What is Perpetual Protocol (PERP)?

What is Perpetual Protocol (PERP)?

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The Perpetual Protocol is a decentralized exchange (DEX) for Ethereum and xDAI futures contracts. Traders may enter long or short positions using up to 10X leverage on a growing list of assets, including BTC, ETH, DOT, SNX, and YFI.

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Trading is non-custodial, and it occurs on-chain, which means that traders always maintain ownership of their assets.

Perpetual Protocol makes use of a virtual automated market maker (vAMM) to deliver on-chain liquidity at predictable prices determined by continuous product curves. Additionally, Perpetual Protocol built its vAMMs to be completely collateralized and market neutral.

Perpetual Protocol's stated mission is to build the greatest, most accessible, and most secure decentralized derivatives trading platform in the world. The firm embraces the “DeFi money Lego” concept by building on our DeFi initiatives and letting others build on Perpetual Protocol.

Following the completion of many milestones on its roadmap, including the deployment of staking pools and the implementation of limit and stop orders, Perpetual Protocol intends to extend to additional chains, offer leveraged tokens, and bring dynamic liquidity in its pools.

 

Component Perpetual Protocol (PERP)
Technologies vAMM, Clearinghouse, Collateralization Vault
Market Capitalization $687.7 Million+
Open-Source Yes
Consensus Mechanism None
Smart Contracts Yes
Founders/Authors Yenfen Weng, Shao-Kang Lee
Launch Date 2020
Circulating Supply of Coins 74,475,000 PERP
Maximum Coin Supply None
Mining-based Coin? No
Is Perpetual Protocol a Stablecoin? No
Does Perpetual Protocol have a burn rate? No
Does Perpetual Protocol have a Whitepaper? Yes, the whitepaper can be viewed here

 

Evolution and Development of Perpetual Protocol

Perpetual Protocol was founded in Taiwan by Yenfen Feng and Shao-Kang. The project began in 2018 as “Strike” and debuted its mainnet in December 2020 under its current moniker.

In all, the initiative raised around $10.65 million in exchange for over 25% of the maximum 150 million PERP supply. Additionally, during the token's creation event, the founding team and advisers held 21% of the supply (36 million tokens).

The initiative was first financed via a seed round by an investment fund, which issued 6.25 million PERP. Later that month, in August 2020, the project released 22.5 million PERP in private financing managed by Multicoin Capital with participation from Alameda Research and Three Arrows Capital.

The next month, the project became public through a liquidity mining campaign on Balancer, distributing 7.5 million PERP to a bootstrapping pool. While Perpetual Protocol intends to move protocol governance to the community, the core development team now governs it due to the project's infancy.

 

What makes Perpetual Protocol unique?

Perpetual Protocol was created to ease the purchase and sale of perpetual contracts like that of a regular exchange.

This is accomplished via the development of a new version of an Automated Market Maker (AMM), a technology that uses a mathematical function to calculate the price of an asset and ease the exchange of two or more assets.

Users deposit crypto assets into liquidity pools that reflect certain trading pairs in the most prevalent AMM configurations. Then, customers who trade against the pool's assets pay a charge that is proportionately dispersed to all liquidity providers depending on their participation in the pool.

In this configuration, the DeFi protocol providers and traders are responsible for both setting the price for each pair and enabling the actual asset exchange.

In comparison, Perpetual Protocol's vAMM is optimized for price discovery rather than spot trading. While it employs the same mathematical function as other DeFi initiatives such as Uniswap to compute pricing, the vAMM does not hold any actual crypto assets.

Therefore, the Automated Market Maker is referred to as a “virtual” market maker. The Perpetual Protocol uses smart contract technology as part of its Clearinghouse as well as the Collateralization Vault. This enables the use of leveraged trading on both long and short positions.

The Clearing House takes traders' first deposits and keeps track of their positions (margin amount, direction, and the amount of leverage). Subsequently, the Clearing House places funds in the ‘Collateralization Vault,' which serves as the backstop and safeguards trade positions, and alerts the vAMM of price changes.

It is also worth mentioning that the Perpetual Protocol team personally selected the various markets open to traders, with the expectation that this process would eventually be handled by their Decentralized Autonomous Organization (DAO) structure.

The insurance fund provided by the protocol is considered the first safety net if there are any unexpected losses either due to liquidation or trader failures. This fund is generated because of the protocol's use since it is where 50% of transaction fees are put.

When the Insurance Fund becomes low, a smart contract is activated that mints fresh PERP and then sells them for collateral in the Vault, so ensuring the system's stability.

 

What are the main uses for Perpetual Protocol?

PERP is Perpetual Protocol's native coin and is crucial to its governance. Perpetual Protocol is still in its infancy and is being controlled by a team.

However, the goal is to shift authority to PERP holders, with the community bearing the burden of growth and improvement.

Apart from being a critical component of the network, PERP may also be staked. Stakers are compensated with a portion of the network's unallocated or freshly minted token supply, as well as half of the network's trading fees.

Eternal Protocol aims to develop a decentralized exchange (DEX) that enables users to run perpetual contracts decentralized. To do this, Perpetual Protocol has created a set of Ethereum-based smart contracts that enable you to provide this service.

Additionally, to avoid Ethereum scalability concerns, Perpetual Protocol leverages scalability technologies to provide its customers with fast transactions and minimal fees without leaving the Ethereum environment.

 

What is the future potential for Perpetual Protocol?

In recent years, the DeFi space has made amazing strides. While various protocols are attempting to mainstream cryptocurrencies, not all of these have been or will be successful.

Perpetual Protocol (PERP), a novel Ethereum concept, has the potential to generate enormous profits if the team relinquishes entire control of their DAO.

More significantly, both the platform and the token are gaining traction on social media as more traders see their potential. Without a doubt, Perpetual Protocol is a DEX worth monitoring.

 

Price analysis on Perpetual Protocol

Perpetual Protocol was initially launched in 2020, and its price analysis over the past year and recent months are as follows:

 

  2020 October November December January to date
PERP Price High $1.45 $18.5 $17.99 $13.17 $10.02
PERP Price Low $0.68 $11.1 $12.36 $8.64 $8.69
Market Cap $17M $1.27B $1.24B $714.43M $698.41M

 

Price prediction on Perpetual Protocol

According to an in-depth technical analysis of PERP's historical price data, the price of Perpetual Protocol is anticipated to reach a minimum of $13.03 in 2022.

The PERP price has a maximum trading range of $15.50 to $13.49. Perpetual Protocol's pricing is expected to reach a minimum of $18.50 in 2023. Throughout 2023, the Perpetual Protocol's price may reach a high of $22.54, with an average of $19.04.

 

Where can you buy Perpetual Protocol?

Perpetual Protocol can be bought, sold, and traded on the following exchanges:

  1. OKEx
  2. FTX Exchange
  3. KuCoin
  4. ByBit
  5. Binance

 

1. OKEx: Founded in 2014, OKEx is headquartered in Malta. It is a comprehensive crypto exchange trading platform that offers competitive trading conditions and a range of digital assets that can be traded.

OKEx is a renowned exchange that offers futures trading, margin trading, and powerful trading platforms. The exchange has high 24-hour trading volumes and serves millions of traders and investors around the world.

 

PROS CONS
OKEx has powerful trading platforms  The exchange does not accept United States traders
The exchange has decent liquidity  Unregulated exchange
There is a range of advanced trading tools for experienced traders There is a limited selection of coins offered
The exchange offers a selection of educational material  
There are dedicated 24/7 customer support offered  

 

2. FTX Exchange: FTX Exchange is a prominent cryptocurrency exchange with a high trust score. FTX is a cryptocurrency exchange that was created by experienced traders to serve the trading needs and objectives of other traders, regardless of their trading skill and experience. Therefore, the Exchange attempts to be both user-friendly for newcomers and strong enough for seasoned traders.

 

PROS CONS
The exchange offers a powerful proprietary trading platform There are limited non-crypto trading assets
There is a decent selection of educational tools and resources US clients cannot register on the exchange
There are several useful trading tools offered The exchange is not regulated
The exchange lists a range of digital assets  

 

3. KuCoin: Established in 2017 and based in Hong Kong, KuCoin is a crypto exchange that allows its traders to swap numerous cryptocurrencies such as Bitcoin, Ethereum, Litecoin, Ripple, KuCoins (KCS), and others.

The exchange has some of the most reasonable rates in the industry, but they are unregulated, which may be a turnoff for many prospective customers.

 

PROS CONS
The exchange offers 24/7 dedicated customer service and support Unregulated
There is a range of tradable tokens The exchange does not accept US traders
There are powerful trading platforms offered   
The exchange has a high trust score  

 

4. ByBit: ByBit is a Singapore-based crypto exchange and trading platform that has been in operation since 2018. ByBit is well-regulated by FINTRAC, and it has over a million registered clients.

ByBit aims to ensure that its clients are provided with intuitive and innovative trading experiences. The exchange offers a wide range of digital coins that can be traded, in addition to ensuring a safe trading environment.

 

PROS CONS
The exchange is well-regulated and has a high level of trustworthiness There are limited trading products and a lack of telephonic support
There is dedicated client support offered 24/7  
There is a range of advanced trading tools  
The platform offers a decent selection of learning tools  

 

5. Binance: Binance is a common name in many crypto trading circles around the world. It is the largest, most popular exchange that offers over 150 digital assets and fast, reliable trading platforms.

The exchange is also known for its decent selection of educational materials and powerful trading tools.

 

PROS CONS
There are more than 150 crypto coins that can be exchange Unregulated
Users can purchase cryptocurrencies using their credit card There is no telephonic support
There are powerful trading platforms offered Only offers crypto trading
There is 24/7 multilingual customer support  
There is a comprehensive training academy offered  

You can buy Perpetual Protocol safely from these cryptocurrency platforms.

Are there criticisms against Perpetual Protocol?

Yes, there are criticisms against Perpetual Protocol.

During instances of extreme volatility, Perpetual Protocol has seen latency difficulties and flash crashes.

This issue arises because of arbitrageurs being unable to enter positions on the other side of big, liquidated positions and individual traders being unable to modify their margins.

Due to the reduced costs, there is often an imbalance between long and short open interest, which places the burden for the funding rate squarely on the shoulders of the insurance fund, not the traders. 

 

What is Perpetual Protocol’s largest Competitor?

dYdX is the largest competitor of Perpetual Protocol.

dYdX is a non-custodial DEX and blockchain-based protocol that enables users to utilize Ethereum smart contracts to conduct transactions. While dYdX is the most widely used decentralized perpetual exchange protocol, several more projects are pursuing similar trading functionality.

dYdX is rapidly ascending the open interest leader board as one of the top DEX platforms. dYdX now has around 45,000 depositors. Most of them are skilled traders, institutional investors, and market makers.

dYdX features a liquidity pool that is used by community-approved liquidity providers to execute trades on the exchange.

 

What is the Staking Process involved with Perpetual Protocol?

Token holders may deposit their PERP into the Staking Pool for a certain period.

Stakers are compensated through staking rewards and are allowed to claim a proportionate share of the transaction fees collected during the epoch according to the number of tokens staked.

Stakeholders of PERP should bear the following five points in mind before staking their tokens:

  • Stakers are required to stake their tokens for a certain period. Stakeholders are not permitted to withdraw their tokens during this time or epoch, and every epoch is seven days long.
  • Once this time has lapsed and stakers want to withdraw their staked tokens, they must submit a transaction.
  • Staking benefits are time-weighted, which means stakers may stake their tokens at any point throughout the era and will get just a fraction of the stake incentives.
  • While transaction fees may be retrieved immediately after the epoch, staking rewards are locked until the first day of the next month.
  • If a Staker does not unstake their tokens after an epoch, the tokens will roll over to the next epoch.

 

What can Perpetual Protocol smart contracts do?

Perpetual Protocol has a smart chain that performs two functions:

  • Clearinghouse
  • Collateralization Vault

 

The clearinghouse is critical for collecting deposits from traders and documenting both the margin amount and the degree of leverage that will be used. It subsequently transfers the money to the collateralization vault, the second side of the smart contract.

Meanwhile, the collateralization vault protects trading positions and communicates with the vAMM to keep token values updated.

 

Is Perpetual Protocol a Good Investment?

Yes, Perpetual Protocol can be a good investment.

One of the platform's most compelling features, Perpetual Protocol, is very secure. It is open-source, which means that anybody can identify any red flags.

Apart from that, it has been subjected to external audits by notable crypto businesses Consensys and PeckShield, with both recommending it.

Additionally, it includes insurance coverage from Unslashed Finance and Nexus Mutual, two firms that specialize in DeFi-related protection, to safeguard consumers' cash. PERP has a chance to succeed in the DeFi and blockchain market.

The Chinese cryptocurrency prohibition seems to be working to their advantage since the transition away from centralized to decentralized exchanges has increased interest in PERP.

A 20x leverage is uncommon, yet due to Perpetual Protocol's insurance fund, it is theoretically impossible for it to run out of liquidity. Perpetual Protocol is primed for rapid expansion.

 

What is the supply and distribution of Perpetual Protocol?

The allocation of PERP tokens is as follows:

  • 7.5% – Bootstrapping Pool for Balancer Liquidity (LBP)
  • 4.2% – Seed investors; 20% unlocked upon mainnet launch and 20% every three months
  • 15% – Strategic investors, 20% at mainnet launch, and 20% every three months
  • 2.1% every three months commencing six months after mainnet debut – team and advisors
  • 54.8% – Ecosystem & incentives; the Perpetual Protocol community will select how to distribute ecosystem benefits.

 

Is Perpetual Protocol a viable Alternative Coin?

Yes, Perpetual Protocol is a good alternative coin.

  • Hacking – The Perpetual Protocol is free from any hacking events
  • Security – The blockchain platform is secure and employs robust technology to maintain this secure state
  • Technology – Perpetual Protocol uses several technologies, including vAMM, smart contracts, and more.
  • Price Stability – The price on PERP is not as volatile as other coins, and it has seen a significant increase
  • Potential Investment – Perpetual Protocol is a good potential investment because of its uses in DeFi

Any cryptocurrency that isn't Bitcoin is referred to as an altcoin.

What are the differences between Perpetual Protocol and Bitcoin?

Bitcoin transactions provide several advantages over fiat currency transactions, including lower transaction fees and faster processing. Bitcoin transactions are particularly advantageous for international payments.

Unbanked individuals may also undertake Bitcoin transactions because they only need a smartphone and a connection to the Internet. PERP is a cryptocurrency based on Ethereum that powers Perpetual Protocol, a decentralized market for perpetual contracts.

Users can execute either leveraged long or short trading positions in a range of assets using perpetual contracts.

 

  Bitcoin Perpetual Protocol
Price change 20/21 +400% +400%
Market Cap $800 Billion+ $687.7 Million+
Past Hacks None None
Popularity Very High
Altcoin Rank #1 – Original Crypto #115

 

What are the differences between Perpetual Protocol and Ethereum?

Ethereum is a decentralized blockchain platform that enables the creation of a peer-to-peer network capable of securely executing and verifying application code known as smart contracts.

Smart contracts enable parties to conduct business without relying on trustworthy central authority. The Perpetual Protocol consists of a series of programs, also known as smart contracts. These smart contracts are compatible with the Ethereum blockchain, and they were developed to interact with and mimic derivatives market service on the Perpetual Protocol.

 

  Ethereum Perpetual Protocol
Price change 20/21 +880% +400%
Market Cap $460 Billion+ $687.7 Million+
Past Hacks None None
Popularity Very High
Altcoin Rank #2 #115

 

What are the differences between Perpetual Protocol and Dogecoin?

Dogecoin was launched in 2013, and while it was intended to be a joke, it quickly became popular on the Internet. Today, Dogecoin is still one of the most prominent meme coins used to tip content creators on platforms such as Twitter and Reddit.

Dogecoin is accepted as a method of payment by many online retailers and merchants, making it one of the best mediums of exchange in the cryptocurrency market.

Perpetual Protocol is a piece of software that aims to motivate a distributed network of computers to run an exchange where users may purchase and sell derivative contracts.

 

  Dogecoin Perpetual Protocol
Price change 20/21 +7,300% +400%
Market Cap $22 Billion+ $687.7 Million+
Past Hacks None None
Popularity High
Altcoin Rank #12 #115

 

What are the differences between Perpetual Protocol and NEO?

Neo is a blockchain-based platform that allows the creation of digital content and smart contracts. NEO seeks to automate digital asset management using smart contracts, eventually constructing a decentralized network-based smart economy system.

With Perpetual Protocol, traders may purchase (go long) or sell (go short) perpetual futures contracts to bet on an asset's future price. Unlike traditional futures, perpetual contracts stay valid until the trader closes the contract.

 

  NEO Perpetual Protocol
Price change 20/21 +160% +400%
Market Cap $1.70 Billion+ $687.7 Million+
Past Hacks None None
Popularity Medium
Altcoin Rank #69 #115

 

What are the differences between Perpetual Protocol and NFTs?

Nonfungible tokens (NFTs) are digital assets that each have a unique value, with no two NFTs holding the same characteristics or value as another. Perpetual Protocol, on the other hand, is fungible, which means that one PERP has the same value and characteristics as another PERP.

 

What are the differences between Perpetual Protocol and Solana?

Solana is a decentralized, scalable blockchain network. Solana processes up to 50,000 transactions per second and offers cheaper transaction costs than blockchain projects such as Ethereum.

Thus, the purpose of Solana's design is to show that a mix of software algorithms may remove the software as a performance barrier, allowing transaction throughput to rise proportionately with network bandwidth.

With Perpetual Protocol, there is a much different objective than Solana. With this protocol, traders can purchase (go long) or sell (go short) perpetual derivatives and futures contracts to bet on an asset's future price. Unlike traditional futures, the perpetual contract will remain valid until the trader closes the contract.

Perpetual contracts' prices frequently deviate from market prices (aka spot market). If most traders believe the underlying asset to gain in value over time, the perpetual contract price will surpass the spot price. Similarly, if most traders predict the price will decline, the perpetual will be cheaper.

 

  Solana Perpetual Protocol
Price change 20/21 +9,300% +400%
Market Cap $54 Billion+ $687.7 Million+
Past Hacks None None
Popularity Very High
Altcoin Rank #5 #115

 

What are the differences between Perpetual Protocol and Cardano?

Cardano is based on the Ouroboros consensus proof-of-stake (PoS) blockchain architecture. This implies that the Cardano blockchain is theoretically indefinitely scalable, allowing for the execution of an unlimited number of transactions without experiencing a bottleneck.

Bitmex pioneered perpetual contracts, a sort of futures contract, in the cryptocurrency market. Eternal Protocol is an exchange that aims to build an open-source protocol for exchanging perpetual contracts. Perpetual contracts are a very common derivative product in the market.

 

  Cardano Perpetual Protocol
Price change 20/21 +2,100% +400%
Market Cap $42 Billion+ $687.7 Million+
Past Hacks None None
Popularity Very High
Altcoin Rank #7 #115

 

Which wallets support Perpetual Protocol?

The following crypto wallets support PERP tokens, where users can store, send, and receive tokens.

  • Coinbase Wallet is a digital wallet that can be used to send, receive, and store a wide range of tokens, including PERP. There is an innovative mobile app, and users can rest assured that their funds are safe.
  • Trust Wallet is a crypto wallet that is backed by Binance, a large and prominent exchange. With this wallet, users can send, receive, and store a wide range of digital assets safely.
  • Freewallet's Multi Crypto Wallet supports more than 150 digital assets, and it is a simple, fast, and secure wallet app powered by Freewallet. Users can purchase gift cards with any digital coin, top-up their phones, exchange cryptos, and protect funds using multi-level security.

 

What are NFTs?

Non-fungible tokens (NFTs) form part of the world of digital currencies. These tokens can be described as units of data that are held on a blockchain or a public ledger. NFTs connect replicable data such as an image, audio files, movies, and various others.

NFTs use blockchain technology and the public ledger to provide owners with a certificate of ownership over a specific NFT. NFTs still act in the same manner as other cryptographic tokens.

However, unlike any other digital assets, NFTs are not interchangeable, which means that they are not as fungible as other digital assets or fiat currencies. While these currencies are identical, every NFT is unique and has a unique value that distinguishes it from other tokens. 

Which NFTs are hosted by Perpetual Protocol?

In October, Perpetual Protocol announced its Genesis NFT drop that would occur with the launch of Perp V2. This drop would consist of 10 unique NFTs in a series. Each of these NFTs could be minted ten times, which meant that there would be 100 NFTs in a series.

(Source for direct link: https://blog.perp.fi/introducing-perpetual-protocol-nft-collection-fd706ef897e)

These NFTs were GIF images of characters performing unique actions. The NFTs hosted included:

  • Walking
  • High Five
  • Meditation
  • Pump It
  • Breakdance
  • Diperino
  • Rainbow
  • Roller Skating
  • Liquidation
  • Scared