategy design of OKX is close to "fast, fierce, and accurate", and its philosophy is "the market is a reflection of human nature". This mechanism naturally attracts high-frequency traders, "spike attackers", and short-term traders.

Hyperliquid: An Experimental Field for On-Chain Structuralism

Hyperliquid aims to create a new financial paradigm: decentralized governance + programmable pricing mechanisms. It attracts traders who seek to rebuild trust systems through verifiable code and distributed governance.

Conclusion

The algorithm designs of different platforms reflect varying financial philosophies and market views. Binance pursues institutional stability, OKX emphasizes market instincts, while Hyperliquid attempts to establish on-chain consensus. When choosing a trading platform, traders need to make choices based on their trading style and risk preferences.

Regardless of which platform you choose, it is important to always maintain a sense of reverence for the market and recognize that there are value judgments hidden behind every algorithm. In this ever-evolving cryptocurrency market, the ability to keep learning and adapting is crucial.