π Lot-Based CFDs vs. Perpetuals
HyperFX uses a lot-based Forex CFD model. Most existing on-chain derivatives protocols use a USD-perpetual model. This page explains the difference between the two and why it matters.
π¬ Understanding DeFi derivativesβ
Finematics β 'DeFi Explained β The Full Guide' β covers how decentralized finance protocols work, which sets the context for understanding how on-chain derivatives like HyperFX fit into the broader DeFi ecosystem.
The two models side by sideβ
| Feature | Lot-Based Forex CFD (HyperFX) | USD-Perpetual (Gains / GMX / Hyperliquid / dYdX) |
|---|---|---|
| Position sizing unit | Standardized lots (1.00 lot = 100,000 base currency units) | USD notional value |
| Pricing model | Spread + commission per trade | Funding rate (continuous, time-based) |
| Leverage definition | Per-pair, fixed tiers (e.g. 1:100 on majors, 1:20 on exotics) | Single global leverage setting across all markets |
| P&L calculation | Pip value Γ lot size Γ price move | USD notional Γ % price move |
| Settlement | Contract closes at exact lot size against bid/ask | Position closed against mark price |
| Fee structure | Entry/exit spread + per-lot commission | Funding rate paid/received continuously |
| Execution model | Central Limit Order Book (CLOB) | AMM pool or synthetic index |
| Market standard | MT4/MT5, regulated Forex brokers | DeFi-native, no off-chain equivalent |
What is a lot?β
In regulated Forex and CFD markets, a lot is the standard unit of measurement for a trade:
| Lot type | Size | Example (EUR/USD) |
|---|---|---|
| Standard lot | 100,000 units of base currency | 1.00 lot = β¬100,000 |
| Mini lot | 10,000 units | 0.10 lot = β¬10,000 |
| Micro lot | 1,000 units | 0.01 lot = β¬1,000 |
When a trader opens "0.50 lots on EUR/USD," the exact notional, pip value, and margin requirement are all deterministic from the lot size and current price β regardless of what that price is in USD terms.
This is the model HyperFX implements on-chain.
What is a USD-perpetual?β
A perpetual swap (or "perp") is a derivative that tracks the price of an underlying asset with no expiry date. Instead of a lot-based structure, positions are sized in USD notional:
- Open "a $10,000 long on BTC" = you hold $10,000 of BTC exposure
- Funding rate mechanism keeps the perpetual price anchored to the index price
- Leverage is typically applied as a multiplier to the USD notional
Protocols like Gains Network, GMX, Hyperliquid, and dYdX all operate this way. They are powerful instruments for crypto assets, but their structure does not replicate how Forex CFDs work in the regulated off-chain world.
π¬ Perpetual futures explainedβ
Finematics β 'Perpetual Futures (Perpetual Swaps) Explained' β covers how perpetual contracts work, what funding rates are, and how they differ from traditional futures β the model that most DeFi derivatives use and that HyperFX deliberately moves away from.
π Settlement flow comparison β lot-based vs perpetualβ
Why it matters in practiceβ
The two models produce different outcomes for the same trade, different margin formulas, and different cost structures.
P&L languageβ
A lot-based Forex trader talks in pips and lots: "45 pips on 0.30 lots of GBP/USD."
A perp trader talks in USD and percentages: "1.2% on my $5,000 BTC long."
HyperFX uses the lot-based model β the standard used by regulated Forex brokers and familiar to traders coming from MT4/MT5.
Margin calculationβ
In lot-based CFDs, margin depends on the base currency price:
Margin = (Lot size Γ Contract size Γ Price) / Leverage
Example: 0.10 lot on EUR/USD at 1.0850, leverage 100:1
Margin = (0.10 Γ 100,000 Γ 1.0850) / 100 = $108.50
In USD-perps, it is simply Notional / Leverage β which works fine for BTC/USD but breaks down when you need consistent multi-currency Forex behavior.
Cost structureβ
Forex brokers charge a spread plus sometimes a per-lot commission. There is no time-based fee accumulation during the trading day.
Perpetuals charge a funding rate β a payment between longs and shorts, typically every 8 hours β which is appropriate for crypto but distorts the economics of currency pairs. HyperFX uses spread + commission, the same structure as regulated Forex brokers.
The on-chain gapβ
Before HyperFX, every on-chain derivatives protocol used the perp model β because it is simpler to implement. The full lot-based Forex CFD model only existed inside broker systems (MT4/MT5). HyperFX is the first implementation of this model directly in smart contracts, with an on-chain CLOB, per-pair leverage tiers, and lot-denominated settlement.
:::info Coming from a traditional Forex broker? If you trade on IC Markets, Pepperstone, XM, or similar, HyperFX uses the same lot sizes, the same pip-based P&L, and the same spread + commission structure. The only difference is that your funds stay in your wallet and the order book is on-chain. :::
π Go deeper β study resourcesβ
π Official documentation & referencesβ
| Resource | Description |
|---|---|
| ESMA β CFD product information | ESMA product intervention measures on CFDs |
| CME Group β Forex futures specifications | How lot sizes and contract specifications work on a professional exchange |
| Investopedia β Lot definition | Standard definition of lot types in Forex trading |
π₯ Educational videosβ
| Video | Channel | Description |
|---|---|---|
| What is a Lot in Forex? | BabyPips | Understanding standard, mini, and micro lots |
| Perpetual Futures Explained | Finematics | How perpetual swaps and funding rates work |
π Reading guidesβ
| Resource | Description |
|---|---|
| BabyPips β What is a Lot? | The definitive beginner guide to Forex lot sizes |
| Investopedia β Perpetual Futures | How perpetual swaps work in crypto markets |
| Investopedia β Funding Rate | The mechanism that replaces spread/commission in perp-based protocols |