Last updated: Aug 02, 2022
Perpetual Protocol is a project developing financial tools with a core product of a perpetual futures DEX. With the protocol, users can trade a variety of assets using perpetual futures, open long and short positions, as well as use up to ten times leverage. When leverage trading, there is a liquidation trigger set to go off if the user’s position margin ratio falls below 6.25%.
Short and long positions expose users to a wider range of price movement of an asset. Perpetual Protocol allows its clients to keep their positions open for as long as they want, provided they agree to pay funding if required.
Due to Perpetual Protocol’s v2 crossmargin, all user funds are kept in pools, backing each other’s positions. With the use of the protocol, a client can open positions with more assets than they own, provided they have allocated the required amounts of collateral. The current buying power, which is the amount of funds that can be deployed as margin, is set to 10x leverage. This means a 100 USDC deposit is equal to buying power of 1000 USD.
In order to keep their users safe, the protocol incentivizes liquidators to liquidate users’ positions where the margin ratio of the collateral is below 6.25%. To increase or decrease the leverage users can deposit or withdraw through the project’s Exchange.
Perpetual Protocol allows users to trade as makers, thus creating orders for takers. Makers place liquidity in price ranges for takers to trade against. As a return, makers earn protocol fees and can also apply leverage to maximize the efficiency of their liquidity.
Trades on the project are performed using an AMM which allows users to place trades right away no matter their size. In such cases it is important to note the expected price impact before placing a trade.
The Perpetual Protocol app can be used to provide for funding payments – a key mechanism used to keep the mark price close to the index price. Essentially, this means funding payments are paid by traders moving the mark price further from the index price, and are earned by traders who move the mark price closer to the index price.
Funding payments are accrued on all open positions, be it market orders or acting as a maker/liquidity provider. Funding fees are paid from the Perpetual Protocol fees collateral, which is required by the user and is separate from the wallet balance.
Using the company’s perpetual contracts allows for speculations on the price of an asset by buying/going long or selling/going short perpetual futures contracts. The price of perpetual contracts remains unattached to the spot market values and can be affected by factors such as traders’ expectancy on the increase in value over time of the underlying asset, in which cases the price of the perpetual contract exceeds the spot price. In the opposite case, when most traders expect the price to fall, the perpetual will trade below the spot price.
Perpetual Protocol fees include 0.1% charged on all trades, 0.09% of all trades, proportional to makers’ share of liquidity pools for each asset. To connect to the Perpetual Protocol dApp, users can use MetaMask and all other wallets supporting Wallet Connect.
The PERP token has utility features like governance and staking. The digital coin has a fixed supply of 150 million PERP. Another use case of the asset is that in extreme cases where the exchange insurance fund may be depleted, PERP tokens may be sold at the market to make up for any shortfalls.
54.8% of the tokens are allocated towards ecosystem growth and rewards funds, 21% are given to the team, 15% to strategic investors, 5% to Balancer LBP, and 4.2% to seed investors.
When staking PERP tokens users are allowed to withdraw their funds at any time, however, when unstaking there is a cool-down period of seven days, which was reduced from 14 via governance proposal and voting.
Perpetual Protocol PERP token can be purchased on centralized exchanges like Hotbit and Gate.io.
It is up to you where to buy the PERP token. It is worth taking into account that decentralized exchanges allow you to do this more anonymously, you do not need to pass KYC procedures to use them, on the other hand, the cost of transactions may be higher than on centralized exchanges, while there is a risk of your funds being held by the exchange.
If you need to understand if Perpetual Protocol is a good investment and try to make a PERP price prediction, you need to do your own research on the project.
All the data for research is available on the project page on our website: check out the technical features of the project in this review, try to use the app, see if the information about the team is available and the team is open for communication, and using the project dashboard and the PERP price chart, assess the project usage rates as well as the token price movement and the number of its holders.
The Perpetual Protocol team was gathered by co-founders Shao-Kang Lee and Yenwen Feng. Shao-Kang Lee is also co-founder of Decore, a payroll and accounting software service for crypto companies, as well as co-founder of Cinch Network, a decentralized uncapped naked options protocol. Before that, he co-founded Zaoo Inc, and POPAPP. Shao-Kang Lee has experience working as a web and mobile engineer and iOS developer.
Yenwen Feng also co-founded Decore and Cinch Network, as well as Zaoo Inc and Cubie Inc. His past experience includes co-founding gamelet.com and willmobile Inc. All the companies co-founded by Feng have taken him as a CEO, except Decore.
Perpetual Protocol audits can be found in the protocol dashboard on this webpage.
The official partnerships announced on the Perpetual Protocol’s website include SOLUNAVAX – index backed by perpetuals, PerpTerminal, which provides volume and account stats of the Perpetual Protocol ecosystem, and Seedle, a tool to manage Uniswap v3 pools positions and liquidity.
Currently, the team is working on multi collateral which will allow traders to use a variety of assets beyond USDC as collateral to back trades on the platform. This mechanism is said to generally follow the FTX model. The end date for the release of this feature is late Q1 2022. For Q2 2022, the team has planned to work on the limit and stop orders, permissionless market creation, and a new staking program.
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