Perpetual Protocol (PERP)

Overview

Perpetual Protocol is a decentralized exchange project built around perpetual contracts. These contracts let traders take a position on an asset’s price without buying the asset itself. A trader can go long to gain from a price rise or short to gain from a fall. Unlike a standard futures contract, a perpetual contract has no set expiration date. Perpetual Protocol’s associated token, PERP, is used for governance and staking rather than as the asset that every trader must buy to open a position. (perp.com)

The project has used several trading designs over time. Its first version used a virtual automated market maker, or vAMM, to set trade prices. Its second version, known as Curie, brought liquidity providers into the system through a design based on Uniswap v3. The team later developed a third design with several ways to supply liquidity. That history makes Perpetual Protocol a useful example of how decentralized derivatives trading has evolved. (docs.nekodex.org)

History & Team

Perpetual Protocol grew out of a project first called Strike. The team formed in Taiwan in 2019 and shifted its focus to perpetual futures in 2020. Co-founders Yenwen Feng and Shao-Kang Lee had previously worked on other technology ventures. The first exchange version launched on the xDai network in December 2020. Perp v2 followed on Optimism in November 2021. (perp.com)

An August 2020 funding round raised $1.8 million and was led by Multicoin Capital. Participants included Alameda Research, Binance Labs, CMS Holdings, Three Arrows Capital, and Zee Prime Capital. These names describe the project’s early backing; they do not describe who runs its governance today. PERP holders participate in decisions through the Perpetual DAO, while the foundation team has retained responsibility for areas such as development and operations. (multicoin.capital)

The move from v1 to v2 was more than a change of network. The team replaced a model that depended on virtual liquidity with one that could draw on active liquidity providers. In 2024, its work on Perp v3 introduced a modular approach through Nekodex, a project used to explore the newer trading design. (docs.nekodex.org)

Technology & How It Works

From collateral to a position

A perpetual trade begins with collateral: assets placed in the exchange’s smart contracts to support a position. Leverage lets a trader open a position larger than that collateral. If the trader closes at a favorable price, the position produces a gain; if the price moves the other way, it produces a loss. Perpetual Protocol’s v2 interface has described leverage of up to 10 times, with an account balance that can support multiple positions through cross-margin. (perp.com)

A funding mechanism helps keep a perpetual contract’s trading price near the price of the asset it tracks. Funding payments depend on the relationship between those prices and on the design of the market. Margin rules and liquidations are other parts of the system: they determine how positions are maintained when the value of their collateral changes. (docs.nekodex.org)

How the exchange versions differ

Perp v1’s vAMM used a mathematical pricing curve. Traders interacted with that curve rather than waiting for another trader to accept each order. The collateral backing positions was held separately from the virtual assets used to represent trades. This design made on-chain perpetual trading possible, but a lasting imbalance between long and short positions put pressure on v1’s insurance fund. Trading on v1 was halted in 2022, and the project moved forward with its newer model. (docs.nekodex.org)

Perp v2 uses virtual tokens and Uniswap v3-style concentrated liquidity. Liquidity providers can place liquidity within chosen price ranges, while traders use the resulting markets to enter and leave positions. Its core contracts were deployed on Optimism, an Ethereum layer-2 network. This approach connects a derivatives exchange to an on-chain liquidity system without treating the virtual trading tokens as ordinary assets that users take away from the exchange. (perp.com)

The v3 design takes a different route. It uses a router to connect traders with different liquidity strategies, including pricing based on an oracle and strategies that hedge through spot markets. The idea is to give different markets a suitable way to find prices and liquidity. Perp v3 was introduced through Nekodex in 2024; the project’s published materials describe that stage as a playground and early-access campaign. (docs.nekodex.org)

Tokenomics & Utility

PERP has a stated total supply of 150 million tokens. The project’s allocation sets aside 54.8% for the Perpetual DAO’s ecosystem and rewards treasury, 21% for the team, 19.2% for investors, and 5% for a Balancer liquidity bootstrapping pool used at the token’s launch. Use of tokens held in the DAO’s locked treasury is subject to governance votes. The project’s token documentation also states that an additional mint or unlock must first pass a governance vote. (docs.nekodex.org)

PERP’s main jobs are to connect holders to decisions and to the project’s incentive system. Holders can vote on proposals involving matters such as treasury spending, fee distribution, and exchange settings. They can also lock PERP to receive vePERP, a form of voting power tied to both the number of tokens locked and the length of the lock. The maximum lock described in the project’s staking system is 52 weeks. Voting power decreases as the remaining lock period gets shorter. (docs.nekodex.org)

The staking program, called Lazy River, was designed to distribute a share of protocol revenue to eligible vePERP holders. The project’s published explanation connects this staking system to Perp v2 and says it does not receive fees from Perp v3. That distinction matters when describing token utility: governance covers the wider project, while fee-sharing arrangements depend on the particular product and program. (docs.nekodex.org)

Ecosystem & Use Cases

The exchange’s central use case is trading crypto price movements through long and short perpetual positions. A short position can also serve as a hedge. For example, someone who holds an asset may take a short position to offset part of a decline in that asset’s price. In both cases, the trader is using a contract rather than exchanging the underlying coin. (docs.nekodex.org)

Liquidity provision is another part of the ecosystem. In v2, market makers supply liquidity to the ranges in which trading takes place. The project has also developed Hot Tub, a set of automated vaults designed to act on price differences between its derivatives exchange and on-chain spot markets. Developers can build around the project’s open-source contracts, while DAO participants can propose and vote on changes to its direction. These are distinct roles: trading uses the exchange, liquidity provision supports its markets, and PERP links holders to governance and staking. (perp.com)

Advantages & Challenges

Perpetual Protocol combines on-chain settlement with familiar derivatives tools, including long and short positions, leverage, and funding. Its v2 design lets market makers focus liquidity within price ranges, and Optimism provides a lower-cost setting for exchange transactions than Ethereum mainnet. The project’s open-source contracts also give developers a base for related tools and strategies. (perp.com)

The design has trade-offs. A market’s available liquidity affects the price a trader receives, especially for larger positions. Funding and margin add steps that readers must understand beyond a simple token swap. The history of v1 shows that the balance between long and short positions can shape an exchange’s economics. Perp v3’s modular approach was developed to offer more ways to supply liquidity, but each strategy still has its own pricing and operational needs. (docs.nekodex.org)

Where to Buy & Wallets

PERP is available on Coinbase and Kraken. It can also be held in a self-custody wallet that supports its token network. The project identifies an Ethereum ERC-20 version of PERP as well as versions on Optimism and other networks. MetaMask can display PERP when the wallet is connected to the matching network and uses the correct token contract. (coinbase.com)

Buying PERP is separate from opening a perpetual position on the protocol. A buyer receives the governance token; a trader places collateral in the exchange to use its derivatives markets. The network used for a withdrawal or wallet transfer determines which version of the token is received. (docs.nekodex.org)

Regulatory & Compliance

Rules for the PERP token and for perpetual derivatives trading can differ. In the United States, the Commodity Futures Trading Commission has applied derivatives rules to certain leveraged digital-asset products offered through decentralized protocols. In the United Kingdom, Financial Conduct Authority rules prohibit firms acting in or from the UK from selling, marketing, or distributing certain crypto-derivatives to retail consumers. In February 2026, the European Securities and Markets Authority reminded firms that products marketed as perpetual futures may fall under existing rules for contracts for differences when they meet that product’s definition. (cftc.gov)

The protocol’s conventional perpetual-contract trading also does not align with widely used Shariah finance principles. The International Islamic Fiqh Academy has found most conventional futures forms impermissible and says Shariah-compliant hedging must avoid excessive uncertainty, prohibited interest, and speculation in price differences as an end in itself. That assessment concerns the structure of the trading activity; PERP ownership and participation in a particular staking arrangement are separate questions for Islamic finance analysis. (iifa-aifi.org)

Future Outlook

Perpetual Protocol’s development has followed a clear sequence: a vAMM on xDai, a liquidity-provider model on Optimism, and research into modular liquidity through Perp v3. Its longer-term role will depend on how well its trading designs serve different markets, how liquidity providers participate, and what PERP holders choose to support through governance. The documented links between PERP, DAO voting, and v2 staking provide a foundation for those decisions, while any change to token incentives remains a matter for governance. (docs.nekodex.org)

Summary

Perpetual Protocol brings long and short perpetual trading into an on-chain exchange. Its history shows three approaches to a central problem: how to give traders usable prices while keeping collateral, funding, and liquidity working together. PERP gives holders a role in the project’s governance and, through its v2-linked staking program, a way to participate in its incentive structure. (docs.nekodex.org)