Perpetual Protocol is a decentralized exchange (DEX) focused on futures trading, operating on Ethereum and xDai platforms. It enables traders to engage in long or short positions with up to 10X leverage on a variety of assets, including BTC, ETH, DOT, SNX, YFI, and more. Being non-custodial, it ensures that traders maintain control over their assets, with all trading occurring on-chain. The protocol employs a virtual automated market maker (vAMM), which provides liquidity on-chain with predictable prices determined by constant product curves. These vAMMs are designed to be market-neutral and fully backed by collateral.
The goal of Perpetual Protocol is to build the leading decentralized derivatives trading platform that is accessible and secure for users worldwide. By leveraging their DeFi projects and allowing others to build on Perpetual Protocol, the company adheres to the "DeFi money lego" philosophy. After achieving several milestones in their roadmap, such as launching staking pools and implementing limit and stop-orders, Perpetual Protocol aims to expand to additional blockchain networks, introduce leveraged tokens, and develop dynamic liquidity in its pools.
Who Founded Perpetual Protocol?
Perpetual Protocol was initiated by Yenfen Weng and Shao-Kang Lee, two entrepreneurs from Taiwan with experience in launching payroll and accounting firms for crypto startups. Most of the team operates out of Taiwan. The project has gained backing from respected investors such as Zee Prime Capital, Multiarrows Capital, CMS Holdings, Binance Labs, and Alameda Research, which is a strategic partner of FTX. With their support, the company secured a seed round led by Multicoin Capital, raising $1.8M in 2020.
What Distinguishes Perpetual Protocol from Others?
Perpetual Protocol aims to offer a trading platform for perpetual contracts accessible to everyone. To achieve this, it provides users the ability to trade with excellent liquidity and minimal slippage. The protocol addresses this need through its vAMM solution. Unlike traditional centralized exchanges that rely on an order book model, traders on Perpetual Protocol interact with a virtual automated market maker, with initial liquidity set by an operator.
For example, consider an operator setting the vAMM’s liquidity at 100 vETH to 40,000 vDAI. If someone deposits DAI to take a long position on ETH, it would push ETH’s price up, encouraging short positions on vETH if its price diverges from the market rate. Traders shorting vETH would also deposit DAI as collateral, helping return vETH’s price to balance. Liquidity swaps are not required as the vAMM acts as a record of all trades, eventually balancing out. In practice, trades on Perpetual Protocol are settled in USDC.
By utilizing this vAMM model and building on xDai, traders can experience on-chain trading without fees and with instant settlement. Moreover, Perpetual Protocol supports gas-free deposits over 500 USDC, allowing traders to deposit without needing ETH in their wallets.
How Many Perpetual Protocol (PERP) Tokens Are There?
The total supply of PERP is 150 million, with 68.7 million currently in circulation. The token distribution is detailed as follows:
- 7.5% - Balancer Liquidity Bootstrapping Pool (LBP)
- 4.2% - Seed investors, with 20% unlocking at mainnet launch and 20% every three months thereafter
- 15% - Strategic investors, 20% unlocked at mainnet launch, and 20% every three months
- 21% - Team & advisors, distributed at 2.1% every three months starting six months post-mainnet launch
- 54.8% - Ecosystem & rewards, with distribution determined by the Perpetual Protocol community
PERP serves as a utility token that encourages and facilitates the decentralized governance of the protocol. The token feedback loop is structured as follows: Staking and trading fee rewards increase > 2. PERP token value rises > 3. Awareness of PERP grows > 4. Awareness of the protocol expands > 5. Trading volume swells > 6. Trading fees climb > Back to 1.
How is the Perpetual Protocol Network Protected?
Perpetual Protocol has undergone audits by Consensys and Peckshield. It is governed by the community and includes a bounty program for developers to identify and report bugs in the smart contracts. The network operates on xDai, while the PERP token is an ERC-20 token on Ethereum.
ERC-20 is a widely adopted token standard for new tokens on the Ethereum blockchain. Ethereum is renowned for its popularity among DAOs and its security via a proof-of-work consensus system requiring miners to produce new Ether. A network of decentralized nodes is responsible for transaction validation and securing the Ethereum blockchain.
Perpetual Protocol uses Chainlink as its oracle for funding rate calculations but does not utilize an on-chain oracle as a price engine. This approach prevents the use of flash loans to manipulate asset prices and gain from Perpetual in a single transaction.
Where Can You Purchase Perpetual Protocol (PERP)?
You can acquire PERP on platforms like UniSwapV2, Binance, Kraken, and Gate.io.
