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1/ $PERP Fundamentals
Perpetual protocol is a decentralised derivative protocol focused on offering perpetual swap contracts for crypto assets.
Below is my thoughts on analysing their architecture for solving low slippage trades and layer-2 scalability.
Perpetual protocol is a decentralised derivative protocol focused on offering perpetual swap contracts for crypto assets.
Below is my thoughts on analysing their architecture for solving low slippage trades and layer-2 scalability.
2/ Virtual Automated Market Maker (vAMM)
PERP's core innovation is the vAMM. It's a constant-product (x*y = k) AMM that does not store liquidity in liquidity pools.
Instead, trade collateral is stored in a smart contract that emulates a vault and manages all collateral.
PERP's core innovation is the vAMM. It's a constant-product (x*y = k) AMM that does not store liquidity in liquidity pools.
Instead, trade collateral is stored in a smart contract that emulates a vault and manages all collateral.
3/ vAMM Part 2
The AMM model for derivatives trading has the problem of impermanent loss for liquidity providers.
Since liquidity is not stored in a liquidity pool. No liquidity providers are actually needed to facilitate low slippage trades hence no IL.
(Huge innovation)
The AMM model for derivatives trading has the problem of impermanent loss for liquidity providers.
Since liquidity is not stored in a liquidity pool. No liquidity providers are actually needed to facilitate low slippage trades hence no IL.
(Huge innovation)
4/ xDai Integration
PERP integrated with the EVM compatible xDai sidechain which has 5 second block times and extremely low gas fees.
But their underlying architecture allows an easy migration to another L2 solution by snapshotting and migrating state.
PERP integrated with the EVM compatible xDai sidechain which has 5 second block times and extremely low gas fees.
But their underlying architecture allows an easy migration to another L2 solution by snapshotting and migrating state.
5/ xDai & Trading Competition
PERP recently held a mainnet trading competition in which 48k trades were executed and cumulative gas fees of $1.69 all covered by the team.
Traders on PERP are essentially executing gasless transactions.
PERP recently held a mainnet trading competition in which 48k trades were executed and cumulative gas fees of $1.69 all covered by the team.
Traders on PERP are essentially executing gasless transactions.
6/ PERP Tokenomics
The interesting part about PERP beyond the key vAMM innovation and successful L2 integration is its token incentive.
Launching soon is the PERP staking mechanic which allows stakers to capture PERP inflation and also 50% of derivative trading fees in USDC.
The interesting part about PERP beyond the key vAMM innovation and successful L2 integration is its token incentive.
Launching soon is the PERP staking mechanic which allows stakers to capture PERP inflation and also 50% of derivative trading fees in USDC.
7/ PERP Tokenomics Part 2
Essentially, the more markets are introduced the higher the trading volume and more derivative trading fees are captured and distributed to stakers.
Therefore, the incentive to stake reducing PERP market supply will only continue to increase.
Essentially, the more markets are introduced the higher the trading volume and more derivative trading fees are captured and distributed to stakers.
Therefore, the incentive to stake reducing PERP market supply will only continue to increase.
8/ On-chain Data
In the last 7 days 300k USDC in trading fees were generated via 93k trades on Perpetual protocol meaning 150k would be distributed to PERP stakers.
The cumulative daily trading volume is a sight to behold.
In the last 7 days 300k USDC in trading fees were generated via 93k trades on Perpetual protocol meaning 150k would be distributed to PERP stakers.
The cumulative daily trading volume is a sight to behold.
9/ Protocol Flaws
Currently, PERP does not have Limit orders meaning traders cannot set stop-loss orders or a specific entry for their trade order to execute at.
This is a significant feature that traders require so should be a high priority by the team.
Currently, PERP does not have Limit orders meaning traders cannot set stop-loss orders or a specific entry for their trade order to execute at.
This is a significant feature that traders require so should be a high priority by the team.
10/ Summary
The vAMM solved on-chain liquidity for perpetual contracts and xDai is significantly reducing transaction latency and PERP has solid tokenomics.
There is room for more trading features, markets and migration to a new L2 solution as they become production-ready.
The vAMM solved on-chain liquidity for perpetual contracts and xDai is significantly reducing transaction latency and PERP has solid tokenomics.
There is room for more trading features, markets and migration to a new L2 solution as they become production-ready.
11/ Summary 2
Fucking bullish
Fucking bullish
