You can already buy financial products on many DeFi platforms. Think not only of crypto coins, but also bets, liquidity pools, strikes and futures. Perpetual Protocol is a platform that has focused on offering futures. These are not only futures for crypto coins, but also for gold, oil and fiat money, among other things. We explain everything about Perpetual Protocol in this article! But first watch this video below why Okex has added this coin and also immediately let you know what Perpetual Protocol means.
- 1 What is Perpetual Protocol (PERP)?
- 2 The difference between AMM and vAMM
- 3 The team
- 4 How does Perpetual Protocol work?
- 5 What is Impermanent Loss?
- 6 Where does impermanent loss occur?
- 7 The PERP Token
- 8 Can I stake or mine PERP?
- 9 Where do you buy Perpetual Protocol (PERP)?
- 10 How can I store PERP tokens?
- 11 The course of Perpetual Protocol (PERP)
- 12 Conclusion
What is Perpetual Protocol (PERP)?
Perpetual Protocol is a DeFi platform focused on futures trading. Interestingly, it supports trading cryptocurrencies and other assets like gold, crude oil, and fiat. What sets it apart is the use of virtual automated market makers (vAMMs). This is an iteration of the automated market maker (AMM) approach common in the DeFi ecosystem.
The difference between AMM and vAMM
It is important to know the difference between AMMs and vAMMs. First, a system using the SMP model uses direct pools of liquidity, while a vAMM introduces virtual pools where the funds, rather than a pool, are held in a smart contract . Then the contract manages the lateral support. Liquidity on vAMM inspired platforms such as Perpetual can thus be proved by an algorithm. SMP-based protocols such as Balancer predict the strength of a market through liquidity providers.
vAMMs offer advantages such as always available liquidity, predictable prices, unbiased markets and guarantee that contracts are fully guaranteed. With sufficient guarantees, traders always get their fair share in settlement. In particular, a combination of these features removes the risk of impermanent loss that would be borne by the strikers in the case of MA. In addition to guaranteeing liquidity and eliminating temporary losses for strikers, the Perpetual network allows traders to inflate their positions with up to 20 times leverage.
In its early days, Perpetual Protocol was supported by an elite team based in Taiwan. However, its further development involves a team spread all over the world. The co-founders of Perpetual are Yenwen Feng and Shao-Kang Lee. In addition, the team consists of developers, researchers and blockchain engineers. Among those who believe in the mission of the project are Binance Labs, Alameda Research, CMS, Three Arrows Capital, Divergence Ventures, Mechanism Capital and Multicoin Capital.
How does Perpetual Protocol work?
As for the operation of Perpetual Protocol, trading on the network is simple. To begin the trading journey, a trader sends funds to the clearing house and provides additional information about the amount of leverage. The clearing house sends the funds to the vault. In addition, the house changes the vAMM of the platform to indicate the deposit and leverage, as well as to determine whether it is a long or short position.
A constant product curve calculates the amount credited to the merchant. The trader can then close the position at will. Incidentally, it is important to know that the network works on a win-lose basis.
What is Impermanent Loss?
We’ve talked about impermanent loss before. It is a concept that you will not only encounter here, but in more places within the crypto world. Whether you invest in crypto purely for speculation or to support projects you care about, the last thing you want is to lose money. Nevertheless, this risk is a reality, where it is possible to lose a lot of money, especially in the world of DeFi. This principle is still too opaque or poorly understood, although it poses a real risk associated with the use of liquidity pools. Before becoming a liquidity provider with the goal of making big profits, make sure you understand what an impermanent loss is. The winnings that are sometimes offered to you can be very misleading!
Simply put, an impermanent loss is a loss of capital between when you deposit cryptocurrencies into a liquidity pool and when you wish to withdraw them.
Where does impermanent loss occur?
To further explain this type of loss, let’s clarify a few definitions, starting with the difference between a DEX (decentralized exchange) and an Automated Market Maker (AMM). The latter is a kind of DEX that does not rely on order books (order books between buyers and sellers) like the former, but on liquidity pools.
These pools of liquidity make it possible to free oneself from the relationship between the traders. This is known as peer-to-contract (P2C). If you perform a crypto swap through an AMM like Uniswap for example , everything is done automatically through the smart contract that controls the liquidity pool, which algorithmically calculates the price of the tokens.
As a result, it can happen that a loss is made due to a rapid and strong price change. As a user there is nothing you can do about this. Still, there are more and more crypto projects that have found solutions to this problem, of which Perpetual Protocol is trying to be one of them.
The PERP Token
This project’s PERP token is an ERC-20 token with an initial and maximum supply of 100 million and 150 million coins. PERP tokens are distributed between the ecosystem, ordinary investors, the team, strategic investors and the Balancer network. Interestingly, the maximum token supply can be adjusted depending on the agreement of the ruling community. PERP handles the governance and stake functions.
While the network initially supported the decisions of key contributors, the intention is to decentralize the function to accommodate ideas and proposals from the wider Perpetual Protocol community. However, proposing ideas or voting on submitted ideas requires ownership of the Perpetual Protocol crypto. Through board voting, the community can change the collateral ratio, the commission ratio, the maintenance margin requirement, the initial margin requirement, and the liquidation commission ratio.
The PERP token can be used to earn more rewards. In addition to the stake rewards, PERP strikers share 50 percent of the system’s trading costs. The number of tokens that are staked is locked for 7 days (this is called an epoch by Perpetual Protocol).
After this period, strikers must release their funds before initiating a withdrawal request. Although an epoch lasts one week, strikers can join an epoch throughout its lifetime. However, the number of rewards earned will depend on how long they have been active during the lock-in period.
Interestingly, the trading fees generated by staking can be claimed after a time period has elapsed, but the stakes expressed in PERP are used “on the first day of the same month of the following year”. This may seem like a long wait for the rewards, but it’s partly to attract committed and long-term users.
Can I stake or mine PERP?
Many investors are wondering how to mine Perpetual Protocol given the importance of the coin. It must be said that mining PERP remains impossible to date, at least not directly. This is because the PERP cryptocurrency is designed differently from currencies such as Ethereum or Bitcoin . PERP does not have its own blockchain that uses Proof of Work . Instead, it runs on the Ethereum blockchain.
However, not being able to mine the Perpetual Protocol crypto does not prevent the strike. It is therefore possible to discontinue the Perpetual Protocol. The purpose of discontinuing PERP is to ensure demand for this product while keeping it out of the market. This objective is intended to enable the exchange to respond to emergency situations, such as extreme market events. PERP tokens will be sold in the market to cover any shortfalls.
The players are compensated for this risk with rewards. These rewards will be updated over time to maintain a healthy number of Perpetual Protocol cryptos stored.
Where do you buy Perpetual Protocol (PERP)?
A direct purchase of the Perpetual Protocol (PERP) remains impossible for the time being, as this project does not yet have its own platform where they offer these tokens. You will therefore have to use a crypto exchange that offers PERP tokens. Fortunately, there are plenty of exchanges to choose from.
The main crypto exchanges to buy PERP tokens is Binance. They are also the safest and most used exchange, because there have been no hacks at this exchange yet. Many people use Binance because it is easy to use, and they charge low transaction costs. Therefore, we can definitely recommend you to buy PERP tokens here.
You will also find other websites on the internet where you can buy PERP, such as a decentralized exchange (DEX). Despite the attractive transaction costs, this may not always be the best choice. You often have to go through many different steps, so that the chance of a mistake is suddenly many times greater. You are often cheaper with a safe and simple exchange like Binance. Since September you can now also buy PERP on Bitvavo, you can do this below.
How can I store PERP tokens?
To ensure the protection of cryptocurrencies such as that of the Perpetual Protocol, a suitable Perpetual Protocol wallet is necessary. User-friendliness, accessibility and security are of the utmost importance here. The best wallets for PERP tokens at the moment are Trust wallet and MetaMask wallet. Ledger products are also good wallets for storing PERP tokens.
The Trust wallet is the best general wallet for the Perpetual Protocol tokens. First, it works with Binance, which we also just talked about. This fact makes the wallet more credible and ensures its security.
The Ledger Nano S or Ledger Nano X, on the other hand, offer more ease of use. These are hardware wallets that work offline and thus guarantee the protection of Perpetual Protocol tokens. This means that the wallet can be disconnected from a machine at any time, making it impossible to extract tokens from it as an outsider.
The course of Perpetual Protocol (PERP)
The PERP token currently (September 2021) has a market cap of €3,214,350,790 and is among the top 10 global crypto projects. It has an average trading volume of 99 million euros per day, which is very high. The maximum available tokens is still unknown as it can be matched between the Perpetual Protocol community. There are 150 million tokens in circulation at the time of writing.
The price of PERP has been on the rise since the beginning. There are therefore already many people who have made money with PERP tokens. It’s not too late to get in. There are plenty of analysts who expect the value to rise much further in the future.
It is important to keep an eye on the price so that you know what you are currently paying for PERP tokens. Of course you want to buy the tokens as cheaply as possible, and then sell them for a better price.
Thus, Perpetual Protocol is a DeFi platform focused on futures trading. We don’t see that often, because most DeFi platforms focus on offering other products, such as liquidity and cryptocurrencies. Perpetual Protocol, on the other hand, supports trading in cryptocurrencies as well as gold, crude oil and fiat money.
That’s not the only thing that sets the platform apart from other platforms. Perpetual Protocol uses a virtual automated market market (vAMM). This of course comes from the normal automated market maket (AMM), although it is quite different from this variant. A whole lot of problems that the AMM have would have been solved with the vAMM. This is partly because virtual liquidity is offered.
So we can say that this is a very promising project, which we will probably hear a lot more about in the future. That could mean that now might be the best time to step in and buy PERP tokens. We would of course encourage you to always do your own research before buying tokens. You can do this through a fundamental or technical analysis . Goodluck!
Thanh Lanh Tran(1989) is Chief Editor from BitcoinUSD.com