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Perpetual Protocol (PERP)

Perpetual Protocol (PERP) is an Ethereum token that powers the Perpetual Protocol, a decentralized exchange for perpetual contracts. Perpetual Protocol (PERP) is a DeFi platform that focuses on futures trading such as support for digital currency trading and other assets such as gold, crude oil and fiat. Crypto derivatives came to add entertainment to virtual currency trading. Common derivative products include perpetual and perpetual contracts. In a futures contract, participants bet on the future price of a crypto asset.

A perpetual contract, on the other hand, mimics the features of a futures contract, but lacks a fixed expiration date. Unfortunately, due to the risks and costs of the other party, its absorption has been slow.

Fortunately, decentralized financing (DeFi) has eliminated the risks of derivatives trading on a centralized platform. However, the approach of Uniswap, Balancer and other DeFi networks to power the DeFi ecosystem to manage perpetual contracts was not ideal. Thus, the Perpetual Protocol (PERP) filled the gap with a new marketing model.

What is a Perpetual Protocol (PERP)?

Perpetual Protocol (PERP) is a decentralized exchange (DEX) for futures trading in Ethereum and xDai. Traders can leverage an increasing number of assets such as BTC, ETH, DOT, SNX, YFI, etc. with 10x leverage. Trading is illegal, which means that traders always keep their assets and are in a chain. Perpetual Protocol uses a virtual automated market maker (vAMM) that provides liquidity in a predictable pricing chain determined by fixed product curves. In addition, the perpetual protocol designed its VAMMs to be market neutral and completely secure.

The stated vision is to create a decentralized, accessible and secure derivative trading platform in the world. By creating our DeFi projects and allowing projects based on a perpetual protocol, the company embraces the “DeFi money lego” ethic. The Perpetual Protocol, after achieving several milestones in its roadmap, such as launching stock pools and enforcing restrictions and stop orders, intends to expand into other chains, introduce leverage tokens and pave the way for dynamic liquidity in pools. The part of the spirit that led to the creation of the perpetual protocol is clearly evident in your community. In fact, we can combine them into four very clear points that explain the purpose and vision of the Perpetual Protocol (PERP), which are:

1. Democratize powerful trading tools and expand economic inclusion around the world. This is due to the fact that the Perpetual Protocol can provide access to perpetual instruments, one of the most complex and centralized financial instruments in the traditional financial world, and is now available to everyone thanks to the Perpetual Protocol.
2. Establish a suitable AMM for low-liquidity futures due to domestic liquidity, which enables the trading of long-term assets. This is possible thanks to VAMMs, which are improvements to the AMMs we typically find in other projects.
3. Reduce perpetual losses for participants in protocol liquidity pools. In this way, the investment of liquidity suppliers is protected from fluctuations in the price of digital currencies.
4. A system that minimizes the risks of price manipulation. This is thanks to the combined system of Oracles and internal algorithms that ensure accurate information and asset price formation in the market.

Project goal and vision

• The part of the spirit that led to the creation of the perpetual protocol is clearly identified in your community. In fact, we can combine them into four very clear points that explain the purpose and vision of the perpetual protocol, which are:
• Democratize powerful trading tools and expand economic inclusion around the world. This is due to the fact that the Perpetual Protocol can provide access to perpetual instruments, one of the most complex and centralized financial instruments in the traditional financial world, and is now available to everyone thanks to the Perpetual Protocol.
• Create an AMM suitable for futures trading with low liquidity due to internal liquidity, which enables long-term trading of assets. This is possible thanks to VAMMs, which are improvements to the AMMs we usually find in other projects.
• Reduce perpetual losses for participants in protocol liquidity pools. In this way, the investment of liquidity providers is protected from fluctuations in the price of digital currencies.
• A system that minimizes the risks of price manipulation. This is thanks to the combined system of oracles and internal algorithms that ensure accurate information and the formation of asset prices in the market.

How Perpetual Protocol works

The transactions that appear in the perpetual contract play a major role in the perpetual protocol model (PERP). In general, it works almost like most centralized exchanges.

However, the biggest difference here is that the perpetual protocol does not require the use of a sales order book. This means that the transaction is always done immediately and without waiting for a partner or payment for the buyer.

For high volume transactions, processing speed in Perpetual is often slower than in centralized products. To overcome this defect, Perpetual performed anti-slip measures exactly on the xDAI tool. Thus, although it works on the Ethereum platform, Perpetual processing speed is much faster than the base layer of the Ethereum blockchain.

Who are the founders of Perpetual Protocol (PERP)?

Perpetual Protocol (PERP) was launched by Yenfen Weng and Shao-Kang Lee, two Taiwanese digital currency entrepreneurs who had previously started payroll and accounting firms for crypto startups. Most team members are based in Taiwan. Perpetual Protocol (PERP) is supported by many reputable investors such as Zee Prime Capital, Multiarrows Capital, CMS Holdings, Binance Labs and Alameda Research, FTX Strategic Partner. With their support, the company closed the first round led by Multicoin Capital for $ 1.8 million in 2020.

What makes a Perpetual Protocol unique?

The purpose of the Perpetual Protocol is to create a platform for the trading of perpetual contracts that anyone can use. To do this, users must be able to trade with good liquidity and low slip. The Perpetual Protocol solves this problem using the vAMM solution. The Perpetual Protocol (PERP) does not follow the typical centralized exchange order model. Instead, traders trade with a virtual automated market maker whose initial liquidity is determined by the operator.

For example, suppose an operator sets vAMM liquidity at 100 VETH to 40,000 vDAI. A person who deposits DAI in ETH for a long time pushes the price of ETH upwards and creates an incentive to reduce VETH if the price does not match market prices. Traders who abandon VETH also deposit DAI as collateral and return the VETH price to equilibrium. Having a liquidity swap is unnecessary, because vAMM acts as an account for all transactions and automatically balances in the long run. In practice, transactions in the Perpetual Protocol are all settled in the USDC.

Using this vAMM model and creating an exchange in xDai, traders can enjoy chain transactions without payment and instant settlement. In addition, the Perpetual Protocol (PERP) supports non-gaseous deposits over $500, meaning that traders can deposit with 0 ETH in their wallet.

Advantages and disadvantages of Perpetual Protocol (PERP)

These are the positive aspects:

There are several things that differentiate Perpetual Protocol (PERP) from their counterparts.

High levels of security

Perhaps one of the biggest selling points of this platform is the very secure perpetual protocol. The source is open, so anyone can check out the red flag. In addition, external audits have been performed by the well-known cryptocurrencies ConsenSys and PeckShield, and recommendations have been received from both. In order to secure users’ funds, it also has insurance coverage from Unslashed Finance and Nexus Mutual, two companies specializing in DeFi-related protection.

Low costs

Ethereum-based Layer 2 protocols are expensive due to network congestion. Perpetual protocol offers fast transactions at low cost.

These are the Cons:

Understanding the strengths of Perpetual Protocol (PERP), let’s take a look at some of the disadvantages.

The flash failure

The Perpetual protocol has experienced flash latency and failure problems during very high oscillation periods. This problem arises because arbitrators can not enter beyond large cash positions and individual traders can not adjust their profit margins.

Low costs

We know this is an advantage, but the fact is that it has created problems for the protocol. There is usually an imbalance between long and short open profits, and the insurance fund is responsible for the financing rate, not the traders themselves. This arrangement does not seem to be sustainable in the long run.

PERP token

The PERP token is a perpetual protocol issued based on the ERC20 standard in the Ethereum network. PERP holders can store or extract liquidity in pools and help develop the project ecosystem. As the ecosystem matures, the perpetual protocol becomes completely decentralized and community members can develop the project on their own.

The native token of the protocol is the PERP token, which is based on the Ethereum ERC-20 standard, and you can check it through this link. The purpose of this token is very simple:

1. Serve as a token of reward to all those who participate in the protocol as liquidity providers.
2. Authorization of the governance system in the perpetual DAO protocol.

PERP as a functional token guarantees the following uses on the platform:

Governance allows PERP token holders to make decisions that affect protocol development. This is possible through the PERP token, which gives voting power to shareholders.

Betting, as PERP token holders can use them in the protocol, is therefore rewarded for their participation. Exchange Backup In severe cases (such as platform hacking), a perpetual protocol may be resorted to by the Exchange Insurance Fund. The fund is made up of PERP tokens that can be sold on the market to make up for any losses.

Another important point in PERP token economics is that its maximum issuance is limited to 150 million tokens.

How is a perpetual protocol network secured?

The perpetual protocol is audited by Consensys and Peckshield. The protocol is community-driven and has an award-winning program for developers who find bugs in smart contracts. This network is on xDai, while the PERP token is an ERC-20 token on Ethereum.

The ERC-20 is a token standard that most new tokens follow when issued in the Ethereum blockchain. Ethereum is one of the most popular blockchains for DAO and is secured by a consensus-based mechanism that requires miners to extract new ether. A set of decentralized nodes confirms transactions and secures the Ethereum fold block.

The Perpetual Protocol uses Chainlink as Oracle for financing rate calculations, but Oracle does not have a chain as a price engine to prevent the use of instant loans to manipulate the prices of fixed assets and profits from Perpetual in the same transaction.

In conclusion

Perpetual protocol is undoubtedly a great tool to use the power of perpetual contracts in the decentralized financial world. Its ability to enjoy this type of operation helps users, along with reducing the risks of perpetual loss and price slippage, help them position themselves better. In addition, the fact that your operations are performed on xDai helps your transactions to be cheap and fast, and overcomes the problem of high Ethereum commissions.

On the other hand, the token and its application also invites holders to seek to benefit from its facilities. In fact, since its inception, the PERP token has performed well in the markets, offering a return on investment of more than 400%, which indicates the good economic performance of the project.