Perpetual Protocol Review
What is Perpetual Protocol?
Perpetual Protocol is an open-source software project that was founded in 2019. It originated in Taiwan and has since then grown to a distributed team across the globe. In August 2020, the decentralized exchange secured USD 1.8 million in funding from 12 investors led by a company caled Multicoin Capital.
An important feature of Perpetual Protocol is that the platform is run on the xDai chain. This means that if you're using MetaMask wallet, you don't need to pay for gas fees here (but if you're using a hardware wallet, you need to pay for the gas fees). You can get free xDai here.
USDC as Collateral and Settlement
The Perpetual protocol lets users use USDC as collateral when trading perpetual contracts. Every trade at this platform is settled in USDC. The platform offers a leverage of up to 10x. All trading activities are performed entirely on-chain without any cryptocurrency custody.
Perpetual Protocol v2 Update
According to information from the exchange to Cryptowisser.com, the upcoming v2 update will introduce multi-collateral, cross-margin, and permissionless market creation.
General Information on DEXs
Decentralized exchanges are becoming popular predominantly due to reasons like:
- No requirement for a third party to store user funds. DEX gives users direct control of their cryptos allowing them to transact directly with any counterparty.
- Limited KYC requirements make it possible to create an account and jump right into trading digital assets.
- Low risk of server downtime since they are spread out across the globe
- Higher immunity to attacks from hackers.
However, one should remember that DEXs normally have an order book with lower liquidity in comparison to their centralized counterparts, although that's slowly starting to change.
Perpetual Protocol Compatible Wallets
In order to use Perpetual Protocol, you need to have one of the following wallets. Access to the platform is only possible to use if you connect your wallet to the platform.
Perpetual Protocol Liquidity
Perpetual Protocol’s decentralized perpetual contract uses virtual automated market makers to match off trades. These virtual AMM are designed in such a way that they are fully collateralized and market neutral. Since there is no need for a counterparty, users can be assured of high degrees of liquidity. Additionally, its predictable pricing model is based on constant product curves.
The main trading venue (perp.exchange) has listed certain eligibility criteria for its services. Investors from the United States fall under the restricted category and are not eligible to use the perp.exchange interface. Its terms of services clarify that the residents from restricted countries will not be eligible for any service offered by this exchange.
Some other countries in the restricted list include Taiwan, the United Kingdom, Antigua and Barbuda, Algeria, Bangladesh, Bolivia, Belarus, Burundi, Myanmar (Burma), Cote D'Ivoire (Ivory Coast), Crimea and Sevastopol, Cuba, Democratic Republic of Congo, Ecuador, Iran, Iraq, Libya, Mali, Morocco, Magnitsky, Liberia, Nepal, North Korea, Somalia, Sudan, Syria, Venezuela, and Zimbabwe.
However, just like any other DEXs, there are multiple interfaces you can choose from for the same protocol. For Perpetual Protocol, you can also access the protocol from apex.win, a trading venue made by third-party developers according to the team. Besides that, you can also interact with Perpetual Protocol’s smart contracts on-chain without any restrictions.
Perpetual Protocol Trading Interface
Every trading platform has a trading interface. This interface is the part of the exchange’s website where you can see the price chart of a certain cryptocurrency and what is its current price. There are normally also buy and sell boxes, where you can place orders with respect to the relevant crypto, and, at most platforms, you will also be able to see the order history (i.e., previous transactions involving the relevant crypto). Everything in the same view on your desktop. There are of course also variations to what we have now described. This is the trading interface at Perpetual Protocol (with no wallet connected though):
It is up to you – and only you – to decide if the above trading interface is suitable for you. Finally, there are usually many different ways in which you can change the settings to tailor the trading interface after your very own preferences.
Perpetual Protocol Fees
Perpetual Protocol Trading fees
When it comes to centralized exchanges, many of them charge what we call taker fees, from the takers, and what we call maker fees, from the makers. Takers are the people removing liquidity from the order book by accepting already placed orders, and makers are the ones placing those orders. The main alternative to this is to simply charge “flat” fees. Flat fees mean that the exchange charges the taker and the maker the same fee.
Perpetual Protocol charges 0.10% per transaction regardless of whether you are a maker or a taker.
Irrespective of whether you compare to DEXs or centralized exchanges, these fees are fairly competitive relative to the industry average.
Perpetual Protocol Withdrawal fees
To our understanding, Perpetual Protocol does - like most decentralized exchanges - not charge any transfer fees or withdrawal fees other than the network fees. If you use Ethereum (for trades) without a hardware wallet, the user’s gas fees are paid for. The network fees are fees paid to the miners of the relevant crypto/blockchain and not fees paid to the exchange itself. Network fees vary from day to day depending on the network pressure. Alternatively, using xDai for trades will attract a fee of 0.001 USD per trade.
Generally speaking, to only have to pay the network fees should be considered as below the global industry average when it comes to fee levels for crypto withdrawals (if you include all exchanges, both DEXs and CEXs in the data set).
Perpetual Protocol does not – like all (or at least close to all) other DEXs – accept any deposits of fiat currency. This means that crypto investors without any previous crypto holdings can’t trade at this trading platform. In order to purchase your first cryptos, you need a so-called entry-level exchange, which is an exchange accepting deposits of fiat currency. Find one by using our Exchange Filters!
Perpetual Protocol Security
The servers of DEXs normally spread out across the globe. This is different from centralized exchanges that normally have their servers more concentrated. This spread-out of servers leads to a lower risk of server downtime and also means that DEXs are virtually immune to attacks. This is because if you take out one of the servers, it has little to no impact on the full network. However, if you manage to get into a server at a centralized exchange, you can do a lot more harm.
Also, if you make a trade at a DEX, the exchange itself never touches your assets. Accordingly, even if a hacker would somehow be able to hack the exchange (in spite of the above), the hacker can not access your assets. If you make a trade at a centralized exchange you tend to hold assets at that exchange i.e., until you withdraw them to your private wallet. A centralized exchange can therefore be hacked and your funds held at such exchange can be stolen. This is not the case with respect to decentralized exchanges, like Perpetual Protocol.