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Examination of Decentralized Perpetual Designs
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Key Takeaways
14 min read
  • Majority of decentralized perpetual protocols either utilize an order-book mechanism, virtual AMM models or oracle-priced models.
  • vAMM models like Perpetual Protocol enable more effective price discovery unlike a protocol that is solely based on an oracle-driven price feed like GMX.
  • dYdX is still the undisputed leader in terms of trading volume. Its current order-book design sacrifices decentralization for performance.
  • The introduction of dYdX v4 will be a critical step in achieving its decentralized ethos and proving that decentralized order-books can succeed at low cost.
  • Regardless of the success of order-books, it is important to recognize the value of other perpetual models since there is still a compelling case for a market that allows regular users to earn yields without the involvement of professional market makers.

Quick Breakdown of the 3 Derivative Platforms

Introduction

In our previous report on Automated Market Makers (AMMs) for spot markets, we discussed the latest developments in AMM designs. In this report, we will look into decentralized perpetual exchanges.

Composability, deep liquidity, and top-notch UI/UI are key when it comes to protocol design for the end users. The ultimate goal of decentralized exchanges - whether spot or perpetual futures - is to resemble the experience of trading on CEXes as closely as possible.

In this context, we will explore some of the popular decentralized perpetual models.

Perpetual Protocol...