Perpetual Protocol – self-described as the decentralized hybrid of Bitmex and Uniswap – has announced that their liquidity mining program will be conducted through Balancer’s “Liquidity Bootstrapping Pools” (LBP). Perpetual Protocol will be the first project to distribute their native token, PERP, through these pools in an attempt to reduce front-running and initial price volatility.
Excited to be the first DeFi Project using Balancer's LBP
Liquidity Bootstrapping Pools can:
-reduce initial price volatility
Creating a fairer distribution.
We are proud to be the first project using Balancer's LBP to distribute our token. https://t.co/Bxs5lGfYHu
— Perpetual Protocol (@perpprotocol) September 8, 2020
7,500,000 PERP tokens (or 5% of the total supply) was made available via the Balancer LBP around Sep 9, 2020, at 6:00, am UTC. The team has warned many times that this new LBP is unlike regular Balancer pools as the initial price of the token will be set high to discourage front-runners and price speculation. The offering is currently live and can be found here.
Using a Balancer LBP, the price of PERP will gradually drop over the course of a three day period. This means that the token price starts at a fully diluted valuation of roughly $1B and drops in price using a programmatic weighting schedule. This spreadsheet is a great way to track what the market value of PERP at any given token price throughout the course of the sale.
PERP tokens will allow community members to take part in governance and staking opportunities. Users can stake to Perpetual Protocol for a fixed amount of time in exchange for PERP staking rewards and stablecoin trading fees. PERP token also acts as an asset of last resort in the event that losses cannot be covered by the built-in insurance fund. More on the token distribution can be found here.
3/4 @BalancerLabs' LBP addresses all these problems:
1) The price will drop over time, so bots will get rekt if they come in early
2) The LBP lasts for 3 days. Everyone has a chance to join
3) Buyers can use other tokens supported on Balancer in exchange for $PERP
— Perpetual Protocol (@perpprotocol) September 7, 2020
The team had planned to launch earlier in the month but decided to hold off due to the sudden spike in gas prices. Now, the offering will battle the gas test as users have three days to watch the price of PERP descend in accordance to market demand.
What does Perpetual Protocol do?
Perpetual Protocol is a decentralized perpetual contract trading protocol that allows up to 20X leverage on long and short positions on virtually any asset. It achieves this by utilizing a new trading structure called the Virtual Automated Market Maker (vAMM). The vAMM is able to on-chain liquidity with predictable pricing, for a deep dive on Perpetual Protocol’s vAMM check out their blogpost.
For those who aren’t familiar with perpetual contracts: A perpetual contract is a derivative similar to a futures contract but without an expiry date. Many exchange operators are playing close attention to Perpetual Protocol as it has long been predicted that something akin to a decentralized Bitmex will become one of the most lucrative DeFi protocols. We’ve yet to see a clear leader in this vertical, it will be interesting to see how much trading volume Perpetual Protocol attracts in the coming months.
To stay up with Perpetual Protocol, follow them on Twitter.