The goal was to set up a perpetual claim on the cash flows of an illiquid asset, such as real estate. The protocol’s native token is PERP, an ERC-20 token which can be staked for interest and kickback on the platform’s transaction fees. Perpetual Protocol’s price today is US$0.81, with a 24-hour trading volume of $16.33 M. PERP is +0.00% in the last 24 hours.PERP has a circulating supply of 66 M PERP and a max supply of 150 M PERP. Calculated as a blockchain’s transaction volume or a decentralized application’s trading (exchange) or borrowing (lending) volume. It’s worth noting that the PERP token was released already in September, even if the exchange itself launched in December.

What Are Perps In Crypto?

This would make it more valuable for traders who purchased contracts at an earlier date. It’s why Perpetual Protocol’s system is characterized as a “Virtual Automated Market Maker” (vAMM). In many cases, the funding rate is applied and payments are exchanged every eight hours. In this example, the $1 payment would be made every eight hours (or three times a day) as long as the funding rate and the notional value of the open position remain the same.

And here they are, in the CHSFL AAA championship game for the fourth consecutive season. Staking rewards in the Perpetual Protocol ecosystem are tiered based on the number of tokens a user locks up. Given the fixed 0.1% trading fee, we can see that the revenue pattern for Perpetual Protocol is proportional to the trading volume pattern.

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The funding rate is applied to the notional value of a trader’s open position. For example, if a trader has a long position worth $10,000 and the funding rate is +0.01%, they would pay $1 to the short position holders. Similarly, if a trader has a short position worth $10,000 and the funding rate is -0.01%, they would receive $1 from the long position holders. The idea of perpetual futures was first introduced by Robert Shiller in a 1993 paper.

The protocol was launched in 2019 and went by the name “Strike Protocol” until the PERP token was released and the name was changed to Perpetual Protocol in the fall of 2020. The system relies on technology provided by Ethereum to execute trades using smart contracts and Uniswap (UNI) code to facilitate contract purchases in a trustless manner. Perpetual Protocol is a non-custodial, smart contract-powered platform that operates on Optimism’s layer 2 blockchain.

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The USDC can then be used as collateral to buy synthetic assets (perpetual contracts). Because the perpetual contracts don’t have an explicit expiration date (compared to e.g. futures), they use funding payments to keep the perpetual contract’s price in line with the underlying asset’s price. Perpetual Protocol uses code created by Uniswap, an Automated Market Maker that uses two pair assets to facilitate the exchange of said assets. However, these are contracts people are trading which means they’re not buying the underlying assets (i.e. Bitcoin) and their smart contracts are only designed to help with price discovery for contracts. Regulation for perpetual futures varies depending on the jurisdiction and the exchange offering the product.

• We can see that the vast majority of traders are longing Bitcoin at the moment which indicates bullish sentiment.
• The main difference is that Phemex offers 100x leverage trading compared to 10x on Perpertual Protocol because we have a larger liquidity pool to draw from and can take on more risk.
• Perpetual futures are among the most traded assets in the world, with tens of trillions in daily trade volume.

Perpetual Protocol is a decentralized leverage trading exchange running on the Ethereum Optimism network. Perpetual Protocol uses DApps such as MetaMask to allow users to deposit funds and collateral in a trustless manner. Traders need Ethereum and stablecoins such as xDAI or USDC to post collateral for their leverage trades.

Unlike the AMMs mentioned above, which are used for both token swaps and price discovery, PERP’s virtual AMM is used only for price tracking to manage leverage and short positions. Perpetual Protocol’s app is a decentralized application (DApp) that facilitates trading using smart contracts and decentralized wallets. Traders can deposit beginners guide to setup gitlab in 4 simple steps Ethereum or stablecoins and trade the largest cryptos by market cap using wallets such as MetaMask. Traders purchase perpetual contracts that never expire until the trade is closed – hence the name perpetual.

Therefore, perpetual futures (perps) were proposed as financial tools that don’t require this periodic buying/selling to maintain a position. Perpetual Protocol offers the trading of perpetual futures on a decentralized exchange (DEX) via the Ethereum-based Optimism layer 2 scaling solution (L2). Traders use Perpetual Protocol to increase their exposure to crypto assets, potentially reaping more profits at the risk of increased losses. The team wanted to integrate these protocols’ features into a decentralised perpetual contract trading protocol that runs on Ethereum.

In the crypto space, they’re a favorite and they recently surpassed spot assets in trade volume. The main reason perpetual contracts are preferred by traders is that they let traders multiply their profits with leverage and also retain them indefinitely. Traditional futures contracts allow top vpn protocols explained traders to increase their leverage in the market. However, since they expire on a given date, traders must “roll over” their positions (close the old one and open a new one with a later expiration date) if they want to continue to have exposure to the asset. This introduces complexity and results in inefficiency for traders wanting to maintain longer term price exposure to the asset.

Besides his extensive derivative trading expertise, Adam is an expert in economics and behavioral finance. Adam received his master’s in economics from The New School for Social Research and his Ph.D. from the University of Wisconsin-Madison in sociology. He is a CFA charterholder as bitcoin is not a legal tender in zambia says central bank well as holding FINRA Series 7, 55 & 63 licenses. He currently researches and teaches economic sociology and the social studies of finance at the Hebrew University in Jerusalem. ERC-20 is a token standard most new tokens follow when publishing on the Ethereum blockchain.