Why use Perpetual Protocol?

There are two different kinds of users on Perpetual Protocol - makers and traders.

Makers provide liquidity which is placed in Perpetual Protocol-controlled pools on Uniswap v3. Makers act as the counterparty for each trade, and receive protocol fees in return. Specifically, makers deposit USDC, and the protocol clearinghouse will mint 10x the amount of virtual USDC (v-tokens). These vUSDC tokens can be placed in special perpetual market pools on Uniswap v3 to provide liquidity according to makers’ instructions. For example, depositing 100 USDC will let you create up to 1,000 vUSDC tokens, which could be deployed as 0.25 vETH and 500 vUSDC (assuming an ETH price of $2000). Makers also choose a price range for their liquidity according to the Uniswap v3 LP model.

As for traders, similar to makers, the journey begins by depositing USDC to protocol. Next, they’ll receive 10x virtual USDC in return, which they can use to trade on the perpetual markets on Uniswap v3. For example, if you deposit 10 USDC and place a long order with 10x leverage, the clearinghouse will mint 100 vUSDC and use those tokens to buy vETH from the vUSDC-vETH Uniswap v3 pool, where makers are providing liquidity, resulting in an effective leverage of 10x.