Trade perpetual futures

This is a guide to trading on Perp v3. For older versions, see Legacy Docs.

Pre-launch Campaign

Perp v3 is being promoted via Nekodex. Check it out: Nekodex $(=ↀωↀ=)

For new users

Perpetual Contracts, aka perps, are a simple tool that let you trade assets that might otherwise be hard to access for you. For example, if your funds are on Ethereum or similar network, it's not easy to trade assets from other networks, like SOL, or real world assets, like currencies or commodities. Perps provide an easy way to trade these assets.

At the same time, perps let you trade both long and short, and with leverage, making them a powerful tool indeed.

Perpetual Protocol is working hard to make trading in this way as easy and accessible as possible.

Quick start

Currently Perp v3 is being tested and promoted via a campaign know as Nekodex. Check it out at Nekodex $(=ↀωↀ=)!

Account creation

Perp v3 uses Ethereum account abstraction (aka ERC-4337). This account is tied to an email address. You can use any email, but it is critical that you are able to continue receiving email at this address in order to sign in.

⚠️ Do not use a disposable or temporary email address.

If you are not familiar with the following terms, we highly recommend that you learn the basics of perpetuals trading and web3 before proceeding!

• long position / short position

• leverage

• funding rate / funding payment

Funding your account

Perp ve uses Perp Smart Account, one of the first DEXs to use Ethereum-based account abstraction. Perp Smart Account can be controlled using a Passkey, or using a web3 wallet. Passkeys are created and stored using an iOS or Android device. Learn more in Perp Smart Account.

Read on to set up an #account-using-passkey or an #account-using-web3-wallet

Account using a Passkey

If you have used Passkey on your phone before, simply follow the steps in the Perp v3 interface to create a Perp Smart Account. For a detailed how-to, see Perp Smart Account.

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Account using a web3 wallet

You have a wallet Click Sign Up and then connect a wallet like Metamask, Rabby or WalletConnect enabled wallet. Sign the message to create your account. You will need to sign to sign up and withdraw, but other operations will be handled using your session key. Learn more in Perp Smart Account.

You don't have a wallet We recommend using Passkey if you don't have a wallet. If you prefer using a web3 wallets, there are many options including Metamask, Rabby and others. Make sure to read about and research web3 wallets before choosing one. You are trusting your funds with the wallet provider, and will likely need to manage backups and secret recovery phrase on your own. In most cases if you lose your wallet and your secret recovery phrase, or your secret phrase is stolen / revealed to a 3rd party, your funds will be lost permanently.

Account address

Your Perp Smart Account can be found via the user interface:

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You will need to deposit funds into this address in order to start trading.

Bridge & deposit

Test before depositing

It is recommended to perform a small test deposit and withdrawal before depositing more funds.

1. Bridge funds

   1. You need ETH on Optimism to pay for transaction fees (aka gas). Don't worry, most transactions on Perpetual Protocol do not need gas, just a signature.

   2. You need USDT for collateral. Collateral will back all of your trades. For now, USDT is the collateral used on Perp v3, and more options will be added soon.

   3. See bridge options at the Optimism Bridge or see Optimism Apps for 3rd party bridges and on-ramps.

2. Use the deposit function on the UI to deposit funds from your web3 wallet to your Perp v3 exchange wallet.

3. All trades will be backed with funds in your account. Fees, P&L, funding payments, etc., will be paid to/from your account.

Perpetual Protocol Smart Account

Test before depositing

It is highly recommended to perform a small test deposit and withdrawal before depositing more funds.

Key benefits

• Trade without signing every transaction

• Gas is payed for you ⛽👌

• Recover your account easily

Smart Account allows you can use your email or other login method to create and manage an account on Perpetual Protocol. Simply go to app.perp.com and follow the steps to sign up with the social or email account of your choice, or use your existing web3 wallet.

Read more at Perp Smart Account

Opening a position

You can only have one position in each asset. If you have a position and buy/long or sell/short the same asset, the new position will be added to the old position. E.g. if you have a 1 ETH long and open a 1 ETH short, the two positions will cancel each other and sum to 0.

Once your account has funds deposited, you can open long and short positions in any asset offered on the exchange interface.

All transactions on Perp v3 are gas-less thanks to our built-in relayer system. All you need to do is confirm the order with two clicks and transaction fees will be paid via the relayer.

Order types

Market orders

Market order

Price impact: Orders do not have price impact in the sense that the price moves due to the order consuming an amount of liquidity. Prices are determined by the underlying liquidity framework module.

Place your order using the current market price. Orders are fill-or-kill (there are no partial fills for market orders; limit orders support partial fills).

Slippage

Orders may experience slippage, where the expected execution price is different from the actual execution price due to a change in price between the time the transaction is sent and the time it is executed. You can control slippage using the Max Slippage setting. Max Slippage of 0.1% or 0.5% is reasonable. It is very rare to need a value above 0.5%.

Limit orders

Limit order

Place your order at a price you set or better. ⚠️ This means if you set a long price below the current market price, the order will fill right away. The same is true if you set a short price above the current market price.

Sufficient collateral is required for any limit order, even if the order closes an existing position (e.g. a short limit order that closes a long position). This will be updated once take-profit and stop-loss orders are launched.

Minimum order size

10 USDT

Partial fills

Limit orders allow partial fills if there is insufficient liquidity to fill your entire order at your set price.

Slippage

See the Market Order tab above.

Fees

Limit orders pay the standard relayer fee one time per order, at the time of the first fill.

Once filled, limit orders pay applicable borrowing fees and funding fees at the same rate as a market order.

Collateral requirements

Each limit order requires a certain amount of funds in your futures account to be available when the limit order triggers. If you remove funds or your futures account balance falls below the level needed to fill the orders, some or all of your orders may be automatically cancelled.

Take-Profit/Stop-Loss

Take Profit & Stop-Loss orders will be available at a later date.

Leverage

Perp v3 uses isolated margin. This means each position has it's own margin, leverage and liquidation price.

Set leverage using the leverage panel (initially shows as a 2x button). The max leverage may be different for each asset.

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Each asset has its own leverage setting, so make sure to check the leverage before trading.

Position size

Enter the position size of your order in either collateral token (USDT) or the asset (base token, ETH, BTC, etc.)

To set the size in the asset token, toggle the size unit by clicking the collateral token symbol (USDT).

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Fees

The UI will show estimated fees for you, and show fees in the transaction summary before you sign your order. If you'd like to understand Perp v3 better, read on.

Borrowing fees

Traders (takers) pay borrowing fees for all positions, similar to when you borrow using Defi lending protocols. This fee is paid continuously on a percent basis depending on how much of the available liquidity is used, and is paid to liquidity providers.

Matcher fee

Current fee: 1 USDT (flat fee)

Similar to other designs like Synthetix and GMX, for each transaction you'll pay a fixed matcher fee to cover gas fees paid on your behalf by the matching engine. You won't need to pay separately for gas for trades on Perp v3.

In the future, matcher fees may change to become based on current trading volume.

Funding payments

At launch, funding payments will be turned off. Funding payments may be applicable in the future, depending on the liquidity provision mechanism.

Collateral and margin ratio

tl;dr

Margining type: isolated margin

Maintenance margin: see Perp contract specs

Max leverage: see Perp contract specs

Perp v3 uses isolated margin: all positions on Perp v3 have their own independent margin. When your collateral (funds you deposited in your Perp v3 account) are used to back a position, this backing is called position margin, or simply margin.

Isolated margin allows us to offer higher leverage, and helps both users and the protocol manage risk. Cross-margin is possible with Perp v3's modular design and may be added at a later date.

The value of your position vs the value of the position margin determines the amount of leverage of each position. If position margin = position value then your leverage is 1x.

A key indicator to watch is margin ratio. This shows your margin value as a percentage of your position value. If the margin value falls too low, margin ratio will fall, and you risk liquidation.

Managing your position

Multiple positions You can only have one position for each asset. If you open a second position for an asset, it will be added to the first. So two longs will add together to create a bigger long, or a long and a short will add together and result in a smaller position or cancel out entirely.

Close position Click the Close Position button next to the position you want to close in order to close it completely.

Reduce (partial close) To close part of a position, make an opposite direction trade. Ie. if you want to close part of a long, open a new short (e.g. close half of a 1 ETH long position by opening a 0.5 ETH short position.)

Increase leverage (reduce margin) Remove margin from your position if you want to increase your leverage for that position. ℹ️ You are limited in how much margin can be removed from a profitable position. You cannot remove more than your initial margin. To remove more, you must reduce your position size.

Decrease leverage (increase margin) Add margin to your position if you want to decrease your leverage for that position.

Leverage

Warning

Leverage trading can lead to complete loss of funds. Use low leverage (2x-3x).

Actively monitor all leveraged positions and trade with caution.

Never trade more than you can afford to lose.

Always actively monitor your positions when trading with leverage. If your position value is higher than your margin value (ie. margin ratio is less than 100%), you are trading with leverage!

Contract specs: Familiarize yourself with the perpetual contract specs before trading. Ensure you are aware of the assets' max leverage and maintenance margin to avoid liquidation.

Coming Soon™️ 🏗️ (will add details based on UI)

Account health and liquidation

Caution

Liquidation will lead to partial or complete loss of funds.

Liquidation

If your margin ratio falls below the maintenance margin ratio (MMR) for the asset you are trading (ref) you may be liquidated. During liquidation, your position will be closed or reduced in size, and some or all of your margin will be taken as a penalty and paid to the liquidator.

Liquidations are triggered by liquidators who call the DEX smart contracts when a position is detected with a margin ratio below the required level. The smart contracts evaluate the position's state, and if the conditions for liquidation are met, the position will be liquidated.

Partial liquidation

Positions will be partly liquidated (50% per liquidation) if they meet certain conditions:

• Position margin is 100 USDT or more and

• Margin ratio is half the maintenance margin ratio (MMR) or higher (if MMR is 5%, the position must have a margin ratio between 5% and 2.5% to be eligible for partial liquidation).

If any conditions is not met, the position will be fully liquidated when margin ratio falls below MMR.

Liquidators

Anyone can act as a liquidator on Perpetual Protocol by triggering liquidations via the exchange smart contracts. Liquidators receive a bonus, paid by the trader as a penalty, in return for monitoring the system and triggering liquidations when necessary. This is a technical task that requires liquidators to write and maintain software to monitor user positions and trigger the exchange contracts at the correct time.

Profit and Loss

P&L is divided into three types. If you have further questions about unclaimable P&L, please see P&L Pool for details or Contact us.

Type	Notes
Unrealized P&L	P&L in open positions is 'unrealized' and continues to change as price changes.
Realized + Claimable P&L	When a position is closed, its final P&L is locked in, resulting in a realized profit or loss. Normally this can be claimed automatically or by going to Account and checking P&L balances.
Realized + Unclaimable P&L	In some cases a temporary hold is place on profits to ensure protocol solvency and guard against attacks and exploits. These funds are safe.

Withdrawing funds

Go to the account overview to withdraw funds back to your wallet.

If you have open positions, you will not be able to withdraw funds. Close all of your positions if you want to withdraw all funds.

Some funds may also be in the form of claimable or unclaimable P&L (see Profit and Loss).

Rug protection

When LPs' funds are used in trades, these funds are locked. This ensures traders can always exit their positions as well as ensuring protocol solvency.