The post How Perpetual Swaps Work on Decentralized Exchanges – A Technical Breakdown appeared on BitcoinEthereumNews.com.

Decentralized perpetual trading platforms control over 8% of the total crypto Perps trading activity, challenging centralized exchanges for a share of the market. Crypto investors’ preference for decentralized perpetual exchanges is growing thanks to key attractions like privacy and financial security.  Image Source – Theblock.co For a better understanding of how decentralized perpetual exchanges work, we will discuss the technical aspects of decentralized perpetual swaps and how they handle systemic operations to deliver a seamless perps trading experience for crypto traders. We assume that anyone reading this article is already familiar with perpetual contracts and understands the basic concepts of crypto perpetual trading, such as funding rates. Understanding Decentralized Perpetual Exchange Decentralized perpetual exchanges are non-custodial protocols for trading crypto perpetual contracts. They leverage decentralized networks and smart contract technology to engineer an operational system that handles perpetual contract trades and processes like trade settlement, liquidation, and funding fee remittances. Unlike centralized exchanges, decentralized exchanges do not rely on centralized systems for price updates and order matching, nor do they require third parties, such as clearinghouses, to operate. Therefore, to efficiently handle trading and settlements, it must develop a self-sufficient system that mostly works onchain. Systems that make this possible are the key components of the protocol Primary Components of Decentralized Perpetual Exchanges The primary components of a Decentralized perpetual exchange are the major systems that work in unison to handle perpetual swaps and achieve a functional trading system. They include; Liquidity and Order Matching System The liquidity and order matching system handles user trader requests. Decentralized swaps are unique in the order matching system, but can be classified under; 1. AMM Perpetual DEX AMM-style perpetual Dexes use liquidity pools to serve trade requests. Assets in the liquidity pool are contributed by independent liquidity providers who are entitled to an…

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Filed under: News - @ December 19, 2025 3:27 am