Perpetual Futures allow users to have leveraged long or short exposure on assets without an expiration date. In place of expiration, users pay ongoing fees (as unrealized P/L in the positions) while the positions are open. This comes with many benefits. Having the ability to keep a position open “perpetually” has the advantage of avoiding the cost and inconvenience of having to completely roll over a position when it expires. It also makes it simple to quickly adjust the position on the fly which is great for responsive hedging.
The biggest benefit though is it allows aggregating liquidity into one market, whereas otherwise, the liquidity would be fragmented across products and contracts for various time periods. The aggregated deep liquidity allows for high leverage that is difficult to find on-chain for non-perpetual products such as options. This high leverage is suitable both for trading and hedging large positions.
Our particular implementation of Perpetual Futures Exchange also has other advantages such as offering the ability to open and close positions with no slippage, which further facilitates opening positions that are large, high leverage, and/or short term.
There are two main user groups for the Exchange — Tradersand Liquidity Providers. In the below sections, we will discuss the key features and benefits each of them will get from using the product.
For a pool-based perpetual futures exchanges like Alperp, a robust oracle service is crucial to operate reliably and seamlessly. For this purpose, we decided to use Pyth’s price feed with reliable and low-latency market data for our service. This way our users can rest assured that their funds will be safe withstanding all market conditions.
Benefits to ALPACA holders
Similar to other products launched under the Alpaca brand, protocol revenue generated will be directed towards xALPACA holders and burn in the following ways:
10% of 16% of Perpetual Futures Exchange Fee is used for ALPACA buyback and distributed as revenue sharing to Governance Vault stakers (as Protocol APR)
6% of 16% of Perpetual Futures Exchange Fee goes towards weekly buybacks and burns of the ALPACA token.