PERP token is
The utility and governance token of Perpetual protocol.
PERP token is used for
- Staking to earn trading fees.
- Governance (later)
Staking takes place in epochs which are 7 days. 50% of fees go to stakers and 50% to insurance fund.
How could value accrue to PERP?
- Trading fees to stakers.
- Tokens locked in staking.
What is Perpetual Protocol?
Perpetual Protocol uses a virtual automated market maker for traders to long or short any asset with high leverage.
How Perpetual Protocol works
- One trader’s gain equals another trader’s loss.
- No liquidity providers involved because real tokens are stored inside vAMMs.
- The Vault always has enough collateral to pay back every trader because one trader’s gain will cancel out another trader’s loss
- No liquidity provider – no impermanent loss.
The vAMM uses a bonding curve:
x*y = k. Price = x/y
- Since the AMM is virtual the traders are just pushing the constants and the price around with every trade.
- If there are many longs the multiple for longs goes down and the price goes up.
- Funding rate
Perp Protocol uses Chainlink data feeds as oracle.
To keep for example ETH/USDT at the real ETH/USDT price Perp Protocol uses an hourly funding rate. Based on FTX formula.
TWAP of the Mark Price < TWAP of the Index Price (Negative Funding Rate).
- Which means shorts pay longs.
- And vice versa for Positive Funding Rate.
- Arbitrageurs are also incentivized to take a short position when the funding rate is positive and long when it’s negative.
In-depth explanation here.
PERP token issuance
Total: 150,000,000 PERP
- 7,500,000 tokens: Balancer LBP.
- 36,000,000 tokens: Team and advisors.
- 6,250,000 tokens: Binance Labs.
- 22,500,000 tokens: Strategic investors.
- 77,750,000 tokens: Ecosystem and rewards
Investors, team and founders have their tokens vested over 1-3 years.
Liquidity Bootstrapping Pool
7.5 million PERP via a Balancer on Sep 9, 2020.
- From block 10825600 and end at block 1084645
- Gradual change from PERP:USDC = 90:10 to PERP:USDC = 30:70
- Strategic investors – 22,500,000 tokens: $0.08 USD per token.