Perpetual Protocol is a decentralized exchange for Ethereum and xDai futures. Traders can use up to 10X leverage to trade long or short on a growing variety of assets such as BTC, ETH, DOT, SNX, YFI, and others. Trading is non-custodial, which means that traders always have control of their assets and trade on-chain. Perpetual Protocol makes use of a virtual automated market maker (vAMM) to provide on-chain liquidity with predictable pricing determined by consistent product curves. Furthermore, Perpetual Protocol built its vAMMs to be completely collateralized and market neutral.

Its purpose is to develop a trading platform for perpetual contracts that anybody may utilize. Users must be able to trade with adequate liquidity and low slippage in order to do so. Perpetual Protocol addresses this issue with its vAMM solution. Perpetual Protocol does not adhere to the traditional order book concept of controlled exchanges. Instead, traders compete against a virtual automated market maker, the beginning liquidity of which is determined by the operator.

History

Yenfen Weng and Shao-Kang Lee, two Taiwanese bitcoin entrepreneurs who previously built payroll and accounting solutions for crypto enterprises, founded Perpetual Protocol. The majority of the team is situated in Taiwan. Perpetual Protocol is supported by a number of well-known investors, including Zee Prime Capital, Multiarrows Capital, CMS Holdings, Binance Labs, and Alameda Research, an FTX strategic partner. With their support, the firm secured a 1.8 million USD seed round headed by Multicoin Capital in 2020. The project started in 2018 under its former name Strike, however they went live only in December 2020 under their current alias.

In all, the initiative raised around 10.65 million USD in exchange for approximately 25% of the maximum 150 million supply of PERP. Furthermore, during the token's creation event, the founding team and its advisers held 21% of the supply, which is 36 million.

How does it work

Users deposit crypto assets into liquidity pools that reflect certain trading pairs in the most prevalent AMM configurations. Then, customers who trade against assets in the pool pay a charge, which is allocated proportionally to all liquidity providers depending on their contribution to the pool. The DeFi protocol providers and traders involved in this setup are both setting the price for each pair and enabling the actual exchange of assets. Perpetual Protocol's vAMM, on the other hand, is exclusively intended for price discovery and not for spot exchange. While it employs the same mathematical mechanism as other DeFi initiatives like Uniswap to establish pricing, the vAMM contains no genuine crypto assets. This is why it is referred to as a virtual Automated Market Maker.

In actuality, Perpetual Protocol keeps smart contracts that operate as a Clearing House and a Collateralization Vault to allow for leverage on both long and short trades. The Clearing House takes traders' first deposits and keeps track of the nature of their positions (margin amount, direction, and the amount of leverage). Following that, the Clearing House transfers the deposits to the Collateralization Vault, which assists in backstopping and securing trading positions and alerts the vAMM to update prices.

Total supply and circulation

The total supply for PERP is 150 million coins, of which 90,7 million are currently in circulation.