In the past few months, Crypto Twitter (CT) has been talking continuously about decentralized perpetual protocols. Ultimately, it’s not surprising that these protocols have been gaining traction in recent times, since they’re one of the few DeFi products, if not the only, that are still able to generate significant revenue in the current bear market.
With the collapse of FTX last week, the need for decentralization & transparency becomes more important than ever. Coinwire believes that decentralized exchanges will gain more adoption at the expense of centralized exchanges in the near future, as users start to realize the importance of self-custody and transparency, which could have prevented the blackswan event from unfolding the way it did.
You probably have heard of GMX, dYdX, Gains Network, and maybe a few others. However, there is another protocol that has recently emerged from stealth mode, who boasts multiple competitive advantages over the current market incumbents. The protocol is called Perp88, and today, Coinwire will help give you the introduction and share with you why we believe Perp88 is well-positioned to gain some market share in the decentralized perpetual market!
1. Introduction to Perp88
Perp88 is a decentralized perpetual protocol developed for traders of any experience. Given the team behind Perp88 are traders themselves, they have a first-hand understanding of the issues that traders currently face given the available options in the market. Having faced those pain points themselves, the team decided to develop Perp88, which offers multiple improvements on the existing offerings.
As a DeFi protocol and an avid supporter of the DeFi ethos, Perp88 ensures that anyone with a device and an internet connection will be able to participate in Perp88 regardless of their race, nationality, or location. Hence, Perp88 does not pose any KYC requirements on any of its users.
In addition, as a decentralized exchange, Perp88 also does not store and does not have any control over the users’ funds beyond the functions set forth by the smart contracts, which have already been audited by a professional blockchain security firm. Given that, users can rest assured that none of the events that have happened to FTX in the past week will happen to your funds on Perp88.
While Perp88 aspires to be a one-stop comprehensive destination for all perpetual products, they will focus their initial efforts on the perpetual exchange for crypto assets. At the moment, Perp88 offers the following features to its users:
Leveraged Trade (Perp): Users can open long or short trades on BTC, ETH, and MATIC with up to 88x leverage and experiencing NO slippage.
Swap: Through the platform’s PLP fund, users can swap assets (USDC, USDT, BTC, ETH, MATIC) with no price impact regardless of their trade size given that Perp88 does not rely on the XYK model, but rather on price feeds from oracles to determine the exchange rate.
Provide Liquidity (Market Making through PLP): The PLP fund provides liquidity for Perp88’s leveraged and spot traders, and users can become market makers by depositing listed assets into the fund. The depositors of the PLP fund receive the entire profits from providing the market making liquidity and 85% of protocol revenue in USDC. More details can be found in the PLP section below.
Refer: Perp88 also offers a referral program for traders and depositors. Users you help onboard to the platform can save up to 12% on trading fees and 7.5% on deposit fees, while you earn up to 40% of your referee’s trading fee revenue and up to 12.5% of your referee’s deposit fee revenue, all in USDC.
2. The Competitive Advantages of the Perp88
While Perp88 offers similar features to other decentralized perpetual exchanges on the market, their product includes multiple competitive advantages against the currently available options in the market in terms of both the economics and the product itself. In this section, CoinWire will share with you what those competitive advantages are and why they will be keys in potentially driving Perp88 to the forefront of all the leading decentralized perpetual exchanges.
Perp88 takes great pride in being the decentralized exchange that provides the most value back to its users whether they are traders, liquidity providers, swappers, or referrers through revenue sharing, rebates, and discounts. Below, we discuss the key benefits of Perp88 in regards to economics.
Best Economics for LP: With more than 85 percent of the platform’s earnings going back to PLP depositors in the form of USDC rewards, it’s clear that Perp88 is committed to rewarding PLP investors. In comparison, just 70% of platform revenue is shared with its market makers on other major platforms.
Most Enticing Referral System: When it comes to referral programs, Perp88 has one of the best benefits for users. To get more than 50% of trading fee revenue earned by referees, the top tier of a referral program’s tier requires participants to participate at a certain minimum level. In the section below, we’ll go into greater depth about the referral program.
Low fees: Perp88 offers their services to customers at a far lower cost than competitors. The trading fees charged by Perp88 are among the lowest in the industry at 0.09%.
Competitive Advantages on Product Features:
As mentioned previously, the team behind Perp88 consists of traders, who share the same pain points faced by other traders. As regular first-hand users of perpetual products, they have developed a deep understanding of the pain points and have a strong view on potential improvements on the product that can be made to alleviate those pain points and strengthen the overall trading experience for users. Below, we discuss the key competitive advantages of Perp88’s products.
High Leverage: Perp88 allows a maximum leverage of 88x. Users who have a strong view on the market and possess conviction to capitalize on that view can therefore maximize their financial gains with Perp88’s high leverage.
0% Spread: Perp88’s allows for a 0% spread upon entering and exiting a leveraged position, which means that the price that the trader sees will be the actual price that they will get. This is a highly important feature especially for short-term traders, as it allows for them to capitalize on small price movements.
0% Price Impact: Perp88 also offers a 0% price impact swap of any assets in the PLP fund.
Advanced Order Types: Advanced order types that Perp88 currently supports include limit order, take profit, and stop loss. These features are added to Perp88 to help enhance the trading experience to emulate that of a centralized exchange.
Subaccount Support: Perp88 is currently the only decentralized perpetual exchange that supports subaccounts under the same wallet address. With this feature, user can easily track and monitor the performance of their trading strategies implemented under their different subaccounts.
Robust price oracle: Perp88 uses several price feeds from Chainlink, who offers the most comprehensive and robust oracle service provider in the market. As Perp88 operates on Polygon, Chainlink price oracle is updated with 0% price deviation requirement, which means once the price of an asset deviates over 0%, the price oracle is updated. For reference, the price deviation requirement for Ethereum & Arbitrum is 0.05% and 0.1% for Avalanche.
High liquidation threshold: The liquidation threshold for leveraged positions has been set at 99% in Perp88. This means the position owner will only be liquidated if the loss and fees accrued reach 99% of the position’s collateral. When the liquidation threshold is set to 99%, the likelihood of a position owner being liquidated is drastically reduced, which is especially beneficial in turbulent market conditions.
LP protection: Perp88 has several safeguards to protect its liquidity providers against hack and exploits. This also includes the Dynamic Funding Rate that protects the liquidity providers from taking on too much one-sided exposure.
User-Friendly Interface and User Experience: One of the key focuses at Perp88 is on delivering an exceptional experience to every user. Whether you’re a DeFi native or are just starting to venture into DeFi, the UI and UX have been carefully designed to be as intuitive and easy to use as possible.
Decentralization: Perp88 is a decentralized perpetual exchange. This means Perp88 DOES NOT have any KYC procedures. It also cannot terminate, ban, or freeze your account. At Perp88, trading is open to everyone who has a device and an internet access, regardless of their location.
No limit on profit: Perp88 doesn’t put any limit on how much traders can profit. You will get all of the possible profits from your trade, and your position won’t be closed or capped just because you are “too right” and making too much money.
3. Leveraged Perpetual Trading
Leveraged Perpetual Trading is one of Perp88’s core features. With this feature, users can open a leveraged long or short position on MATIC, ETH, and BTC with up to 88 times of their collateral value (meaning if you deposit $1,000 worth of collateral, you would be able to open a leveraged position of up to $88,000 in size).
Perp88 charges Borrowing Fees on traders’ positions. Perp88’s Borrowing Rate charged on traders is determined by the asset utilization rate.
For example, if you open a leveraged long position on BTC, the BTC utilization rate will determine the Borrowing Rate for your position, as BTC is reserved to be paid out as profits. On the other hand, if you open a leveraged short position on BTC, the utilization rate of the stablecoin, in which you will receive profit (e.g. USDC & USDT), will determine the Borrowing Rate for your position, as the stablecoins are reserved to be paid out as profits.
At 100% utilization (all available assets in the PLP pool are borrowed), the Borrowing Rate for each asset sits at 0.01% per hour and linearly decreases until it reaches 0.0% per hour at 0% utilization. Below we share the chart on the Borrowing Rate and the utilization rate, taken from Perp88’s Docs:
Dynamic Funding Rate:
In addition to the single-slope Borrowing Rate, Perp88 also implements a Dynamic Funding Rate, which seeks to balance out the long and the short exposure on Perp88, protecting liquidity providers from taking on too much one-sided risks.
Similar to how funding fee works on centralized exchanges, if there is more long exposure than short, long traders will pay short traders. On the other hand, if there’s more short exposure than long exposure, short traders will pay long traders. Below are the formula used to determine the funding rate for long and short positions.
Long Exposure Funding Rate:
Short Exposure Funding Rate:
The maximum Dynamic Funding Rate implemented on top of the utilization-based Borrowing Rate is shown in the table below. Note that the Funding Fee is settled on an hourly basis.
|#||Asset Type||Assets||Max Funding Rate per Hour|
The team behind Perp88 has kindly developed a model to help users simulate the Funding Fee and the Borrowing Fee based on the open interest. You can find the model here.
4. PLP Fund
PLP is a liquidity pool consisting of ETH, BTC, MATIC, USDT, and USDC. Perp88’s leveraged and spot traders rely on PLP as their primary source of liquidity for their trading activities. In other words, the liquidity in the PLP fund acts as the market making liquidity for traders; therefore, when traders incur any losses, those losses are added to the PLP fund and registered as profits from countertrading. Conversely, if traders profit from their trades, assets from the PLP fund are paid to the traders and considered as losses from countertrading.
To reward liquidity providers of the PLP fund for taking on the role of market makers for Perp88 traders, Perp88 will distribute 85% of protocol revenue in USDC to the PLP depositors and 100% of profits generated from countertrading, which are accrued automatically. As a reference point, Perp88’s distribution of 85% of revenue to the PLP depositors is among the highest of any major perpetual exchanges with a similar model. For example, the current market leader, GMX, only offers 70% of revenue to their market makers.
One important thing to note is that traders, as a group, tend to lose money over time, making PLP an attractive yield farming strategy. As of September 2022, GMX’s traders have lost a total of $40M, which makes up 12.5% of their market making liquidity.Traders on Gains Network have accumulated a total loss of $3.5M, which is around 35% of the market making liquidity. This makes depositing assets into PLP a great way to earn yields over a longer time frame.
Assets of PLP and target weight
The table below shows the complete list of assets that make up the PLP fund. Given that the PLP fund functions as the liquidity for traders, it is crucial that there is enough supply of each asset to support leveraged trading and swapping. Therefore, Perp88 has assigned a target weight to each asset.
|#||Asset Type||Assets||Target Weight (%)|
Depositing & Withdrawing Assets from the PLP Fund
All of the above assets are acceptable PLP fund deposits, and users can make their selection at the time of deposit.
The following is a rundown of what happens when a user deposits or withdraws from PLP.
- Deposits: The PLP fund accepts deposits in USDC, USDT, BTC, ETH, and MATIC. When a deposit is made, a number of PLP tokens equal to the value of the deposit is minted and sent to the depositor. For instance, when a user deposits $1 worth of ETH, $1 worth of PLP at the time of deposit will be minted and sent to the user.
- Withdrawals: PLP assets can be withdrawn by burning PLP tokens. Users can specify which asset (USDC, USDT, BTC, ETH, or MATIC) they would like to receive their withdrawals in. The asset specified by the user earlier equal to the value of the PLP tokens burned will be sent to the user. For instance, when a user withdraws $1 worth of PLP, users can withdraw $1 worth of ETH, BTC, MATIC, USDC, or USDT.
5. Referral Program
Perp88 implements a referral program as a way to spread the awareness of the protocol and to onboard new users onto the platform. The code users receive discounts on fees, and the referrers receive rebates on fee revenue generated from their code users.
Perp88 currently offers two types of referral program:
- Depositor’s Referral Program
- Trader’s Referral Program
Keep in mind that the referral code for both programs is the same. To participate in both programs, each referrer needs only one referral link and each code user needs only one referral code
Program for Depositor Referrals
The Referral Program for Depositors applies rebates and discounts on the deposit fees for the PLP. Below, we highlight the different tiers of the program and their benefits:
Benefits: 5% discount on deposit fees for PLP depositors, 5% rebates to the referrer in USDC
Requirement: No Requirement to be in Tier 1
Benefits: 5% discount on deposit fees for PLP depositors, 7.5% rebates to the referrer in USDC
Requirement: Net all-time deposit value (deposit – withdrawal) of $1M from the referees
Benefits: 7.5% discount on deposit fees for PLP depositors, 10% rebates to the referrer in USDC
Requirement: Net all-time deposit value (deposit – withdrawal) of $5M from the referees
Program for Trader Referrals
The Referral Program for Traders applies rebates and discounts on the opening and closing fees for leveraged trading. Below, we highlight the different tiers of the program and their benefits:
Benefits: 10% discount on trading fees for traders, 25% rebates to the referrer in USDC
Requirement: No Requirement to be in Tier 1
Benefits: 10% discount on trading fees for traders, 30% rebates to the referrer in USDC
Requirement: 10 active users, combined $1M in weekly volume from the referees
Benefits: 12.5% discount on trading fees for leveraged traders, 40% rebates to the referrer in USDC
Requirement: 20 active users, combined $2.5M in weekly volume from the referees
Please note that an “active user” is defined as a unique wallet address that has at least 1 successful trading transaction within that week.
Perp88’s Trading Referral Program is among the best.
When compared to other platforms, Perp88 has one of the most generous trading referral programs in terms of the value it gives back to its participants, which includes big discounts for the referees and rebates on fees for the referrers.
Base Tier Comparison
Perp88 and Binance offer 10% referee discounts. Binance’s 10% discount is only valid for the first month after account activation, while Perp88’s lasts a lifetime.
In addition, Perp88 offers 25% rebates to referrers, which is the highest among every exchange’s base tier. Referrers at Perp88 can receive their full referral fees because rebates are calculated on trading fees BEFORE the discount.
When compared to other referral programs, Perp88’s 35% of trading fee revenue is by far the highest.
Perp88 offers a 12.5% discount to referees, while Binance and GMX offer 10%.
Perp88’s tier 3 rebates to referrers are 40%, tied with dYdX and Perpetual Protocol. However, Perp88 has the least stringent requirements when compared to the competitors’ similar tiers. To receive 40% on rebates from dYdX, you must stake 500K DYDX ($680K). Perpetual Protocol has less stringent requirements than the other two, but it still requires you to stake at least 2,000 PERP ($1,180) and remain an exclusive promoter of the project.
Overall, Perp88 triumphs this comparison again because its referral program returns the most value to its members (52.5% of trading fee revenue).
As a special bonus, you can sign up with the code “CWPerp88” and enjoy tier 3 discounts for both the Depositor’s and the Trader’s referral program!
Simply go to Perp88’s referral page (https://app.perp88.com/referral) and enter the code “CWPerp88” to start enjoying the discount!
6. Potential Airdrop of Perp88
Perp88 will initially launch without Governance tokens because the team behind Perp88 wants to focus their efforts on finding the right product market fit through product improvement and iterations.
However, the team has hinted that there’s a potential token launch that may happen in the future and early adopters of the protocol will qualify for a special airdrop of their governance tokens. With that said, if you don’t want to miss out on this opportunity or would like to maximize your chance of getting an airdrop, don’t forget to deposit funds into PLP, open multiple trades, and refer some friends to the platform!
Telegram Announcement: https://t.me/Perp88Announcements
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