PERP

Overview of PERP

Perpetual Protocol (PERP) is a decentralized finance (DeFi) protocol launched in 2020. It was co-founded by Yenwen Feng and Shao-Kang Lee. It functions on the Ethereum blockchain and is a system for the trading of perpetual contracts, which are agreements between buyers and sellers with no expiry date, hence enhancing flexibility in cryptocurrency trading.

PERP enables traders to long or short digital assets with up to 10x leverage, which has the potential to amplify their profits or losses. It operates on a virtual automated market maker (vAMM) model, which aims to facilitate trading by adjusting the price of digital assets based on supply and demand. Prices are synced with those on external markets using an oracle mechanism to decrease the risk of price manipulations.

The native token of the Perpetual Protocol is the PERP token, and it serves various functions within the protocols ecosystem including staking and governance. It is tradable on various cryptocurrency exchanges, such as Binance, Uniswap, and SushiSwap. MetaMask Wallet is one of the known wallets recommended for storing PERP tokens.

Pros and Cons

By diving into a comprehensive analysis of its strengths and weaknesses, It will equip you with the knowledge needed to make informed decisions in this dynamic digital realm.

Pros:

1. Operates on Ethereum Blockchain: Perpetual Protocol (PERP) operates on the Ethereum blockchain which is one of the largest and most well-established blockchains. This allows for comprehensive smart contract functionalities and a secure network infrastructure.

2. Perpetual Contracts Offering Trading Flexibility: The key feature of PERP is that it allows for the trading of perpetual contracts. Unlike standard futures contracts, perpetual contracts do not have an expiry date. This allows traders more flexibility as they can hold onto a position for as long as they need without worrying about expiry.

3. Uses a vAMM Model to Facilitate Trading: PERP operates on a virtual automated market maker (vAMM) model. This model enables automatic price adjustments of digital assets based on supply and demand dynamics, making trading smoother and more efficient.

4. Functions of Staking and Governance for PERP Token: The PERP token is multi-functional within the Perpetual Protocol ecosystem. Token holders can participate in staking and governance, allowing them a degree of influence over the protocol's future development.

5. Support from Multiple Exchanges: PERP tokens are supported and can be traded on various major cryptocurrency exchanges such as Binance, SushiSwap, and Uniswap. This provides liquidity and accessibility for traders.

Cons:

1. Dependence on Ethereum Network Stability: As PERP operates on the Ethereum blockchain, it's subject to Ethereum's network congestion and scalability issues which could affect transaction speeds and fees.

2. Potential for Amplified Losses with Leverage: While PERP allows up to 10x leverage trading, this tool can be double-edged. If the market moves against a trader's position, losses could be heavily magnified.

3. Risk of Price Manipulations: Despite the use of an oracle mechanism intended to sync PERP's prices with external markets and prevent manipulations, theres still a possibility of price manipulations, which could impact traders.

4. Centralization Concerns due to Governance Model: While PERP's governance model allows for community participation, it might centralize control if large token holders, known as whales, dominate decision-making processes.

5. Reliance on Third-Party Wallets for Secure Storage: PERP tokens need to be stored securely, and while wallets like MetaMask are reputable, reliance on third-party wallets can pose risks like technical vulnerabilities or potential attacks.

What Makes PERP Unique？

Perpetual Protocol (PERP) brings innovative features to the cryptocurrency landscape with its introduction of decentralized perpetual contracts. Perpetual contracts, a prevalent concept in traditional trading markets, have been implemented by the Perpetual Protocol in a decentralized finance setting, distinguishing it from many other cryptocurrencies that primarily function as a currency or a store of value.

The perpetual contracts on PERP do not possess an expiry date. This characteristic enables traders to hold long or short positions on digital assets for an indefinite period, thus providing more strategic flexibility compared to standard contracts that have a stipulated expiry.

PERP also utilizes a unique trading mechanism known as the virtual automated market maker (vAMM). Unlike typical AMMs that host liquidity pools backed by actual assets, vAMMs operate with a virtual liquidity pool. This means they can provide virtually unlimited liquidity and better capital efficiency. The vAMM system, combined with pricing through an oracle mechanism, offers a unique trading environment different from majority of the other digital asset trading platforms.

Also noteworthy is the governance function of the native PERP token. Token holders have the right to participate in the governance of the Perpetual Protocol, thus giving power back to the community. This democratic government model, although fairly common in DeFi projects, is not ubiquitous across all cryptocurrencies.

Circulation of PERP

The PERP token was first issued in December 2020 when Perpetual Protocol launched its mainnet. The total initial supply was 10 million PERP tokens. There is no cap on the maximum supply, as new PERP can be minted through liquidity mining rewards.

In terms of circulating supply, there were around 5.4 million PERP tokens in circulation . The circulating supply has been gradually increasing as more tokens unlock from liquidity mining rewards. However, over 60% of the supply is still locked for future distribution.

PERP has seen high volatility since launching, peaking in early 2021 to an all-time high of around $19 during a period of hype around decentralized exchanges.The founders have retained over 60% of supply for future distribution as incentives. There is also no limit to earning PERP through liquidity mining on the platform.

There is no cap on PERP mining, as liquidity providers can continuously earn PERP token rewards for staking and trading activity on Perpetual Protocol. This contributes to the uncapped circulating supply.

How Does PERP Work？

The PERP token is integral to the functioning of Perpetual Protocol as it allows users to participate in governance, staking, and trading on the platform. PERP holders can stake their tokens to become liquidity providers for the protocol's decentralized AMM, earning trading fees and PERP rewards. The token also allows holders to vote on platform changes and proposals. Furthermore, PERP is used as collateral by traders to open leveraged positions on Perpetual Protocol's perpetual swaps. More PERP is required as collateral for higher leverage. A portion of the fees generated from perpetual swaps trading goes towards buying back PERP tokens and distributing them as staking rewards. Thus PERP has utility and value accrual through enabling decentralized governance, staking incentives, fee buybacks, and collateralization on Perpetual Protocol

Exchanges to Buy PERP

Several cryptocurrency exchanges support buying Perpetual Protocol (PERP), these include:

1. Binance: Binance, one of the leading and largest cryptocurrency exchanges globally, supports PERP trading. Pairs available include PERP/USDT, PERP/BTC, and PERP/ETH.

2. Uniswap: Uniswap, a decentralized exchange built on Ethereum, presents the ability to trade PERP. The primary pair available is PERP/ETH.

3. SushiSwap: Another decentralized exchange on Ethereum, SushiSwap also supports PERP trading. The PERP/ETH pair is predominantly traded.

4. FTX: FTX is a cryptocurrency derivatives exchange that supports traditional cryptocurrency trading. The platform supports the PERP/USD trading pair.

5. Gate.io: Gate.io is a cryptocurrency exchange offering PERP trading. PERP/USDT is among the supported trading pairs.

6. OKEx: OKEx is a Malta-based digital asset exchange that supports various cryptocurrency pairs, including PERP/USDT, PERP/ETH, and PERP/BTC.

7. Poloniex: Poloniex cryptocurrency exchange provides numerous trading pairs. Pairings for PERP include PERP/USDT and PERP/BTC.

8. 1inch: 1inch is a DEX aggregator that pulls liquidity from various exchanges, enabling PERP trading. The primary pair available is PERP/ETH.

9. Balancer: Balancer is an automated portfolio manager, liquidity provider, and price sensor. The decentralized exchange supports PERP trading, with PERP/ETH as a trading pair.

10. CoinEx: CoinEx is a global and professional digital coin exchange service provider. PERP/USDT pair is available for trading on this platform.

How to Store PERP？

Storing PERP tokens requires a digital wallet that supports Ethereum based ERC-20 tokens since PERP is built on the Ethereum blockchain. Here are the types of wallets that you can consider for storing PERP:

1. Software Wallets: These wallets are programs that you can install on your desktop or mobile devices. A popular software wallet that supports ERC-20 tokens like PERP is MetaMask. MetaMask is a browser extension and mobile app that comes with an inbuilt swap feature and it's also widely used to interact with numerous DeFi platforms.

2. Web Wallets: These are wallets that you can access through a web browser, without the need to download any software. MyEtherWallet is a well-known web wallet that supports PERP.

3. Hardware Wallets: Often considered the safest option, hardware wallets are physical devices that store your tokens offline. Examples include Ledger and Trezor, both of which support ERC-20 tokens including PERP.

4. Mobile Wallets: These wallets are applications on your smartphone that store your private keys. Trust Wallet is one of the commonly use mobile wallets that support ERC-20 tokens.

5. Exchange Wallets: If you buy PERP from exchanges like Binance or Uniswap, you could also opt to keep your tokens on the exchange's wallet. However, while this option can be convenient for trading, it is generally advised to transfer your tokens to a private wallet if you plan to hold them long-term, as exchange wallets can be more susceptible to hacks.

Before choosing a wallet, make sure to consider factors such as your intended use, security requirements, ease of use, and whether the wallet has been well-reviewed by trustworthy sources.

Should You Buy PERP？

In terms of suitability, purchasing PERP could be of interest to various categories of individuals and organizations:

1. Traders interested in decentralized finance (DeFi) and derivative markets: Given PERP's functionality in allowing traders to hold short and long positions on various cryptos through perpetual contracts, it would be suitable for active traders looking to benefit from market volatility.

2. Crypto investors seeking diversification: For those already investing in various cryptocurrencies and seeking diversification within their portfolios, PERP could be an addition. Its unique perpetual contract feature and governance capabilities allow it to offer distinct advantages from typical cryptocurrencies.

3. Blockchain enthusiasts believing in the potential of decentralized finance: If you're supportive of the fundamentals behind DeFi and are confident in the future growth of the sector, investing in PERP could be a way to back this belief, given that PERP is a core participant in the space.

4. Participants ready for risk and potential losses: Given the leveraged nature of trading on Perpetual Protocol, it's essential to understand that while gains can be significant, potential losses can also be substantial. Therefore, it's suitable to individuals willing and able to absorb such risks.

Conclusion

Perpetual Protocol (PERP) is a decentralized finance platform built on the Ethereum blockchain, which provides an innovative environment for the trading of perpetual contracts. Its uniqueness lies in the adoption of a virtual automated market maker (vAMM), allowing traders to take long or short positions on various digital assets with leverage.

Each user's ability to profit from trading PERP is largely dependent on their individual strategy and the overall performance of the cryptocurrency market. On one hand, the unique perpetual contracts and staking function of the PERP token within the system present potential ways to generate income. On the other hand, leveraged trading, which can deliver significant profits, can also lead to substantial losses if market movements are unfavorable.

Future appreciation of the PERP token would depend on a variety of factors. These include, but are not limited to, the continued growth and adoption of the DeFi sector, the wider cryptocurrency market trends, and the overall development and upgrades of the Perpetual Protocol system itself.

In terms of development prospects, as one of the active projects in the DeFi space, PERP is likely to benefit from the growing attention and investment in this sector. However, as with any investment, potential investors are advised to conduct thorough research and exercise due diligence to fully understand the investment risks and potential returns.

FAQs

Q: How does the funding rate on Perpetual Protocol perpetual swaps work？

A: The funding rate aims to keep the price of perpetual swaps in line with spot prices through a mechanism that pays longs and charges shorts based on market conditions.

Q: What oracle solution does Perpetual Protocol use for pricing？

A: Perpetual Protocol uses a decentralized oracle solution called DODO to provide accurate and manipulation-resistant pricing for its perpetual swaps.

Q: How are liquidity providers rewarded on Perpetual Protocol？

A: Liquidity providers earn trading fees from swap transactions and epoch rewards of newly minted PERP proportional to their share of the total liquidity pool.

Q: What is the Perpetual Protocol Insurance Fund used for？

A: The Insurance Fund helps prevent contract liquidations in the event of excessive price volatility by covering losses and is funded through platform fees.

Q: How does Perpetual Protocol manage risk and maintain solvency？

A: Perpetual utilizes dynamic position limits, liquidity mining lock periods, price limit ratios, and collateral liquidity to manage risk exposures.

Q: What blockchain is Perpetual Protocol built on？

A: Perpetual Protocol is built on the Ethereum blockchain and uses smart contracts to power its decentralized perpetual swaps exchange.

Q: Can users stake PERP for governance rights？

A: Yes, staking PERP grants voting shares proportional to the amount staked to participate in platform governance.

Q: Is there a Perpetual Protocol mobile app available？

A: Yes, Perpetual Protocol offers iOS and Android mobile apps to track positions and trade perpetual swaps on the go.

Risk Warning

Investing in cryptocurrencies requires an understanding of potential risks, including unstable prices, security threats, and regulatory shifts. Thorough research and professional guidance are advised for any such investment activities, recognizing these mentioned risks are just part of a wider risk environment.