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Introduction to Perennial
Derivatives Redesigned for DeFi
Perennial is a DeFi-native derivatives primitive that allows for the creation of two-sided markets that trade exposure to an underlying price feed in a capital efficient manner.
Perennial acts as a peer-to-pool derivatives AMM that perpetually offers to take the other side of any Taker’s position directly at the oracle price, in exchange for funding & interest rates based on market skew & utilization.
Takers (Traders) deposit collateral to get leveraged exposure to different price feeds (long, short, and exotic payoffs). A Taker's exposure within a market is matched against positions in the opposite direction. Where a shortfall between Takers exists in a market, Makers (Liquidity Providers) provided capital earns fees for filling the shortfall in the market. Makers take on exposure relative to the amount required to fill the exposure mismatch between takers.
On a continuous, on-going basis, takers & makers settle up; the losing side of the trade pays the winning side.
Perennial is minimalist at its core, designed to be a low-level, unopinionated primitive that lays the basic infrastructure and leaves the rest up to market creators and participants to define/optimize.
Some things that make Perennial stand out:
- Cash-settled — trades settled in $USD, not crypto, in line the most popular crypto derivatives
- Low fees — a hyperefficient protocol (in terms of mechanism design & capital efficiency) that minimizes fees for takers & makers
- Customizable LP experience (both simple & pro) — Makers can LP with significant leverage (up to 50x) and can fully customize their risk exposure & hedging strategy (or lack thereof); Retail LPs can utilize vaults built on top that abstract complexity. Perennial makes very few assumptions about LPs at the protocol level, giving LPs full control.
- Designed for the needs of Developers — not just another trading protocol; Perennial is built to be a composable primitive (low fee, fully-on chain, easy to integrate)
- Permissionless — Permissionless market creation, integration, and composability.