Categories
DeFi Ethereum

What the PERP token is used for

How the PERP token works. Perpetual Protocol uses a virtual automated market maker for traders to long or short any asset with high leverage.

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


Unique Properties on Perpetual Protocol’s vAMM (virtual automated market maker)

  • 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.

Stabilizing price

  • Oracle
  • 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.

  • fundingPayment=positionSize∗fundingRate
  • fundingRate=24TWAPperpetual​−TWAPindex​​

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

Pre-sale

  • Strategic investors – 22,500,000 tokens: $0.08 USD per token.

Docs


Similar projects


PERP price


Crypto taxes

You really need to understand crypto taxes before you start trading. Koinly (affiliate) was the only service that solved our problem with crypto and DeFi tax. It's easy to use and you can try it for free.