When a bull market arrives, almost nobody wants to just hold spot. The instinct is to add leverage, and for most traders that means a perpetual future. So the real question is not whether to use leverage—it is how to get it. We tested two ways to hold the same 2X exposure: a 2X perpetual, and RiskON, which is built to deliver roughly 2X on its own. We count a market as bullish whenever its price sits above a rising 200-day average—a simple, mechanical rule, spelled out in full further down. Across the BTC and ETH bull markets of the past seven years, RiskON won every one—14 of 14. Compounded through them, one dollar in RiskON grew to $27 in BTC and $109 in ETH; the same dollar in a 2X perpetual grew to just $12 and $22. Same target exposure, very different outcomes—and the difference is a cost the perpetual pays and RiskON does not.
RiskON: Leverage Without the Borrowings, Funding, and Margin Calls
Before the comparison, it is worth knowing what RiskON actually is, because it is neither a perpetual nor an option you trade on an exchange.
Deposit one unit of an asset into The Risk Protocol—BTC or ETH today, with more assets to be enabled over time—and it splits into two tokens, RiskON and RiskOFF. Each starts with half the economic value of the deposit, and the two always sum back to the underlying. RiskOFF is the cautious half: it gives up its gains above a +8% cap in return for protection against losses past −5%. RiskON is the other half, and it inherits exactly what RiskOFF gives up.
That inheritance is the leverage. Above +8%, RiskON earns its own gain plus the gain RiskOFF gave up—roughly 2X leverage on the part of the move beyond the cap. A +30% rally becomes +52%; a +100% rally becomes +192%. Between −5% and +8% it tracks the asset one for one, and below −5% it takes the downside RiskOFF was shielded from, again at 2X. Drag the slider to see the whole payoff:
Where does the extra upside come from? Not from borrowing. RiskON and RiskOFF are the two sides of a single fully collateralized, costless collar, struck against each other the moment you mint them: RiskOFF is long a protective put and short a call, and RiskON is long that same call and short that same put. In plain terms, RiskOFF buys insurance against deep falls and pays for it by capping its own upside, and RiskON is the counterparty on both sides of that trade. The leverage is simply the two tokens swapping risk with one another—an internal risk swap, in the protocol's own words—not capital borrowed from an exchange. Because nothing is borrowed, three costs a perpetual cannot escape never arise.
- No borrowings. The pair is 100% collateralized at mint. The 2X is an internal swap between the two tokens, not external debt.
- No funding. This is not a perp, so there is no borrowed leverage and no ongoing financing bleed. Whatever the structure costs is priced once into the collar at mint—not streamed out every hour or every eight hours the way a perpetual's funding is, and not inflated by how long the crowd happens to be.
- No margin calls. With no borrowed funds to repay, there is nothing to margin-call or force-liquidate. RiskON's value can fall in a deep crash, but it cannot be closed out from under you.
The collar re-strikes every 30 days, resetting the band around the prevailing price and rolling the prior month's gain into the next. And because the payoff is fixed for the length of that epoch rather than rebalanced day by day, there is no churn for volatility to grind on—a property that matters far more than it sounds, as the next two sections show.
How We Measured This
The result lives or dies by the method, so start there. We used seven years of daily BTC and ETH prices, together with the funding data for their perpetual markets, from 2019 to 2026.
A bull market is defined mechanically. A day counts as bullish when the price closes above its 200-day moving average and that average is itself rising. The 200-day average is the standard long-term trend line: shorter windows whipsaw on noise, longer ones lag the move, and 200 days is long enough to mark the primary trend yet quick enough to turn within a cycle. Runs of bullish days form a bull market, and the filter returns 8 of them in BTC and 6 in ETH, matching the cycles anyone who traded them would recognise.
One detail is worth dwelling on, because it is what makes the test fair. The rule looks only at prices up to and including the day it is judging—never at what comes next. So the signal is one a trader could have computed and acted on that same morning, watching the same chart in real time. We are not selecting bull markets in hindsight, after their tops and bottoms are already known and easy to draw around; we are flagging them as they would have appeared, live, while you still had to decide what happens next.
In each bull market we put one dollar into each of two strategies on the same day. One is a 2X perpetual: constant 2X exposure, rebalanced daily, paying funding on the full 2X notional. The other is RiskON. We hold both to the end of the bull market, sit in cash in between, and compound the results across every one. The figures throughout this piece are what came out.
The Tax Nobody Prices In
A perpetual future has no expiry date, and that single fact is the source of its cost. A dated future is dragged toward spot because it must settle on a fixed day. A perpetual never settles, so something else has to keep its price tethered to the asset it tracks. That something is the funding rate—a payment exchanged between longs and shorts at a regular interval. It is the contract's cost of carry, and in a market that leans long, the longs pay it.
It is tempting to think funding is zero when longs and shorts are balanced. It is not. Hyperliquid makes the mechanics explicit; its funding rate is
funding = premium + clamp(interest − premium, −0.05%, +0.05%)
where the interest term is fixed at 0.01% every 8 hours—about 11.6% a year. Hyperliquid quotes that rate per 8 hours but settles it every hour, charging one-eighth of it at a time, so the cost drips out around the clock rather than landing in three lumps a day. With the book perfectly balanced and the premium at zero, that interest term is exactly what a long pays. It is the floor, not the ceiling: holding a 2X long is holding a financed position, and the financing is never free.
The premium is where bullishness enters. It is the gap between the perpetual's price and spot, premium = (perp − oracle) / oracle. When longs are aggressive they bid the perpetual above spot, the premium turns positive, and funding climbs with it—once the premium clears the small clamp, funding tracks it almost one for one, up to a ceiling of 4% per hour. Funding is, in effect, a thermometer for how badly the market wants to be long: a balanced book reads near the 11.6% floor, and a crowded long tilt reads far hotter.
A bull market is a crowded long tilt, by definition. So its funding is not occasionally high. It is structurally, persistently high.
Make it concrete. You post $10,000 of collateral and open a 2X long—a $20,000 position. Across the BTC and ETH bull markets in this study, funding on a long averaged roughly 17% to 22% a year; call it 20%. That position then pays 20% of $20,000—$4,000 a year—in funding alone, which is 40% of your stake, gone before the market has moved a dollar and before decay takes its share. In the froth of 2021, when funding briefly ran past 70% annualized, the same position would have been bleeding over $14,000 a year at that pace—more than the collateral behind it.
RiskON, holding no borrowed position, pays none of this.
The Second Tax: Volatility Decay
Funding is the cost you can see. The second one never appears as a payment, and it is the larger of the two.
A constant 2X position has to be rebalanced to stay constant. As the price moves, it is topped up after a gain and trimmed after a loss so that exposure stays at exactly twice the equity. On a straight-line climb that would cost nothing. Prices do not move in straight lines.
Two days show it. The price rises 10%, then falls 10%. The asset travels $100 to $110 to $99 and lands down 1%. The 2X position travels $100 to $120 to $96 and lands down 4%. No fee was charged; the loss is pure path. The recovery is figured on a smaller base than the drop destroyed, and doubling every move widens the gap—the same reason a 50% loss needs a 100% gain to undo it.
That little leak is not a fluke, and it has a tidy formula behind it. A position pinned to a constant k times the asset gives up about ½·k·(k−1)·σ²·T against k times the asset's own return, where σ is volatility and T is time. Do not let the symbols put you off—for a 2X position it boils down to one clean idea: every year, you quietly hand back about the asset's variance. And because it grows with the square of the swings, a 10% round trip costs roughly 2%, a 20% round trip about four times that, a 40% round trip four times again.
What does that add up to in crypto? BTC and ETH swing at 60% to 80% a year, and squaring those puts the drag at roughly 35% to 65% a year—on top of funding, and invisible until you compare where you should have ended up with where you actually did. It is the same quiet erosion, volatility drag or beta slippage, that has eaten leveraged ETFs and leveraged tokens for years.
Funding is the interest on borrowed exposure. Decay is the toll on rebalancing it. A 2X perpetual pays both, every day it is open.
RiskON is re-struck once a month and never rebalanced in between, so the daily churn that creates decay simply never happens. It pays neither tax.
The Findings
In 8 of 8 BTC bull markets and all 6 in ETH, RiskON beat the 2X perpetual. Not on average. In every one.
Compounded through the BTC bull markets, one dollar in RiskON grew to $27. The 2X perpetual reached $12—barely past the $11 earned by holding the coin with no leverage at all. Both aimed at the same 2X; the perpetual surrendered the difference to funding and decay.
ETH is the cleaner verdict. RiskON became $109; the 2X perpetual became $22; unleveraged spot became $27. The 2X perpetual finished below holding the coin with no leverage at all, while RiskON multiplied it many times over. Same target exposure, opposite outcomes.
And it is not the gift of one lucky run. RiskON wins bull market after bull market, in the long trends and the short ones alike.
| Start | End | Days | Underlying | RiskON | 2X Perp | RiskON DD | 2X Perp DD | Funding/yr | Winner |
|---|---|---|---|---|---|---|---|---|---|
| 2019-09-10 | 2019-09-25 | 15 | -16% | -28% | -32% | -30% | -36% | +11% | RiskON |
| 2020-05-08 | 2021-05-20 | 377 | +314% | +624% | +431% | -68% | -71% | +33% | RiskON |
| 2021-08-09 | 2021-09-09 | 31 | +0% | +0% | -6% | -16% | -24% | +18% | RiskON |
| 2021-10-21 | 2021-12-27 | 67 | -19% | -35% | -43% | -47% | -57% | +21% | RiskON |
| 2023-01-26 | 2023-08-16 | 202 | +25% | +41% | +30% | -25% | -35% | +7% | RiskON |
| 2023-10-16 | 2024-08-08 | 297 | +117% | +201% | +198% | -39% | -55% | +14% | RiskON |
| 2024-11-02 | 2025-03-27 | 145 | +26% | +45% | +32% | -40% | -50% | +9% | RiskON |
| 2025-04-22 | 2025-11-02 | 194 | +18% | +30% | +25% | -17% | -29% | +5% | RiskON |
BTC, every bull market. Negative rows are stretches where the trend rule held into the first leg of a reversal; RiskON loses less in each, because it pays no funding and takes the early decline at 1X.
| Start | End | Days | Underlying | RiskON | 2X Perp | RiskON DD | 2X Perp DD | Funding/yr | Winner |
|---|---|---|---|---|---|---|---|---|---|
| 2020-04-30 | 2022-01-06 | 616 | +1550% | +6057% | +1901% | -78% | -88% | +33% | RiskON |
| 2023-01-14 | 2023-02-23 | 40 | +6% | +8% | +7% | -10% | -20% | +10% | RiskON |
| 2023-03-23 | 2023-08-16 | 146 | -1% | -1% | -12% | -31% | -43% | +6% | RiskON |
| 2023-11-19 | 2024-07-31 | 255 | +61% | +88% | +63% | -49% | -59% | +16% | RiskON |
| 2024-11-24 | 2024-12-23 | 29 | +2% | +2% | -3% | -25% | -35% | +17% | RiskON |
| 2025-07-28 | 2025-11-10 | 105 | -6% | -14% | -26% | -52% | -59% | +5% | RiskON |
Reading the tables. 2X Perp = the 2X perpetual. DD = the worst peak-to-trough drawdown inside the bull market. Funding/yr = the annualized funding a long paid, quoted on a 1X position (a 2X long pays it on twice that).
The Downside
A leveraged-upside story usually hides a leveraged-downside cost. RiskON does not, and this is where the structure earns its keep.
Between its strikes, RiskON is a one-times claim. A 5% pullback costs it 5%. The 2X perpetual loses 10% on the same pullback, twice as much, and RiskON only steepens to 2X once a decline pushes past its −5% floor—so it takes the early, ordinary part of every dip at half the perpetual's rate.
This is visible in realized risk, not just on paper. Averaged across the bull markets, RiskON's worst drawdown was 35% in BTC against the perpetual's 45%, and 41% against 51% in ETH—shallower in every single one.
Higher returns and shallower drawdowns, in the very same windows.
Does It Survive Scrutiny?
A finding is only as good as its assumptions, so we changed them, one at a time, and ran the whole comparison again. We loosened the definition of a bull market. We pushed the perpetual to 3X. We took the funding from a different exchange. In every version a trader could actually act on, RiskON still came out ahead—usually by more.
| What we changed | Type | BTC wins | BTC ratio | ETH wins | ETH ratio |
|---|---|---|---|---|---|
| 30-day epoch, +8%/-5%, 2X Binance, 200-day MA (rising) | causal | 8/8 | 2.2× | 6/6 | 5.0× |
| Bull = price above 200-day MA | causal | 9/9 | 2.7× | 6/6 | 6.5× |
| Perpetual at 3X leverage | causal | 7/8 | 3.4× | 6/6 | 29.3× |
| Funding from Deribit (second venue) | causal | 7/8 | 1.9× | 6/7 | 2.9× |
| Bull = trough-to-peak (20% rule) | hindsight | 0/12 | 0.2× | 1/16 | 0.1× |
Reading the table. Wins = the number of bull markets where RiskON beat the 2X perpetual, out of the total. Ratio = RiskON's ending wealth divided by the perpetual's. causal means a rule you could run live, with no knowledge of the future; hindsight means a rule that needs to know the top and bottom in advance.
There is exactly one way to make the perpetual win, and it is worth being honest about it. If you define a bull market by its top and its bottom—after both have already happened—the windows become smooth, uninterrupted climbs that never dip more than 20%. Strip out the chop and the perpetual's two costs nearly vanish: there is little volatility for decay to feed on, and a short clean run barely accrues funding. That is the single row tagged hindsight above. But drawing those windows requires knowing the future. The 200-day rule does not; it sits through the chop, the pullbacks, and the heavy funding that come with every real bull market—which is exactly where RiskON earns its edge. The perpetual wins only on a chart you could draw afterward. RiskON wins on the one you trade in real time.
The Better Way to Be Bullish
Reaching for leverage in a bull market is the right instinct. The market is going up, and you want more of it. The mistake is in where the leverage comes from. A perpetual finances that exposure for you and bills you for it—funding that runs highest in exactly the bull markets you want to ride, and decay that grinds away on every swing in between. Neither cost shows up as a line you can point to, and both are paid, relentlessly, for as long as you hold.
RiskON sources the same 2X from structure instead of borrowing. Nothing is borrowed, so there is no funding. No borrowed money stands behind it, so there is nothing to liquidate. The leverage is a simple swap of risk between two tokens, priced once at mint and then left alone. Across every bull market a trader could have spotted in real time, that structural 2X beat the borrowed one—more upside, shallower drawdowns, the very same conviction.
The lesson is not that leverage is wrong. It is that how you source your leverage matters more than the leverage itself.
Leverage has a new home. And RiskON is only the first room in it: more SMART Tokens are on the way, each a new and better way to obtain leverage.