Perpetual Exchange

Currently in development

PERPS is a perpetual exchange platform on Binance Smart Chain. A futures contract is an agreement to buy or sell an asset (such as commodities or currencies) at a predetermined price at a specified point in time known as the ‘settlement date’. Traders can thereby have exposure to the price of an asset without holding the underlying asset.

However, a perpetual futures contract does not have a settlement date — there is no contract expiry like in conventional futures markets— so individuals can hold positions for as long as they choose.

The trading of contracts on PERPS is based on an underlying Index Price. The contract price adjusts, on a perpetual basis, based on the price and volume of the asset in spot markets.

Key Mechanics

Funding Rate

To make sure the price of perpetual contracts do not diverge too much from the price of the underlying asset, they operate with a ‘Funding Rate’ which applies to open positions. A positive Funding Rate means users who are ‘long’ (Contract buyers) pay users who are ‘short’ the asset (Contract sellers) and a negative rate means the opposite — shorts will pay longs. The Funding Rate is comprised of both an ‘Interest Rate’ and a ‘Premium’, which is calculated in real-time when a position is opened, modified, or closed.

The price of the perpetual futures contract on PERPS will therefore continually converge with the price of the real underlying asset.

Opening and Managing Positions

BUSD will be used as the primary collateral and all trades on PERPS are settled in BUSD. This process is managed via a smart contract which acts as a ‘clearing house’ for trades. When the user deposits BUSD, the smart contract mints a synthetic token representing the underlying asset being traded. The user can then enter a position on their chosen asset — with the option of applying a specified amount of leverage if they choose.

For example, if a user deposits BUSD and speculates on the price of Bitcoin (BTC-PERP) increasing, and this occurs and the user closes their position, they will end up with a higher amount of BUSD than their original deposit. Leverage is max 10x for opening a position.

With PERPS, users can also use leverage with BUSD to open a position.

Counterparty Pool

PERPS incorporates a counterparty pool. The pool serves as the counterparty to all trades on PERPS. As compensation for taking the other side of the trade, regardless of what it may be, the counterparty pool receives different type of fees to compensate for the risk taken and make it profitable in the long run.

All BUSD deposits in the counterparty pool are tokenized. As market participants providing liquidity to this pool, these users then accrue trading fees whenever a trade is placed in the pool to which they have provided liquidity.

Market Making and Platform Stability

Users on PERPS also have the option of being ‘Market Makers’ by providing liquidity to a Counterparty Pool on PERPS.

(1) Zero Slippage Trading

PERPS offers the benefit of zero slippage trading. When a user is presented with a trading price, secured through Chainlink price feeds, this is accommodated through a Counterparty Pool containing BUSD. This allows for instant trades that do not incur slippage.

(2) Setting Contract Prices

PERPS takes prices for contract assets from decentralized Chainlink oracles. Chainlink is the leader in oracle price feeds due to their record of consistency.

(3) Settlement Asset

All positions on PERPS, once exited, are settled in BUSD.