Perpetual Protocol: Is It A Good Investment?

Introduction

Perpetual Protocol was launched in late 2019, originally under the name Strike Protocol. Perpetual Protocol is made on an automatic market maker (AMM) design inspired by Uniswap. The PERP token is that the Perpetual Protocol's ERC-20 native token, empowering the complete system in two ways (staking and governance).

Perpetual Protocol could be a decentralized perpetual contract protocol for each asset, made possible by a Virtual Automated Market Maker (vAMM). Like Uniswap, traders can trade with our vAMMs directly without the necessity for counterparties. The vAMMs provide guaranteed on-chain liquidity with predictable pricing set by constant product curves. The vAMMs are designed to be market neutral and fully collateralized. PERP holders can become stakers by staking the PERP tokens in their possession to a Staking Pool. In return, stakers are rewarded with a bit of transaction fee in stable coins plus staking rewards in PERP.

How Does Perpetual Protocol Work?

Perpetual Protocol was designed to facilitate the selling and buying of perpetual contracts in a way that mirrors a stock exchange. It does this by creating a replacement version of an automatic Market Maker (AMM), a way that utilizes a math function to work out the worth of an asset and facilitate the exchange of two or more assets. To find out more about how other protocols implement this method, take a look at Uniswap, Balancer, or Curve.

Virtual Automated Market Maker (vAMM): within the commonest AMM setups, users deposit crypto assets into liquidity pools that represent certain trading pairs. Then, users who trade against assets within the pool pay a fee that's distributed to any or all liquidity providers proportionally, supporting their contribution to the pool. During this setup, the DeFi protocol providers and traders engage with are both determining the worth for every pair and facilitating the particular exchange of assets.

In contrast, Perpetual Protocol's vAMM is meant just for price discovery, not for spot exchange. While it uses the identical function as other DeFi projects like Uniswap to see prices, there aren't any real crypto assets stored within the vAMM. The financial organization accepts the initial deposits of traders and records the character of their position (margin amount, direction, and therefore the amount of leverage). 

Subsequently, the financial institution sends the deposits to the 'Collateralization Vault,' which helps backstop notify the vAMM to update prices and secure trading positions. It may even be worth noting that the Perpetual Protocol team has manually chosen the various markets available for traders. At the same time, they expect this process to be disbursed by their Decentralized Autonomous Organization (DAO) structure in the future.

Insurance Fund: within the event of unexpected losses from either loss within the liquidation process or the shortcoming of traders to fund position payments, the insurance fund is the first line of defence. This fund increases through the protocol's method, where 50% of purchasing fees are collected.

The liquidity pool (k) of Perpetual Protocol is digitized and algorithmically determined. Rather than hoping for liquidity providers to see the curve of a specific market, Perpetual Protocol can programmatically adjust and update the parameters of the virtual AMM (x*y=k) and always offer a competitive product for any market.

The team claims that PERP is the first virtual AMM (vAMM) to enable non-constructive markets while guaranteeing on-chain liquidity. These unconstructive markets lower the capital demands required by traditional markets, thus paving the way for brand spanking new and emerging products.

The PERP token is the Perpetual Protocol's ERC-20 native token, empowering the complete system in two ways (staking and governance). Perpetual Protocol's Insurance Fund is guaranteed by holders of its native token PERP. The Insurance Fund is employed to hide unexpected losses arising from leveraged transactions. If the Insurance Fund runs out, Perpetual Protocol will print more PERP to replenish the Insurance Fund and canopy losses. Conversely, PERP holders can stake their assets in Perpetual Protocol's stake pool for a set period. In reaction, stakers are paid a percentage of the transaction fees accumulated during the protocol period and the inflationary staking rewards.

Financial Analysis

Perpetual Protocol price today is $18.45 with a 24-hour trading volume of $38,949,332. PERP price is up 4.9% in the last 24 hours. It has a circulating supply of 56 Million PERP coins and a total supply of 150 Million. At the time of writing this post (November 9, 2021), PERP's Return On Investment (ROI) over the past year was 1,960%, exceeded in 'xDAI Ecosystem, Derivatives, Perpetuals, Automated Market Maker (AMM), Exchange-based Tokens, Decentralized Exchange Token (DEX), Decentralized Finance (DeFi)' categories which had 449% growth over the past year. It exceeded the crypto market which had 1454% growth over the past year.

Another critical factor in the success of any project is gaining public attention. Our data shows that PERP's Twitter account saw a growth of 57% over the last months in the number of followers, which is considerable. However, the Telegram channel users had a 22% growth over the last months.

Over the last five months, PERP's Market Capitalization rank followed an overall increasing trend, starting at the rank of 109-107 on Aug-Sep 2021, reaching 115 in Oct 2021. However, by the time of writing this post, PERP's market cap rank is about 129, and its value is $1,042,967,125 Billion. Moreover, its liquidity score is 46% below the market's average score, making it relatively more challenging to sell in bear markets.

Is Perpetual Protocol (PERP) The Best Cryptocurrency To Invest In?

It is important to note that every person has various financial situations and decisions. Everyone should carefully analyze their financial situation and then decide where to invest based on their preferences. Therefore, there is no personal prescription that works for everyone.

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