How to Use Perpetual Contracts for Non-speculative Purposes
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In this first-ever Perpetual Protocol Workshop, we cover how to use perpetual contracts for non-speculative purposes. Including: 1. Escaping staking lock-up period, 2. Hedging your yield farming risk, and 3. Funding rate arbs Additionally, we'll also walk you through the process of installing Metamask and depositing your USDC on Perpetual Protocol (from a CEX). Try out Perpetual Protocol at https://perp.exchange/
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How to Use Perpetual Contracts for Non-speculative Purposes
- 6. What’s the Perpetual Contract • • The only asset you touch during the trades is USDC
- 7. BTC Perpetual Market What’s the Perpetual Contract Trader Long Short up down Use USDC as the collateral… … to open a position with a leverage
- 8. What’s the Perpetual Contract BTC Perpetual Market Trader Long Short up down Use USDC as the collateral… … to open a position with a leverage
- 9. What’s the Perpetual Contract Market Long Short up down … to open a position with a leverage Price of BTC Price of BTC more less …
- 10. the price of a perpetual contract isn’t necessarily the same as that of the underlying asset.
- 11. What’s the Funding Payment BTC Spot Market on Coinbase BTC Perpetual Market on FTX $60,500 $60,000
- 12. What’s the Funding Payment BTC Spot Market on Coinbase BTC Perpetual Market on FTX $60,500 $60,000 Too many longs on the market!
- 13. periodically incentivize people to take the less popular side (The short side in our example)
- 14. What’s the Funding Payment BTC Perpetual Market on FTX $60,500 Longs gonna pay shorts during the funding time.
- 15. Funding Payment = Position’s Value in USD * Current Funding Rate
- 16. • Longs pay shorts if funding rate is positive. • Shorts pay longs if the rate is negative.
- 17. Tactics 🤑
- 18. How to Escape Lock-up Period with Perpetual Contracts 🧠🐱👤🔒👋
- 19. 1. Escaping Lock-up Period • •
- 22. 1. Escaping Lock-up Period
- 23. 1. Escaping Lock-up Period Perpetual Market Spot Market Profit: 100*$100 = 10,000 Proceeds: 100*$396 = 39,600
- 24. 1. Escaping Lock-up Period Perpetual Market Spot Market Profit: 100*$100 = $10,000 Proceeds: 100*$396 = $39,600 Total Proceeds: $49,600 + Funding Payments*: $535.2
- 25. 1. Escaping Lock-up Period
- 26. Sold AAVE at $396 and complained about lock-up period Sold AAVE at $496 and profited from funding payments as well
- 27. How to Escape Lock-up Period with Perpetual Contracts 🧠🐱👤🔒👋
- 28. How to Hedge your Yield Farming Risk with Perpetual Contracts 🐱👤🌾💣💀
- 29. 2. Hedging your yield farming risk
- 31. 2. Hedging your yield farming risk Perpetual Market Spot Market Profit: 500*$150 = $75,000 Yield: $55,479.5 Loss: $-90,000
- 32. 2. Hedging your yield farming risk Perpetual Market Spot Market Loss: $-90,000 Profit: 500*$150 = $75,000 Yield: $55,479.5 Total Profit: $40,479.5 + Funding Payments: $3,645
- 33. 2. Hedging your yield farming risk
- 34. Lost $34,520.5 and ass hurt when encounter bear case Hedge risk and still profits despite the price of the token tanks
- 35. How to Hedge your Yield Farming Risk with Perpetual Contracts 🐱👤🌾💣💀
- 36. 2. Hedging your yield farming risk Perpetual Market Spot Market Loss: 500*$-100 = $-50,000 Yield: $55,479.5 Profit: $48,000
- 37. 2. Hedging your yield farming risk Perpetual Market Spot Market Profit: $48,000 Loss: 500*$-100 = -50,000 Yield: $55,479.5 Total Profit: $53,479.5 + Funding Payments: $5,670
- 38. How to Profit from Funding Payments 🧠🐱👤🤑💰
- 39. 3. Funding Rate Arbs ?
- 40. 3. Funding Rate Arbs
- 41. 3. Funding Rate Arbs • • •
- 42. How to Profit from Funding Payments 🧠🐱👤🤑💰
- 43. Q&A 🙇♂️
- 44. Extra Resources ← no ← a little ← some