What is Perpetual Protocol (PERP)?

Perpetual Protocol is a decentralised derivatives exchange; its native token is PERP. The platform enables traders to access a wide range of derivatives, including cryptocurrency, gold, and other commodities, aiming to expose investors to opportunities across diverse assets.

Perpetual contracts are similar to traditional options: they are an agreement to purchase an asset at a later date for a predetermined price. However, perpetual contracts have no expiration date, allowing traders to increase their profit potential in specific market scenarios. Perpetual Protocol is one of the major derivative decentralised exchanges (DEXs) by daily trading volume. The platform presently serves 15-plus markets.

The protocol's native utility token is PERP.

A brief history of Perpetual Protocol (PERP)

Perpetual Protocol, originally known as Strike, was conceived in 2019. It was inspired by Automated Market Makers (AMMs), including Synthetix and Uniswap.

The team wanted to integrate these protocols' features into a decentralised perpetual contract trading protocol that runs on Ethereum. AMMs, like Uniswap, allow users to trade without a central authority. Unlike the AMMs mentioned above, which are used for both token swaps and price discovery, PERP’s virtual AMM is used only for price tracking to manage leverage and short positions.

Perpetual Protocol reported in August 2020 that it had secured US$1.8 million in a strategic round headed by Multicoin Capital, with participation from Zee Prime Capital, Three Arrows Capital, CMS Holdings, LLC, and Alameda Research.

How Perpetual Protocol (PERP) works

The network functions as a decentralised perpetual contract platform that represents a wide variety of assets. Anyone may purchase and sell these assets in a secure way by utilising the network's Virtual Automated Market Maker (vAMM) protocol. Perpetual Protocol's low fee structure is a major selling point: The network incorporates Layer-2 scaling methods to deliver rapid transactions with low fees.

The vAMM is at the core of Perpetual Protocol's solution. This system operates on AMMs like Uniswap, but it adds a number of unique characteristics to the equation. Specifically, the network enables users to trade utilising leverage and short selling from an AMM-style exchange, claiming efficient liquidity provisioning and high transaction throughput.

The platform's unique technical framework enables lenders to receive their repayments on time, even if a borrower is late on loan payments, a strategy facilitated by a combination of collateral requirements and liquidity pool profits.

What is Perpetual Protocol (PERP) used for?

The protocol's native token is PERP, an ERC-20 token which can be staked for interest and kickback on the platform’s transaction fees. The total token supply is set at 150 million.

Staking rewards in the Perpetual Protocol ecosystem are tiered based on the number of tokens a user locks up.