General FAQ
Our goal is to democratize Futures and other derivatives.
We have witnessed how democratizing crypto-assets can create new opportunities like fundraising (ERC-20), tokenized investments (cToken), and so much more.
Issuing Futures used to be the job of centralized organizations with very high barriers to entry. But with Perpetual Protocol, we lower the barrier of issuing Futures by orders of magnitude. Compared to centralized exchanges or other protocols like Synthetix and FutureSwap, there are several properties unique to Perpetual Protocol:
Stakers have no exposure to impermanent loss caused by price fluctuation, which insulates stakers from fluctuation in the price of the underlying assets.
Trading volume is not bound by the funds in the Staking Pool.
The AMM model is suitable for low liquidity Futures because of built-in liquidity, allowing trading of long-tail assets.
Oracles are not used to determine prices while trading, which minimizes the risk of price manipulation (ex. front running).
In the theory of disruptive innovation, a much cheaper way to reconstruct an expensive product wins and creates more use cases. This is our goal for Perpetual Protocol.
Our team is decentralized. Team members and advisors are located across the Asia-Pacific, North America, and the EU.
Yes, the Staking Pool is shared by all Virtual AMMs.
Each lock-up time, or "epoch", as we call it, lasts for 7 days. The length of the epoch can be adjusted through governance.
Rewards given to stakers are available right away for fee rewards, and locked for 1 year for trading fee / funding payment reimbursements (80% locked for 1 year, 20% available immediately).
Tokens will be released and unlocked according to different schedules depending on the token holder. Please see PERP Distribution and PERP Release Schedule for details.
Governance Perpetual Protocol is a project built on community support. Once the ecosystem has matured and we have broader token distribution, Perpetual Protocol would gradually transition into a DAO and let the community decide the future development of the protocol. Note that governance may vote to add additional token features in the future.
Staking
In order to incentivize participation in Perpetual Protocol governance, PERP holders are rewarded when they stake their tokens in the Staking Pool. Stakers are rewarded with a portion of transaction fees generated by trading, plus the staking reward once per staking epoch (7 days).
Please see PERP Tokens for more details.
Please see PERP Tokens for more details.
Investors: (6,250,000+22,500,000) * 25% = 7,187,500
Balancer LBP: 7,500,000
Ecosystem & rewards: 7,775,000
Total: 7,187,500 + 7,500,000 + 7,775,000 = 22,462,500
Unlocked / Total = 22,462,500 / 150,000,000 = 15%
No, each perpetual contract requires its own unique Virtual AMM with different settings.
ā | Perp.fi | Synthetix |
Financial Instrument | Perpetual Contract | Synthetic Assets |
Slippage | Slippage from constant-product curve. Roadmap: slippage could be mitigated through the algorithmic adjustment of k. | No slippage because the price comes from the Oracle directly. ā ā Traders can place any size of orders without slippage. |
Stakers' PnL | Stakers are not exposed to impermanent loss caused by price fluctuation. | Stakers must take directional positions. (Even minting sUSD is a directional position.) ā š¤ Stakers face exposure to price fluctuation in order to earn staking rewards. |
Oracle | āTWAP is used at the funding time (every hour) to calculate the funding rate. ā 1) The price is used to calculate the funding rate only, which greatly minimizes the risk of price manipulation. 2) Using the TWAP adds another layer defense against manipulation. | A continuous spot price feed is needed from the Oracle. š¤ The Oracle is needed for every block and used to calculate the value of positions. It has a huge risk of being hacked and Synthetix has suffered from different levels of losses. ā š¤ Pricing coming from the Oracle directly makes the system easier to be front-run. The prices of orders are settled 3 minutes later due to front-run protection. |
ā | ā | ā |
Perpatual Protocol has managed to fix or mitigate most of the Synthetix problems detailed here (front-running, skew of the debt pool, Oracle, snapshotting attack): Synthetix ā the battlefieldā
ā | Perp.fi | Futureswap |
Financial Instrument | Perpetual Contract | Margin Trading |
Slippage | Slippage from constant-product curve. Roadmap: slippage could be mitigated through the algorithmic adjustment of k. | No slippage because the price comes from the Oracle directly. ā ā Traders can place any size of orders without slippage. |
Open Interest | There is no cap on the open interest. | Open interest is capped by the size of the liquidity pool. š¤ This means the growth is also capped by the size of the liquidity pool. |
Impermanent Losses | Stakers are not exposed to impermanent loss caused by price fluctuation. | Liquidity providers are exposed to impermanent loss. |
Underlying Assets | Not limited to ERC-20 tokens. ā ā The underlying assets could be BTC, XRP, ... , and even off-chain assets. | ERC-20 tokens only. |
Oracle | āTWAP is used at the funding time (every hour) to calculate the funding rate. ā ā 1) The price is used to calculate the funding rate only, which greatly minimizes the risk of price manipulation. 2) Using the TWAP adds another layer defense against manipulation. | A continuous price feed is needed from the oracle. ā š¤ Pricing coming from the Oracle directly makes the system easier to be front-run. The prices of orders are settled 3 to 10 minutes later due to front-run protection. |
ā | ā | ā |
dYdX perpetual contracts provide an off-chain order book with a perpetual contract.
ā | Perp.fi | dYdX Perpetual Contract |
Liquidity | Guaranteed liquidity from the Virtual AMM (constant-product curve). Potential to offer long tail assets, private markets, etc. | Order book model. ā ā Higher throughput ā No slippage š¤ Need to build up liquidity from scratch. |
Auto-Deleveraging | No auto-deleveraging. | Auto-deleveraging position if the counter-party gets liquidated and the system is not able to find a new counter-party. ā š¤ When there is low liquidity, the positions are auto-deleveraged much more easily than those on centralized exchanges. |
Token model | Native PERP tokens to incentivize stakers and traders. | N/A |
Transaction fees | Transaction fees are shared with PERP stakers. | Transaction fee revenues accrue to dYdX. |
Perpetual Protocol uses ChainLink as the Oracle for the funding rate calculation. The Oracle price is not used elsewhere. This limits Perpetual Protocol's exposure to Oracle failure or manipulation.
Perpetual Protocol only uses the Oracle price at funding time (every 1 hour), and in addition, the 1-hour TWAP is used. This minimizes the usage of the Oracle and the risks of the price being manipulated.
Currently the Oracle price shown on the trading interface is updated more regularly. However, the price is only used once per hour to calculate funding payments.
No, Perpetual Protocol doesn't use any on-chain Oracle or on-chain DEX as the price engine. It's very difficult to use a flash loan to manipulate the price of underlying assets and profit from Perpetual within the same transaction.
The only time Perpetual Protocol makes use of on-chain Oracle prices is to liquidate under-collateralized assets. In this case, because Perpetual Protocol uses both the 15 min TWAP Oracle price and latest Oracle price to calculate UnrealizedPnL, it's very difficult to manipulate UnrealizedPnL within the same transaction. Please see Liquidation for more details.
No, positions are not deleveraged in Perpetual Protocol because Virtual AMMs serve as the counter-party for all trades.
CollateralizationRatio š Initial setting: 500%
The Virtual AMMs are backed by the PERP staked as collateral at the CollateralizationRatio in the Staking Pool.
š¬ Initial setting: 500%
EmergencyShutdownCollateralizationRatio š Initial setting: 150%
Once the CollateralizationRatio falls below the EmergencyShutdownCollateralizationRatio, PERP holders can vote for the execution of an Emergency Shutdown.
ā
FeeRatio š Initial setting: 0.1%
The transaction fee percentage. This rate is charged every transaction, and the proceeds are shared by the stakers.
MaintenanceMarginRequirement š Initial setting: 2.5%
Once a position's margin ratio falls below the MaintenanceMarginRequirement, liquidators can liquidate this position. Please see Liquidation for more details.
InitMarginRequirement š Initial setting: 5%
The initial margin ratio required to open a new position. Please see Liquidation for more details.
LiquidationFeeRatio š Initial setting: 1.25%
The liquidation fee percentage. Please see Liquidation for more details.
StakingEpochLength š Initial setting: 7 days
It's the length of the staking epoch.
ā
The smart contracts are deployed on top of Ethereum. There is no restriction to access the smart contracts to anyone, anywhere.
The DEX UI is hosted by the team. Due to regulations, trading will not be available to citizens of, or users from, the US, UK and Taiwan. Third parties may offer parallel platforms using the open source front end.
