The Evolution of Onchain Derivatives | Cole Kennelly (Volmex) at ETHConf

Sun, Aug 2, 2026, 12:00 AM

In this talk, Cole Kennelly, founder of Volmex Labs, traces the history and evolution of onchain derivatives from the early days to where the market is headed. He introduces Volmex as the premier benchmark index company for crypto, having pioneered volatility indices like the BVIV and EVIV (analogous to the VIX but for Bitcoin and Ethereum), which are available on Bloomberg Terminal, Polymarket, TradingView, and others. He defines onchain derivatives as platforms making perpetual futures, options, and other instruments tradable in DeFi, offering 24/7 global, permissionless, and fully transparent markets, while acknowledging cons like public liquidation thresholds and higher latency, noting the adage that pioneers get slaughtered while settlers get rich. Cole frames the market in four generations. Gen one (2017 to 2020) included pioneers like dYdX, Synthetix, and Augur that had directionally right ideas but were too early, with dYdX's perpetual focused app chain foreshadowing today's Hyperliquid and Lighter, and Augur serving as Polymarket before Polymarket. Gen two (2021 to 2023) was defined by automated market makers and option vaults through protocols like GMX, Gains, and Ribbon, where GMX's GLP model was a bootstrapped grassroots first foray, though AMMs proved less scalable than order books. Gen three (2023 to 2025) is characterized by scalable protocols like Hyperliquid, Polymarket, and Lighter with their own dedicated chains and bolted on ecosystems like HyperEVM and LighterEVM, driving explosive volume into the tens of trillions. He shares that onchain perpetuals saw around $20 billion in 24 hour volume, $650 billion over 30 days, and $14.7 billion in open interest, with an all-time high of $80 billion transacted on the volatile October 10th. He highlights the rise of RWA derivatives (TradeXYZ on Hyperliquid running the official S&P 500 perpetual, FX perpetuals on Lighter) and prediction markets like Polymarket, which crossed the chasm during the 2024 presidential election with $2.7 billion on one market. He closes positioning the current moment as gen four, predicting more privacy, greater expressivity, and net new derivative types, and reiterates that onchain derivatives are global, always accessible, transparent, and real time auditable. 00:00 Introduction 00:33 Meet Cole and Volmex Labs 00:55 Volmex Volatility Indices Overview 01:44 What Are Onchain Derivatives 02:10 The Pros and Cons of Onchain Derivatives 02:32 The Verticals of Onchain Derivatives 02:58 The Four Generations Framework 03:20 Gen One Pioneers: dYdX, Synthetix, Augur 03:57 Why dYdX Was Ahead of Its Time 04:48 Synthetix and Early RWA Exposure 05:06 Augur as Polymarket Before Polymarket 05:27 Gen Two: AMMs and Option Vaults 05:47 The GMX and GLP Model 06:21 Why AMMs Are Less Scalable Than Order Books 06:42 Option Vaults Ahead of Their Time 07:06 Gen Three: Hyperliquid, Polymarket, Lighter 07:42 Perpetual Futures in 2025 08:08 Why Exchange Dedicated Chains Unlock Scale 08:39 The Rise of RWA Protocols 09:11 Volume and Open Interest by the Numbers 09:46 Rivaling Binance and Coinbase 10:08 The October 10th All-Time High 10:28 RWA Perpetuals and TradeXYZ 10:52 The Official S&P 500 Perpetual 11:15 FX Perpetuals on Lighter 11:15 Prediction Markets Becoming Ubiquitous 11:49 How the 2024 Election Crossed the Chasm 12:15 Reading Markets Instead of Polls 12:37 Fed and Asset Price Markets 13:02 Volmex Markets on Polymarket 13:21 Where Onchain Derivatives Go: Gen Four 13:46 The Next Wave of Innovation 14:19 Key Takeaways 14:45 Closing _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ *ETHConf 2026* ETHConf is a 3 day event for founders, industry leaders, and builders who are excited about the possibilities of building on top of Ethereum. Connect with 2,000+ top innovators in crypto, finance, technology, and policy at our inaugural three-day event packed with showcases, demos, partnerships, and conversations shaping the future of the global economy. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ ✅ *Follow ETHConf* X: https://x.com/ethconf Website: https://ethconf.com _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 🎟️ Get your early bird tickets for ETHConf 2027: https://ethconf.com/2027#tickets 🎤 View the full ETHConf 2026 Speaker Schedule: https://ethconf.com/schedule _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _