Perpetual Protocol is a decentralised exchange (DEX) for futures.
It’s an interesting perps platform that was the reigning champion until dYdX launched on Layer 2, allowing it to dominate the market.
We discussed Perpetual Protocol in our futures article and in our The Next DYDX | A High-Risk, High-Reward Opportunity.
So, let’s dive in!
What are perpetual futures?
Futures are a type of derivative. Derivatives are complex financial instruments whose value is derived from an underlying asset. For example, crude oil is a commodity and the underlying asset. Crude oil futures are financial contracts that derive their value from the underlying asset (crude oil) that people trade. You can’t easily trade oil itself, but you can trade its derivative.
A traditional future is an agreement to purchase an asset, such as gold (or Bitcoin), for a fixed price at a set point in the future.
Unlike traditional futures, Perpetual Futures or perps for short, don’t have a settlement date (they are perpetual) and are cash settled, rather than requiring physical delivery of the asset.
Perps give traders access to huge leverage and the ability to go long (buy) or short (sell), which was previously very challenging for the everyday investor. Right now, Perpetual Protocol offers up to 10X leverage. This means your buying power is 10 times the collateral you deposit. For example, if you deposit $100, your buying power will be $1000.
How does Perpetual Protocol work?
Perpetual Protocol allows users to trade perpetual futures. It offers up to 10X leverage on a range of assets like BTC, ETH, SOL, BNB and 13 more.
The platform uses a virtual Automated Market Maker (vAMM) model. This uses a mathematical function to determine the prices of assets.
Who are the founders of Perpetual Protocol?
Perpetual Protocol was created by Taiwanese crypto entrepreneurs Shao-Kang Lee and Yenfen Weng in 2019. It was first launched on mainnet in 2020.
Perpetual Protocol embodies the ‘DeFi legos’ ethos by building upon other DeFi protocols, and allowing other projects to build on its own product. Learn more about the Perpetual Protocol ecosystem and its partnerships here.
PERP is the native token of Perpetual Protocol.
The PERP token is a utility and governance token used by holders to vote on ecosystem updates and development proposals. Learn more about how PERP governance works here.
Investors who stake in PERP can earn 15% of the protocol’s revenue. This is possible thanks to the launch of vePERP (vote-escrowed PERP), which means the token is locked up for between a week and a year. When locked, holders get voting rights in governance decisions and a share of the fees and PERP rewards. Stakers are currently earning 30-50% APY.
The total supply of PERP is 150 million. The current circulating supply is 68.7 million, with the token distribution as follows:
- 54.8% allocated to ecosystem and rewards
- 21% allocated to team and advisors
- 15% allocated to strategic investors
- 4.2% allocated to seed investors
- 5% allocated to Balancer Liquidity Bootstrapping Pool (LBP)
Where can you buy PERP?
PERP can be purchased on Binance, Kraken, Uniswap and more.
How to trade on Perpetual Protocol
To trade on Perpetual Protocol, you need an Ethereum-compatible wallet like MetaMask and USDC tokens for collateral. For more details on how it works, click here. You can also trade through Optimism.
For Cryptonary’s transparent opinion on Perpetual Protocol, check out our Rating Guide here and our research report, The Next DYDX | A High-Risk, High-Reward Opportunity.
Disclaimer: Not financial nor investment advice. Any capital-related decisions you make are your full responsibility and yours only.
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