Perpetual Protocol decentralized derivatives exchange
What is Perpetual Protocol
A decentralized derivatives exchange called Perpetual Protocol is based on the Ethereum blockchain. Perpetual swaps are a sort of derivative that let traders bet on an asset’s price without really owning it, and also lets consumers exchange them.
Although perpetual swaps are comparable to futures contracts, they do not have an expiration date like futures contracts do. As a result, traders are free to hold a position open indefinitely without worrying about the contract’s expiration.
With no central organization or mediator in charge of the trade, the Perpetual Protocol is intended to be highly decentralized. As a result, users are free to do business directly between themselves without having to rely on a middleman.
In order to create a very effective and liquid market for perpetual swaps, the protocol makes use of a special virtual automated market maker (vAMM) technology. The vAMM ensures that there is always enough liquidity for traders to enter and exit positions quickly and easily by automatically adjusting asset prices based on supply and demand.
Perpetual Protocol is an innovative decentralized finance (DeFi) initiative that seeks to increase the usability and effectiveness of derivatives trading for consumers all over the world.
The history of Perpetual Protocol
The creators of Perpetual Protocol, which includes CEO Yenwen Feng and CTO Chao Wang, are a group of blockchain enthusiasts and programmers. The group saw an opportunity to use blockchain technology to create a more effective and open derivatives market and was motivated by the rising popularity of decentralized finance (DeFi).
Alameda Research, Three Arrows Capital, Framework Ventures, and other top blockchain venture capital firms contributed $1.8 million to the project’s inaugural round of funding. This gave the team the chance to concentrate on creating and implementing the protocol.
In December 2020, the Ethereum blockchain saw the launch of permanent Protocol, which provided permanent swaps for a range of assets, including cryptocurrencies like Bitcoin and Ethereum as well as conventional assets like gold and oil. In the first few months of existence, the exchange had a sharp increase in trade volume as a result of its rapid rise in popularity among DeFi aficionados.
Perpetual Protocol declared a big improvement to its vAMM technology in March 2021, which greatly increased the exchange’s effectiveness and performance. New capabilities were also included as a result of the upgrade, including the capacity to trade using limit orders and to design one’s own trading pairs.
Since then, Perpetual Protocol has continued to innovate and expand, adding new assets and features to the platform. The team has also partnered with leading DeFi projects and blockchain companies to promote the adoption of the protocol and build a thriving ecosystem around it.
How Perpetual Protocol works
Perpetual Protocol is a decentralized derivatives exchange built on the Ethereum blockchain. It allows users to trade perpetual swaps, a type of derivative that tracks the price of an underlying asset without requiring the trader to own the asset.
Here’s how Perpetual Protocol works:
- Users deposit collateral: In order to trade on Perpetual Protocol, users need to deposit collateral into their trading account. The collateral can be any ERC-20 token that is supported by the protocol, such as Ethereum, USDC, or DAI.
- Users open positions: Once they have deposited collateral, users can open long or short positions on a variety of assets, including cryptocurrencies and traditional assets like gold and oil. Perpetual swaps on Perpetual Protocol do not have an expiration date, so traders can hold their positions as long as they want.
- Virtual Automated Market Maker (vAMM) System: The exchange uses a unique virtual automated market maker (vAMM) system to provide liquidity for traders. The vAMM automatically adjusts the price of assets based on supply and demand, ensuring that there is always enough liquidity for traders to enter and exit positions quickly and easily.
- Fees: Perpetual Protocol charges a small trading fee for each transaction, which is used to incentivize liquidity providers and to fund the development of the platform.
- Close position: When a trader wants to close their position, they simply need to execute an opposing trade to their original position. The profit or loss from the trade will be added to or subtracted from their trading account balance.
- Withdraw funds: Users can withdraw their collateral and any profits they have made at any time, as long as they have enough collateral remaining in their account to cover any open positions.
Overall, Perpetual Protocol offers a highly decentralized and efficient way for traders to speculate on the price of assets without actually owning them. The vAMM system ensures that there is always enough liquidity in the market, making it easy for traders to enter and exit positions quickly and easily.
Can Perpetual Protocol be trusted
Perpetual Protocol is designed to be a trustless and decentralized exchange, meaning that users can trade directly with each other without having to trust a third party. The exchange is built on the Ethereum blockchain and uses smart contracts to execute trades and manage user funds.
The code for Perpetual Protocol is open-source, meaning that anyone can review it and verify its security. The protocol has undergone extensive auditing by reputable blockchain security firms, such as Quantstamp and Trail of Bits, to ensure that it is free from vulnerabilities and exploits.
In addition, Perpetual Protocol has implemented a number of security measures to protect user funds and prevent malicious attacks. For example, the protocol uses a multi-signature wallet to store user funds, which requires multiple signatures from authorized parties before funds can be withdrawn.
Furthermore, Perpetual Protocol has a bug bounty program, which rewards users for identifying and reporting vulnerabilities in the protocol. This incentivizes the community to help improve the security and reliability of the platform.
Overall, while no system can be 100% secure, Perpetual Protocol has taken significant steps to ensure the safety and security of its users’ funds and trades. However, as with any investment, users should do their own research and make their own informed decisions before using the platform.
Does Perpetual Protocol charge a fee
Yes, Perpetual Protocol charges a fee for each trade executed on its platform. The fee is typically a percentage of the total trade value and is paid by the trader who initiates the trade.
The current trading fee on Perpetual Protocol is 0.1%, which is relatively low compared to other decentralized exchanges in the DeFi space. However, it’s important to note that additional fees may be incurred, such as gas fees for executing transactions on the Ethereum network.
The fees collected by Perpetual Protocol are used to incentivize liquidity providers and to fund the ongoing development of the platform. The protocol also distributes a portion of the fees to its native PERP token holders as a form of reward for staking and providing liquidity.
Overall, while trading fees are an inevitable part of using any exchange, Perpetual Protocol’s fees are relatively low and help to support the growth and development of the platform.