Perpetual Protocol

Table of Contents

1. What is Perpetual Protocol?
2. How does Perpetual Protocol work?
3. History of Perpetual Protocol
4. Overview of $PERP Token
5. Who are the Founders of Perpetual Protocol?
6. What makes Perpetual Protocol unique?
7. How is Perpetual Protocol different from other decentralized exchanges (DEXs)?
8. What are the fees associated with trading on Perpetual Protocol?
9. How is Perpetual Protocol able to offer high leverage trading?
10. How does Perpetual Protocol handle order matching and execution?
11. What is the governance model for Perpetual Protocol?
12. Where to buy $PERP?

What is Perpetual Protocol?

Perpetual Protocol is a decentralized exchange (DEX) built on the Ethereum blockchain. It allows users to trade a variety of digital assets in a trustless and decentralized manner. It uses a unique trading mechanism called "perpetual contracts" which are similar to futures contracts but with no expiration date.

This allows traders to access high leverage trading and the ability to trade both long and short positions. Perpetual Protocol also has a built-in governance system, allowing users to vote on important protocol decisions.

How does Perpetual Protocol work?

Perpetual Protocol works by allowing users to trade a variety of digital assets using "perpetual contracts". These contracts are similar to traditional futures contracts, but unlike futures, they do not have an expiration date. This means that traders can hold their positions for as long as they want, and can trade both long and short positions.

When a trader wants to open a position, they must provide collateral in the form of the underlying asset or another supported collateral. The price of the asset is determined by an automated market maker (AMM) algorithm, which takes into account the current supply and demand for the asset.

The trading on Perpetual Protocol is done on-chain, meaning that all trades are recorded on the Ethereum blockchain and can be publicly audited. This ensures transparency and trustless trading. Additionally, Perpetual Protocol has a built-in governance system, which allows users to vote on important protocol decisions, such as the addition of new assets or changes to the trading fees.

When a trader wants to close a position, they must settle the difference between the entry and exit price of the contract. Traders can also add or remove collateral to maintain the required collateralization ratio.

History of Perpetual Protocol

Perpetual Protocol was developed by the team at Aave, which is a decentralized lending and borrowing platform. The project was first announced in 2020 and the mainnet launch took place in September of that year.

The initial version of Perpetual Protocol, v1, was focused on providing high leverage trading for Ethereum-based assets. It quickly gained popularity among traders due to its trustless and decentralized nature, as well as its ability to offer high leverage trading.

In late 2020, Perpetual Protocol announced the launch of v2, which added support for trading a wider range of assets, including Bitcoin, and other ERC-20 tokens. The new version also introduced the concept of "global liquidity pools", which allows traders to access liquidity from other decentralized exchanges.

In early 2021, Perpetual Protocol announced the launch of v3, which introduced a new governance mechanism and a new token, the PIPT, which is used to vote on protocol decisions and earn a share of the trading fees.

Throughout its history, Perpetual Protocol has been focused on providing a more flexible and efficient trading experience for users compared to traditional centralized exchanges, and continuously improving the protocol's features and functionalities.

Overview of $PERP Token

$PERP is the native token of the Perpetual Protocol. It serves several purposes within the protocol, such as:

Governance: $PERP holders can vote on important protocol decisions, such as the addition of new assets or changes to the trading fees.

Trading Fees: $PERP is used to pay trading fees on the protocol, and holders of the token can earn a share of the trading fees.

Collateral: $PERP can be used as collateral to open positions on the protocol.

Staking: $PERP holders can stake their tokens to earn a share of the trading fees and to participate in the protocol's governance.

Liquidity provision: $PERP can be used to provide liquidity to the global liquidity pools in the protocol, by providing liquidity to the trading pairs it will earn a share of the trading fees

The total supply of $PERP is capped at 100 million tokens and as of now, it is listed on a variety of decentralized exchanges (DEXs) and centralized exchanges, and can be traded for other digital assets such as ETH, BTC, and USDT. As usual, the token price is determined by the supply and demand on the market.

READ MORE: Curve Finance: CRV + Liquidity

Who are the Founders of Perpetual Protocol?

The founders of Perpetual Protocol are Stani Kulechov, Jordan Lazaro Gustave, and Mher Davtyan.

Stani Kulechov is the CEO and founder of Aave, which is a decentralized lending and borrowing platform, and one of the key players in the development of Perpetual Protocol. He has over 7 years of experience in the FinTech and blockchain industry and has been involved in several blockchain projects prior to Perpetual Protocol.

Jordan Lazaro Gustave is the CTO and co-founder of Aave, and has also been a key contributor to the development of Perpetual Protocol. He is a software engineer with over 8 years of experience in the industry, and has a strong background in blockchain and smart contract development.

Mher Davtyan is the COO and co-founder of Aave, and also played a key role in the development of Perpetual Protocol. He has over 8 years of experience in the FinTech industry and has worked as a management consultant and private equity analyst prior to joining Aave.

The team behind Perpetual Protocol is highly experienced in the blockchain and FinTech industry, and they have a strong track record of delivering successful projects.

What makes Perpetual Protocol unique?

Perpetual Contracts: Unlike traditional futures contracts, perpetual contracts have no expiration date, which allows traders to hold their positions for as long as they want, and trade both long and short positions.

High Leverage Trading: Perpetual Protocol allows traders to access high leverage trading, which means that traders can open large positions with a relatively small amount of collateral.

Decentralized and Trustless: All trading on Perpetual Protocol is done on-chain, meaning that all trades are recorded on the Ethereum blockchain and can be publicly audited. This ensures transparency and trustless trading.

Global Liquidity Pools: Perpetual Protocol allows traders to access liquidity from other decentralized exchanges, making it easier for traders to find the best prices for their trades.

Built-in Governance: Perpetual Protocol has a built-in governance system, which allows users to vote on important protocol decisions, such as the addition of new assets or changes to the trading fees.

Multiple Collateral options: Perpetual Protocol supports a wide range of assets as collateral, including ETH, BTC, and other ERC-20 tokens, making it a versatile platform for traders.

Low fees: Perpetual Protocol charges low trading fees, which is a competitive advantage compared to other centralized exchanges.

How is Perpetual Protocol different from other decentralized exchanges (DEXs)?

Perpetual Protocol is different from other decentralized exchanges (DEXs) in a few key ways. Firstly, it uses a unique trading mechanism called "perpetual contracts" which are similar to futures contracts but with no expiration date. This allows traders to access high leverage trading and the ability to trade both long and short positions.

Additionally, Perpetual Protocol has a built-in governance system, which allows users to vote on important protocol decisions, such as the addition of new assets or changes to the trading fees. This allows the community to have a say in the direction and development of the protocol, which is not always possible on other DEXs.

Another difference is that Perpetual Protocol allows traders to access liquidity from other decentralized exchanges, through its global liquidity pools feature. This makes it easier for traders to find the best prices for their trades and it also increases the liquidity of the platform.

Lastly, Perpetual Protocol charges low trading fees compared to other centralized exchanges. This is an advantage for traders as they can trade more frequently without worrying about high trading fees eating into their profits.

What are the fees associated with trading on Perpetual Protocol?

Trading on Perpetual Protocol incurs a few different types of fees. One is the trading fee, which is a small percentage of the total value of the trade. This fee is used to cover the cost of executing the trade on the Ethereum blockchain and to provide liquidity to the platform. The trading fee is usually around 0.03% for both maker and taker orders.

Another fee is the funding rate, which is a fee that is paid or received by traders depending on the direction of the trade. The funding rate is used to ensure that the price of the perpetual contract stays close to the underlying asset's spot price. The funding rate is variable and it is determined by the supply and demand of the particular trading pair.

There is also a gas fee, which is the fee that you pay to execute a transaction on the Ethereum blockchain. The gas fee can vary depending on the current network congestion and is paid in ETH.

Furthermore, there is a liquidation fee, which is a fee that is charged when a trader's position is liquidated due to the lack of collateral. The liquidation fee is usually around 5% of the liquidated amount, this fee is used to cover the cost of executing the liquidation process and to provide liquidity to the platform.

All in all, the fees associated with trading on Perpetual Protocol are relatively low compared to other centralized exchanges, making it an attractive option for traders looking to trade frequently without worrying about high trading fees eating into their profits.

READ MORE: SushiSwap: The Ultimate DEX?

How is Perpetual Protocol able to offer high leverage trading?

Perpetual Protocol is able to offer high leverage trading by using a mechanism called "perpetual contracts". These contracts are similar to traditional futures contracts, but unlike futures, they do not have an expiration date. This means that traders can hold their positions for as long as they want, and can trade both long and short positions.

When a trader wants to open a position, they must provide collateral in the form of the underlying asset or another supported collateral. The amount of collateral required is determined by the leverage they want to use. For example, if a trader wants to use 10x leverage, they only need to provide 10% of the total value of the trade as collateral. This allows traders to open larger positions with a relatively small amount of collateral.

While high leverage trading can potentially lead to larger profits, it also increases the risk of losing your entire collateral if the trade goes against you. Therefore, it is important for traders to understand the risks and to trade responsibly.

So, to mitigate the risk of liquidation and to avoid traders from over-leveraging, Perpetual Protocol uses an insurance fund that is funded by the liquidation fee and can be used to cover the losses of the traders who got liquidated.

How does Perpetual Protocol handle order matching and execution?

Perpetual Protocol handles order matching and execution in a decentralized and trustless way. When a trader places an order on the platform, it is broadcasted to the Ethereum blockchain, where it is recorded in a transparent and public manner. Other traders can then see the order and decide whether to fill it or not.

The order matching process is done by an automated market maker (AMM) algorithm, which takes into account the current supply and demand for the asset, as well as the trader's desired price and the amount of the order. The AMM algorithm then matches the best available orders, and executes the trade.

One of the benefits of this decentralized and trustless approach is that it eliminates the need for a central authority to match and execute trades. This greatly reduces the risk of fraud or manipulation, and ensures that all trades are executed in a fair and transparent manner.

The biggest benefit of Perpetual Protocol is that it uses a unique mechanism called "global liquidity pools" which allows traders to access liquidity from other decentralized exchanges, making it easier for traders to find the best prices for their trades.

What is the governance model for Perpetual Protocol?

The governance system is implemented through a smart contract on the Ethereum blockchain, which allows holders of $PERP to vote on proposals in a transparent and trustless manner. In order to vote, $PERP holders must stake their tokens, which locks them up for a certain period of time. The more $PERP a holder has staked, the more voting power they have.

The proposal process starts with the creation of a proposal by the community members, the proposal can be related to any matter concerning the protocol, once the proposal is created, it will be open for voting by the community members, after the voting period ends, the proposal will be executed if it passes.

The governance system is designed to be decentralized and community-driven, which means that the community has the power to make important decisions about the protocol's direction and development. This aligns the interest of the community with the interest of the protocol and helps to ensure its long-term success.

Where to buy $PERP?

$PERP can be purchased on a variety of decentralized exchanges (DEXs) and centralized exchanges. Some popular options include:

Uniswap: Uniswap is a decentralized exchange (DEX) built on the Ethereum blockchain. It allows users to trade $PERP for other digital assets such as ETH, BTC, and USDT.

Sushiswap: Sushiswap is another decentralized exchange (DEX) built on the Ethereum blockchain. It allows users to trade $PERP for other digital assets such as ETH, BTC, and USDT.

Binance: Binance is a centralized exchange that allows users to buy $PERP with BTC, ETH, BNB, and USDT, it also offers leverage trading.

Gate.io: Gate.io is a centralized exchange that allows users to buy $PERP with BTC, ETH, and USDT

Huobi: Huobi is a centralized exchange that allows users to buy $PERP with BTC, ETH, and USDT.

READ MORE: The Ultimate Guide to Decentralized Exchanges (DEXs)