What is Perpetual Protocol (PERP)? Detailed overview of PERP . token

• General overview of Perpetual Protocol
• What is Perpetual Protocol (PERP)?
• What is vAMM (Virtual AMM)?
• What is a perpetual contract?
• How does the Perpetual Protocol work?
• Features of Perpetual Protocol
• Perpetual Protocol project development roadmap
• General overview of PERP . token
• What is PERP token used for?
• Basic information about PERP . token
• PERP Token Allocation
• Token release schedule
• Where to store and buy PERP tokens
• Assess the potential of the Perpetual Protocol project, should invest in PERP token or not?
• Frequently asked questions about Perpetual Protocol
• summary

Derivatives are products that are of great interest to traders because of their flexibility and potential profits. Derivatives contracts have not only become a key product of centralized exchanges, but they are increasingly popular on decentralized exchanges. Typical of these is the Perpetual Protocol project? So what is this derivative protocol? How they work. Let's explore Perpetual Protocol with TraderH4 in the article below!

General overview of Perpetual Protocol

First, let's get an overview of the project including key concepts, activities, and salient features of the Perpetual Protocol. 

What is Perpetual Protocol (PERP)?

Perpetual Protocol is a decentralized perpetual contract protocol for a variety of assets, primarily cryptocurrencies. Perpetual is done by the Virtual Automatic Market Maker.

Like the mechanism of the Uniswap DEX, users can directly trade with the virtual automated market (vAMM) without going through any third parties. vAMM provides liquidity and guarantees the value of assets. The vAMM is designed to be completely market-neutral, so it can provide liquidity and guarantee the value of assets, as well as safety for traders. 

Perpetual Protocol's goal is to create the most secure, accessible, and decentralized perpetual futures exchange. Perpetual Protocol allows any user, anywhere, anytime to access and use the platform to trade without going through a 3rd party. The remarkable point of Perpetual Protocol is that it does not hold rights. user management. Therefore, users have the right to actively control their personal assets, extremely safe and transparent. 

Perpetual Protocol was founded in 2019 by Strike and launched the first version of Perpetual launched on the xDai network in December 2020. On November 31, 2021, version 2 titled Curie (after the famous scientist Marie Curie) of Perpetual Protocol, launched the Optimism program on November 31, 2021.

Perpetual Protocol allows trading of Perpetual Future Contracts (perpetual futures contracts) of many popular cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH)… Currently, Perpetual uses Stablecoin as USDC as collateral. mortgage. However, this could be extended to other types of collateral in the future. 

What is vAMM (Virtual AMM)?

vAMM works unlike AMM which is an automatic liquidity provider for token swaps like Uniswap and Balancer. DEXs use the AMM model to create live liquidity pools. Meanwhile, vAMM introduces virtual pools. In it, money instead of being kept in a pool or large pools like AMM, they will be kept in Smart Contracts. Disputes already handled by Smart Contract. Assets deposited into smart contracts are also fully collateralized. Therefore, it is possible to forecast price movements and ensure liquidity in the market. Thereby, leveraged trades and short sales are also done easily.

What is a perpetual contract?

Perpetual contracts allow traders to predict the future price of an asset and then open a long position or open a short position. It is a fact of trading derivatives in the market that contracts will expire. If the time limit expires, orders placed against the price will be liquidated. In contrast, perpetual contracts are different, they will never expire and remain valid until the position is closed. 

However, because of the difference, the price of the spot contract will be different from the price of the coin/token/asset on the spot market. This disparity mainly depends on the expectation of the crowd. If the majority of investors expect the price to rise sharply past the underlying value of the coin/token on the spot market, then the price of this coin/token in the perpetual contract could go much higher than its current value. at theirs.

The price of a perpetual contract will often differ from the price of the asset in the spot market. This is exactly the same in the case of too many investors expecting the price to fall. 

So is there any mechanism to control this price difference if it is too big? The answer is yes. There are two mechanisms, Funding payments and Arbitrage, which are responsible for controlling this price difference. The goal is to bring the price of the cryptocurrency as close as possible to the spot market price. Specifically, these two mechanisms are as follows:

• Funding payments
  Usually, traders pay their long or short positions to each other by a certain amount every hour, depending on price movements in the market. If the price of the coin/token is higher than in the spot market, the person opening a long position will pay for the short position and vice versa. The amount payable is based on the difference between the contract price and the price of the cryptocurrency on the spot market. 
• Arbitrage
  In the event that the price of the perpetual contract has a large difference from the price of the coin/token on the spot exchanges, the trader will pocket the difference. Besides, this makes the price of the perpetual contract and the price of the spot contract create the necessary balance. 

How does the Perpetual Protocol work?

The Perpetual Protocol is designed to facilitate the buying and selling of perpetual contracts. It does this by creating a new instance of Automated Market Maker (AMM), a technique that uses a mathematical function to determine the price of an asset and to facilitate swaps of two or more. asset. Below is the general working mechanism of Perpetual Protocol. 

• Step 1: Trader sends money to Clearing House and sends specific information about the amount of leverage.
• Step 2: Clearing House sends money to Vault, based on contribution rate. In addition, house makes also makes changes to the platform's vAMM. That purpose is to accurately determine the deposit, leverage, record the position, as well as to determine whether it is a long or short position. vAMMs are virtual marketplaces because they are designed to determine prices only. 
• Step 3: Constant – product curve calculates the price movement and amount for each trader's position.
• Step 4: The trader can then close the position at will. However, the market follows the “Zero Sum” mechanism. So in a trade if you win, the other must lose and vice versa.

In addition, in the Perpetual Protocol there is an insurance fund with the purpose of protecting investors in the event of unexpected losses such as liquidation of orders, inability to provide funds to maintain positions. This fund will support investors but also hold 50% of transaction fees. Once the insurance fund is depleted, a Smart Contract activates a new PERP token and is sold as collateral in the Vault. The ultimate goal is to maintain the liquidity of the whole system. 

Features of Perpetual Protocol 

If you are not familiar with the highlights of this derivatives platform, here are the important things you should know about the Perpetual Protocol. 

• Up to 10x Leverage: Traders are free to use leverage on any asset, coin/token and up to 10x. In particular, transaction costs are transparent, high liquidity and transaction time is 24/7. 
• Easy position setting and quick withdrawal: Traders can easily connect to Metamask wallet or Perpetual Protocol private wallet to start trading, in a very short time, less than 1 minute. Besides, the time to make a withdrawal is equally fast, only a few seconds, despite the network failure. 
• There is a wide choice of assets to open long or short positions: Any asset can have a perpetual contract on the Perpetual Protocol. Asset classes on Perpetual Protocol include gold, fiat, BTC, BCH, ETH, XRP, EOS, LTC, ZEC, XMR…
• Perpetual Protocol slippage rating is lower than that of DEXs using AMMs. For example, Uniswap suffers from higher price slippage than centralized exchanges because it is not limited by the liquidity provided. The Perpetual Protocol vAMM can be algorithmically set to provide lower slippage for traders.

Perpetual Protocol project development roadmap

The Perpetual Protocol project development roadmap is described in detail as follows:

• xDai Native UI, Limit & Stop Order, Mobile UI (eg for use with Metamask Mobile)

• Curie V2
• Testnet (October 2021) completed
• Testnet competition (October 2021) completed
• Mainnet 2.0 (November 2021) completed
• Maker UI (December 2021) is done
• Gas rebates (12/2021) completed
• Liquidity mining (January 2022) completed
• Multi-collateral (Q1 2022) is growing
• Limit, stop order (Q1, 2/2022) is being studied
• Permissionless marker creation (Q2 2022) is under study
• Staking 2.0 (Q2 2022) is under research.

General overview of PERP . token 

Next, let's take a look at the PERP token in detail. Is this a potential cryptocurrency and worth investing in?

What is PERP token used for?

PERP is a utility token , which is used primarily in the protocol and promotes decentralized management. Therefore, investors holding PERP tokens will have the right to vote on proposals in the protocol based on the number of tokens held. Here are the main uses of PERP.

• Governance: Similar to other PoS consensus platforms, when PERP token holders stake, they have the right to vote or propose new ideas to improve the Perpetual protocol. The core people who build the transaction will also have the power to make important decisions, before the platform votes on governance. 
• Staking: PERP token holders can lock or stake their stake for a fixed period of time to get rewards back. 
• Backstop exchange: As TraderH4 shared above, Perpetual Protocol has an insurance fund to protect investors. If the insurance fund is depleted, new PERP tokens will be sold on the market to cover the shortfall in the fund. 

Basic information about PERP . token

• Token name: PERP token
• Ticker: PERP 
• Blockchain: Ethereum 
• Standard Token: ERC-20
• Token Type: Utility token 
• Total supply: 150,000,000 PERP
• Circulating Supply: 78.475,000.00 PERP
• Contract: 0xbc396689893d065f41bc2c6ecbee5e0085233447

PERP Token Allocation

The allocation of 150,000,000 PERP is implemented according to the following plan: 

• The reward is ecosystem development: 54.8% 
• Project team and advisory board: 21%
• Strategic investors: 15% 
• Balancer LBP: 5% 
• Seed Investor: 4.2% 

Token release schedule 

Here is some information about the Perpetual Protocol project's Token Sale. 

• Private Sale for strategic investors took place in May 2020 for 0.08 USD/PERP. Investors get 25% when Mainnet launches and will get extra 25% every 3 months. Unlock starts from 15/12/2021.
• Seed Round: Binance Labs are Seed investors of Perpetual Protocol. They have been invested in the project since 2018 but the details are not disclosed. Similar to Private Sale, Binance Labs will receive 25% tokens after mainnet launch and 25% more every Quarter. The unlocking period starts from December 15, 2021. 
• Balancer LBP: Does not lock tokens, so trading still takes place normally. 
• Team & Advisors: Start receiving tokens half a year after Mainnet launch at a rate of 2.1% per quarter and start unlocking from June 15, 2021.
• Ecosystem & Rewards: Tokens will be unlocked according to the vote of the admin.

Where to store and buy PERP tokens

PERP tokens are being listed and supported for trading on most of the leading exchanges today including: Binance, Coinbase, Huobi Global, Bybit, FTX, KuCoin, Gate.io, Kraken… Translating with PERP tokens is quite diverse: PERP/ETH, PERP/USDT, PERP/BTC, PERP/WETH, PERP/BRL...

PERP token is developed on the Ethereum platform, according to ERC-20 standards, so it is easily compatible with many types of wallets today.

• Hot wallets on exchanges: Binance , Coinbase , Huobi Global, Bybit, FTX, KuCoin , Gate.io ...
• Popular ETH wallets: Metamask , Myetherwallet , Mycrypto…
• Cold wallets: Ledger, Trezor.

Assessing the potential of Perpetual Protocol project, should invest in PERP token or not?

Let's take a look at TraderH4 with important information to evaluate the potential of the Perpetual Protocol project and whether or not to invest in PERP tokens. 

• Perpetual Protocol has successfully raised $1.8 million from some of today's leading funds such as Zee Prime Capital, CMS Holdings, LLC, Multicoin Capital, Alameda Research, Binance Labs. The presence of these large funds shows that Perpetual Protocol is most likely a “hidden gem”.
• Andrew Kang, George Lambeth, Calvin Liu, Tony Sheng, Alex Pack and Regan Bozman are also key investors, directly supporting the Perpetual Protocol.
• Perpetual Protocol is the first project in the perpetual contract array of the DeFi ecosystem . 
• Launching on rollups that allow Perpetual Protocol to scale will help the platform achieve high throughput and low transaction costs. These are very important factors for a successful perpetual futures exchange. 
• V2 of the protocol just recently launched on Optimism – a potentially improved Ethereum Layer 2 scaling solution. Besides, Perpetual is also planning to launch on Arbitrum. The Arbitrum platform was also selected by the Norwegian Government to develop the national financial product. 
• The protocol will not only be limited to Crypto but will also support the trading of products such as gold and will likely expand to foreign exchange and stocks in the not too distant future. If it captures the market share of this trillion-dollar financial market, Perpetual Protocol will make great strides in the future. 

In summary, we can consider Perpetual Protocol as one of the potential projects on the market today. Although still in the process of development and completion, Perpetual Protocol is still a project worth considering for investment. However, all trading activities in the market carry risks. Therefore, investors need to consider carefully before making investment decisions. 

Frequently asked questions about Perpetual Protocol 

Below are the frequently asked questions of investors regarding PERP token and Perpetual Protocol project, 

• What pairs of PERP tokens are available today?

Some popular PERP token pairs today are PERP/USDT, PERP/BUSD, PERP/ETH, PERP/BTC…

• Through what channels can I learn about the Perpetual Protocol project?

Some official information channels of the current Perpetual Protocol project are:

Website / Twitter / Telegram / Discord

• How to own PERP tokens?

There are two main ways to own this PERP token, which is to buy directly on Perpetual Protocol and on the exchange that lists this token as TraderH4 shared above. In addition, staking PERP tokens also helps you to receive more PERP tokens.

• What are the main functions of PERP tokens?

The two main functions of the PERP token are staking and governance.

• What is the difference between AMM and vAMM?

AMM is determined by the formula: x * y = k, where x and y are 2 types of crypto assets that you deposit into the liquidity pool. Based on the available quantity of these 2 currencies, the investor can set the swap price accordingly. If the supply of x increases, the supply of y decreases and vice versa. Whereas k is a constant and liquidity is always available. 

The Perpetual Protocol vAMM has a similar mechanism, but the biggest difference is that it doesn't store any assets inside the AMM. We call vAMM a virtual liquid market because it does not store assets, does not trade, does not swap, it is only used for the sole purpose of price recognition. The assets will be sent to a Smart Contract called "Clearing House", then will store these assets in the "Vault". Clearing House accepts deposits and records position ownership with relevant information such as initial margin, leverage and whether it is a long or short position. 

summary

The article on TraderH4 shared details about the Perpetual Protocol project and the PERP token. Although it is considered a hidden gem of the market and has great potential for development. However, Crypto investment is still a risky field with quite a large risk. Therefore, investors need to analyze and consider carefully when making investment decisions. Let's accompany TraderH4 to find out other potential projects in the market!