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

- Channel: [ETHGlobal](https://streameth.org/ethglobal)
- Date: 2026-07-09
- Duration: 15:10
- Topics: Volmex, Cole Kennelly, ETHConf, onchain derivatives, perpetual futures, perps, options, prediction markets, RWA derivatives, DeFi, volatility indices, BVIV, EVIV, VIX, benchmark index, dYdX, Synthetix, Augur, GMX, GLP, Gains, Ribbon, AMMs, option vaults, order books, Hyperliquid, Lighter, Polymarket, HyperEVM, TradeXYZ, S&P 500 perpetual, FX perpetuals, open interest, trading volume, app chains, equity perps, commodities, October 10
- Watch: https://streameth.org/watch/yt-_E3L_nkOVa0
- YouTube: https://www.youtube.com/watch?v=_E3L_nkOVa0

## Description

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

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