Perpetual Protocol (PERP)

Trading Perpetual Contracts

Perpetual Protocol lets users trade perpetual futures contracts on cryptocurrencies. These contracts don’t expire, so traders can hold positions as long as they want. Users can go long (betting prices will rise) or short (betting prices will fall) with up to 10x leverage.

Liquidity and Market Making

It uses a virtual automated market maker (vAMM) system to provide deep liquidity without needing traditional market makers. This helps reduce slippage and allows smooth trading on the platform.

Governance and Staking

The PERP token is used for governance, letting holders vote on protocol decisions like fee levels and fund allocation. It’s also used for staking to earn rewards and participate in the platform’s growth.

Layer 2 Scaling

Perpetual Protocol runs on Ethereum’s Layer 2 (Optimism), which lowers transaction fees and speeds up trades, making the platform more accessible and efficient.

Additional Features

• Supports multiple crypto assets like BTC, ETH, DOT, and others.
• Non-custodial trading, so users keep control of their funds.
• Insurance fund protects the protocol and traders from losses in extreme market conditions.

Pros

• Low Fees and Fast Transactions: Uses Layer 2 solutions like xDai and Optimism to keep fees low and speed high.
• Decentralized and Non-Custodial: Users keep control of their funds; no need to trust a central party.
• Virtual Automated Market Maker (vAMM): Provides guaranteed on-chain liquidity with predictable pricing without needing traditional market makers.
• Leverage Trading: Allows up to 10x or 20x leverage on various assets, enabling more trading opportunities.
• Wide Asset Support: Supports perpetual contracts on many assets including cryptocurrencies, commodities, and synthetic assets.
• Open Source and Audited: The protocol is open source and has undergone multiple third-party security audits.
• Staking and Governance: PERP token holders can stake tokens to earn fees and participate in protocol governance.

Cons

• Complexity: Perpetual contracts and leverage trading can be complicated for beginners to understand.
• Liquidity Limits: While vAMM provides liquidity, it may have higher slippage compared to centralized exchanges.
• Past Insurance Fund Issues: There was an incident where a large liquidation caused a dip in the insurance fund, showing some risk in extreme market conditions.
• Dependent on Layer 2 Networks: Performance and fees depend on the underlying Layer 2 blockchain, which may have its own limitations or issues.

For more details, visit the official site: perp.com

Founders

Perpetual Protocol was founded by Yenwen Feng and Shao-Kang Lee. They are Taiwanese entrepreneurs who started the project around 2018-2019. Both have experience launching companies in the crypto space before creating Perpetual Protocol.

Investors in Perpetual Protocol

Perpetual Protocol has received backing from several well-known venture capital and investment firms. Key investors include:

• Multicoin Capital: Led the initial $1.8 million seed round in August 2020.
• Alameda Research: A strategic partner known for crypto investments.
• Binance Labs: The venture arm of Binance, a major cryptocurrency exchange.
• CMS Holdings: A crypto-focused investment firm.
• Three Arrows Capital: A prominent crypto hedge fund.
• Zee Prime Capital: Another notable investor in the project.
• Multiarrows Capital: Also involved in funding Perpetual Protocol.

These investors helped support the development and growth of Perpetual Protocol, contributing to its decentralized derivatives trading platform.

Halal Status of Perpetual Protocol

• General Ruling: No, Perpetual Protocol is generally considered not halal.
• Reason: It involves perpetual futures contracts, which are similar to futures but without an expiry date. These contracts often include elements like speculation (maysir) and uncertainty (gharar), which are typically not allowed under Islamic finance principles.
• Additional Context: Many Islamic scholars view futures and perpetual futures trading as problematic because they involve selling assets that one does not own at the time of the contract, and the zero-sum nature resembles gambling.
• Note: Some platforms try to create Sharia-compliant versions of perpetual futures, but the standard Perpetual Protocol contracts do not usually meet these criteria.

For more details, you can explore Islamic finance forums and scholarly discussions on futures and perpetual contracts.