PERP Perpetual Protocol

Use Cases of Perpetual Protocol

Perpetual Protocol has several key use cases:

• Trading: The primary use case is for trading perpetual swaps, allowing traders to speculate on the price movements of various assets, including cryptocurrencies and traditional financial instruments.
• Hedging: Perpetual swaps can be used as a hedging tool to protect against price fluctuations in the underlying asset. For example, a cryptocurrency miner could use Perpetual Protocol to hedge against price drops in their mined cryptocurrency.
• Liquidity Provision: Traders can provide liquidity to the platform by depositing assets into the liquidity pool. In return, they earn trading fees and a share of the platform’s revenue.
• Yield Farming: Perpetual Protocol offers yield farming opportunities, where users can earn additional rewards by staking their assets on the platform.

These use cases leverage the decentralized and non-custodial nature of Perpetual Protocol, offering users a secure and efficient way to trade derivatives.

Pros of Perpetual Protocol

• Decentralized and Non-Custodial: Perpetual Protocol is built on the Ethereum blockchain, making it fully decentralized and allowing traders to retain control of their assets.
• Low Fees and Fast Settlement: The platform charges low trading fees of 0.1% or less and settles trades in seconds thanks to its automated market maker (AMM) design.
• Capital Efficiency: Perpetual Protocol uses a virtual automated market maker (vAMM) design that enables traders to leverage their positions by up to 10x, increasing capital efficiency.
• 24/7 Trading Availability: Users can trade perpetual contracts at any time, providing flexibility and convenience.
• Insurance Fund: There is an insurance fund available to protect users.
• Good Liquidity: The platform offers good liquidity for trading.
• Price Stability: Staked coins are not affected by price fluctuations.

Cons of Perpetual Protocol

• High Risk: Perpetual swaps are high-risk derivative products that can lead to significant losses if not managed properly.
• Limited Liquidity: As a relatively new platform, Perpetual Protocol may have limited liquidity compared to more established centralized exchanges.
• Vulnerability to Smart Contract Risks: Like all decentralized platforms, Perpetual Protocol is vulnerable to smart contract risks such as coding bugs.
• Complex Trading Mechanisms: The platform's trading mechanisms can be complex and challenging for new users.
• Small Market Share and User Base: Perpetual Protocol has a small market share and user base compared to other platforms.
• Short Crashes: The platform has experienced short crashes in the past.

Founders of Perpetual Protocol

• Yenwen Feng: Co-founder of Perpetual Protocol.
• Shao-Kang Lee: Co-founder of Perpetual Protocol.

These individuals played a crucial role in establishing Perpetual Protocol, which was initially known as "Strike" and later transitioned to its current name in the summer of 2020.

Investors in Perpetual Protocol

Perpetual Protocol has 4 investors who participated in its funding rounds. These investors include:

• Multicoin Capital: A venture capital firm based in Texas.
• Alameda Research: A corporation based in Hong Kong.
• CMS Holding: A holding company based in Illinois.
• Three Arrows Capital: A hedge fund based in Singapore.

These investors contributed to Perpetual Protocol's Seed VC funding round, which raised $1.8 million on August 25, 2020.

Halal Status of Perpetual Protocol

• Halal Status: No
• Reason: Perpetual Protocol involves perpetual futures contracts, which are generally considered haram due to their speculative nature and the potential for excessive uncertainty (gharar), both of which are discouraged in Islamic finance.

Key Considerations

• Speculation: Perpetual futures contracts are often seen as speculative, which aligns with gambling and is prohibited in Islamic finance.
• Gharar (Uncertainty): These contracts involve significant risk and uncertainty, which is also not permissible under Sharia law.
• Riba (Interest): While Perpetual Protocol may not directly involve interest, the speculative and debt-like nature of futures contracts can be considered a form of riba, which is forbidden in Islamic finance.

Islamic Finance Principles

• Ethical Investments: Investments should be made in halal (permissible) enterprises that do not harm society.
• Transparency: Financial transactions must be transparent and clear, which is often not the case with perpetual futures contracts due to their speculative nature.
• Fair Profit Distribution: Profits should be distributed fairly and without involving interest or excessive speculation, which is not guaranteed in perpetual futures trading.